Marketing Maple Syrup

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H. Terms of Sale

The terms of sale tend to be negotiated when you have a sale, which in this case means when you have a wholesaler or business partner. There are a few different options with respect to this. Freight on Board affects the price, because FOB Seller means that the buyer will pay for the product to be delivered to the seller's location; FOB Buyer means that the seller is going to ship the product. FAS is "free alongside ship," which means that the seller's obligation is to get the goods to the ship (WCS, 2014). C&F means cost and freight, while CIF means "cost, insurance, freight." With these, the cost of the goods and freight are included in the price or the goods of goods, insurance and freight.

While obviously this is subject to negotiation, we are planning to ship to Europe, then distribute to wholesalers. So the cost is going to be FOB Buyer, and we will take care of getting the product to the wholesaler's warehouse. This allows us to have control over costs, and handle our own shipping to Europe. Either way, you price according to the service that is being provided.

I. Methods of Payment

There are a few different methods of payment. The first is cash in advance, which is not necessarily normal when doing business with large companies in developed countries. These are good for a first time dealing however, should we not want to expose ourselves to too much risk, dealing with a new customer Open accounts are more normal, where some sort of trade credit. This is probably what we will use after establishing the business relationship. We are not going to use consignment sales, relying on someone else's marketing skills for us to make money. So at present we want to build a relationship, starting with a cash sale and then extending credit once we have a reliable business relationship and a better understanding of European trade laws.

Pro Forma Marketing Budget

Selling Expense

10,000

Advertising Exp

20,000

Distribution Exp

40,000

Total

70,000

Pro Forma Income Statement

Year 2

Year 3

Year 4

Year 5

Revenue

500,000

750000

1

1250000

1400000

Product Cost

250,000

375000

500000

625000

700000

Gross Profit

250,000

375,000

500,000

625,000

700,000

Marketing Exp

70,000

105000

136500

170625

196218.8

Administrative Exp

40000

60000

78000

97500

112125

Fixed Costs

80000

80000

90000

100000

100000…

Sources Used in Document:

References

WCS. (2014). FAS -- free alongside ship. World Class Shipping. Retrieved December 6, 2014 from http://www.worldclassshipping.com/incoterm_fas.html

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