APPLICATION OF THE KAMAFIP SOFTWARE Dr Laszlo Karpati

APPLICATION OF THE KAMAFIP SOFTWARE Dr. Laszlo Karpati, Ph. D. , MBA California Consulting Bt. 2016 www. califorconsult. com

Topics: • Objective of the KAMAFIP software • Structure of the KAMAFIP model • Product-level marketing planning • Company-level planning • New calculation methods • Responsibility of the planner

Objective of the KAMAFIP software 1 • KAMAFIP is an acronym, originated from KArpati (Laszlo) MArketing FInancial Planner, English language expression elements • Its development is based on several decades’ financial-marketing software expertise of the Author

Objective of the KAMAFIP software 2 • Main aim: financial planning of marketing resources on both product and company level, based on the previous period’s results and expert estimations for the immediate future of the market(s) • The software was developed on Excel basis, in English language

Structure of the KAMAFIP model 1 • KAMAFIP model is based on planning of 15 (or more) product-market combinations and a company-level summarizing module • It supposes that production is done at the domestic factory and the products are sold both domestically and abroad • On the basis of the previous period’s figures, planning can be carried out both on product and company level for the next business year

Structure of the KAMAFIP model 2 • Model treats different marketing interventions as discreet variables • Programme financially evaluates the discreet variables individually • Planner can choose any variant from among all the product-market combinations • By the summarizing module the companylevel planning can also be carried out

Product-level marketing planning 1 • Model treats any product(family) - market(group of countries) combinations separately • Planning starts from the finished business year’s real figures. For this purpose a separate auxiliary software (MARKOPTINPE) was developed, based on GAAP principles • Inputs of the planning period can be established by market research and expert estimation • Company-level summarization can guarantee the input figures’ verification

Product-level marketing planning 2 • Software characterizes marketing interventions by discreet variables, as below: • Price setting: 9 levels (see slide 5) • Product development: none (level 0) and development: 1 st and 2 nd level (with increasing cost intensity) • Trading channel development: none (level 0) and development: 1 st and 2 nd level (increasing intensity) • Marketing communication: basic (level 1) and gradually developed from level 2 to level 5 by increasing costs • Total number of combinations: 9*3*3*5= 405

Product-level marketing planning 3 • Variants of the combinations: Marketing mix P elements: Price : level 1 -9 Product : level 0– 2 Place (commercial channel): level 0– 2 Promotion (marketing communication): level 1 -5 Combination 1 . . . Combination 405 1 9 0 2 1 5

Product-level marketing planning 4 • The following figures are calculated in case of each combinations: • Net income (before taxation) • Ratio of the net income of the given combination in comparison with that of the combination with the highest net income • The cost of marketing interventions • Financial effectivity of the marketing costs • Planner can select freely from among the 405 combinations

Product-level marketing planning 5 • The most important calculation of the model is the establishment of price level and subsequently the expected sales quantity • Price levels are established automatically by the average market price, price of the market leader and by the still acceptable own minimum price • Expected sales quantities are calculated by the previously established price levels (1 -9) and by the automatically calculated individual price sensitivity figures

Company-level marketing planning • Combination selected by the planner is transferred to the company-level summarizing module • By the help of the summarizing module the recent period’s figures can be verified, as well as: • By summarizing the planning inputs , reality of the company-level marketing planning can also be evaluated

New calculation methods 1 – Interpretation of the 4 P elements of the marketing mix (Product, Price, Place, Promotion) by discreet variables and calculations with them – Conception of combination of the 4 P’s by discreet values, as an individual approach of the marketing mix characterization – Financial ranking method to evaluate the discreet marketing mix by calculation of net income

New calculation methods 2 – Calculation method of individual contribution of the 4 P elements to the sales – Definition of the marketing intensity factor and calculation methods with the factor – Price level calculation method by market average price level and by the market leader price

New calculation methods 3 – Individual price sensitivity figure calculation and its application in establishing the expected sales quantity – Methodical solution of indirect marketing cost estimation and by it calculation of the total marketing costs – Calculation method of commercial channel development’s financial effectivity

Responsibility of the planner • Success of every planning model can be based on two basic factors: • Establishing the reliable input figures, as well as • Professional knowledge and practice of the planner • These ones above exist in case of the KAMAFIP software, too. Faulty or non-relevant input figures may lead to enormous mistakes without a professional review and supervision

Author: Laszlo Karpati wishes you a lot of success in practicing this software