PROFITABILITY ASSESSMENT
INDUSTRY CONDITIONS
MARKETING EXTERNALITIES
1. Profit margin given in the case is assumed to be derived purely from the operations of the firm(average standard for the industry)
2. Higher profit margin in any region would result in high profitability for the firm
1. Market popularity determines the customers' affinity towards buying the product
2. High popularity low marketing spend for product promotions, high profit
3. Statistical check has to be done to ascertain that there is a significant variation in popularity of a sport across regions, basis which marketing spend could be allotted
4. Chi square independence test(p-value=0.007) proves that popularity of the sport varies from region to region significantly
1. Profit margin is one of the important parameters which can be used to explain the managements decision of promoting sales in one region over other
2. In this scenario, overall sales is highly correlated to the average profit margin of the region. However, the picture cannot be explained completely with the available information(90% correlation has been observed between sales & profit margin)
3. Thus leading us to the assumption that along-with the profit margins, there is an external incentive/risk in the business environment which promotes/deters sales in the region
Assumption :
1. Cricket products Core competency of GameInCorp (69% sales contributor)
2. Returns on investment to promote cricket Relatively high, brand image promotes sales
Advantages of 1.High Brand recognition2.Incerese in loyal customer 3.Spontaneous conversion of targeted audience4.High flexibility of modifications of offers5.Low marketing cost6.Better data availability for impact analysis
Disadvantages of 1.No short term ROI generation2.Negetive comments and Hackers attack3. Bad branding can doom the image of company4.Regular maintenance and commitment in updating Social platforms5.Getting involved with social media is time consuming
Advantages Disadvantages
1.No short term ROI generation
2.Negetive comments and Hackers attack
3. Bad branding can doom the image of company
4.Regular maintenance and commitment in updating
Social platforms
1.High Brand recognition
2.Incerese in loyal customer
3.Spontaneous conversion of targeted audience
4.High flexibility of modifications of offers
Advantages Disadvantages
1.No short term ROI generation
2.Negetive comments and Hackers attack
3. Bad branding can doom the image of company
4.Regular maintenance and commitment in updating
Social platforms
1.High Brand recognition
2.Incerese in loyal customer
3.Spontaneous conversion of targeted audience
4.High flexibility of modifications of offers
Advantages of 1.High Brand recognition2.Incerese in loyal customer 3.Spontaneous conversion of targeted audience4.High flexibility of modifications of offers5.Low marketing cost6.Better data availability for impact analysis
Disadvantages of 1.No short term ROI generation2.Negetive comments and Hackers attack3. Bad branding can doom the image of company4.Regular maintenance and commitment in updating Social platforms5.Getting involved with social media is time consuming
Advantages
1.No short term ROI generation
5.Low marketing cost
4.High flexibility of
modifications of offers
3.Spontaneous conversion
of targeted audience2.Incerese in loyal
customer
3. Bad branding can doom
the image of company
2.Negetive comments and
Hackers attack
BEST CHANNEL OF COMMUNICATION
• The channel should have a high appeal amongst the audience.
Demographics of GameInCorp customers are indicators of its brand image & strengths
Hence demographics of channel followers should be aligned to the overall firm’s demographics, provided the firm is not using the forum for brand makeover/image change
• The channel should be within the reach of the budget allocated for marketing
CHANNEL SELECTION CRITERIA
Cost Effectiveness
Channel Popularity Target Audience
Out of the 4 channels, Social Media 1 is most
popular(2174 followers)
Average demographics
deviation is lowest for Social Media 1 (~10%)Also 98% of the
followers are less than 40 years
The overall cost for using the
channel comes out to 6400 INR
1 2 3 4
91%74% 77%
69%
Demographics Similarity
Followers of Social Media 1 are ~90% similar to the existing customer base of GameInCorp(demographics-wise)
80% of the social media budget is exhausted by using Social Media 1 and it caters to 90% of the customer base(less than 40 years)
Social Media 1 appears most viable as well as profitable channel at this stage due to its high appeal & customer similarity
IDEATION APPLICATION CONCLUSION
BEST CHANNEL OF COMMUNICATION
• The channel should have a high appeal amongst the audience.
Demographics of GameInCorp customers are indicators of its brand image & strengths
Hence demographics of channel followers should be aligned to the overall firm’s demographics, provided the firm is not using the forum for brand makeover/image change
• The channel should be within the reach of the budget allocated for marketing
CHANNEL SELECTION CRITERIA
Cost Effectiveness
Channel Popularity Target Audience
Out of the 4 channels, Social Media 1 is most
popular(2174 followers)
Average demographics
deviation is lowest for Social Media 1 (~10%)Also 98% of the
followers are less than 40 years
The overall cost for using the
channel comes out to 6400 INR
1 2 3 4
91%74% 77%
69%
Demographics Similarity
Followers of Social Media 1 are ~90% similar to the existing customer base of GameInCorp(demographics-wise)
80% of the social media budget is exhausted by using Social Media 1 and it caters to 90% of the customer base(less than 40 years)
Social Media 1 appears most viable as well as profitable channel at this stage due to its high appeal & customer similarity
IDEATION APPLICATION CONCLUSION
BEST CHANNEL OF COMMUNICATION
• The channel should have a high appeal amongst the audience.
Demographics of GameInCorp customers are indicators of its brand image & strengths
Hence demographics of channel followers should be aligned to the overall firm’s demographics, provided the firm is not using the forum for brand makeover/image change
• The channel should be within the reach of the budget allocated for marketing
CHANNEL SELECTION CRITERIA
Cost Effectiveness
Channel Popularity
Target Audience
Out of the 4 channels, Social Media 1 is most
popular(2174 mn followers)
Average demographics
deviation is lowest for Social Media 1 (~10%)Also 98% of the
followers are less than 40
years
The overall cost for using the
channel comes out to 6400 INR
Social Media 1 appears most viable as well as profitable channel due to its high appeal & customer similarity
Social Media 1
Social Media 2
Social Media 3
Social Media 4
2174
590208 200
Customers (Million) For Social Media 1 Customers aged less than 40 in the income band 20-40k and belonging to urban city have demographic deviation of 0.83*,1.09 ,0.95 and 0.78 for Gender ,Age ,Income & Location respectively averaging to 91% ** Demographic similarity among target audience .
Followers of Social Media 1 are ~90% similar to the existing customer base of GameInCorp (demographics-wise)
Using Social Media 1,90% of the customer base(less than 40 years) can be targeted by using
just 80% + of the social media budget.
Cost of targeting a million customers is just 3INR for social media 1.
Out of the total media budget of 8000 INR 6400 is spent on Social media 1 and remaining can be utilised in social media 3 as it is second most cost effective and target base has a 77% demographic similarity to base of GameInCorp.
*Social media 1 has male female target base of 50% each,60% of brick and mortar store customers are male;50/60=0.83 deviation **(.83+09+95+.78)/3=0.91+ 6400/8000=80%
Social Media 1
Social Media 2
Social Media 3
Social Media 4
2.94
13.78
4.81
20.00
Cost per million targetted customer
Social Media 1
Social Media 2
Social Media 3
Social Media 4
91%74% 77% 69%
Avg. Demographics Devia-tion
Engagement % (+)Response Time (-)
Competitor 1Competitor 4
Engagement % (+)Response Time (+)
---
Engagement % (-)Response Time (-)Competitor 2Competitor 5Competitor 7
Engagement % (-)Response Time (+)Competitor 3Competitor 6Competitor 8
8.25%
8.9 hours
• Average “engagement as % of followers” has been found to be 8.25% from the given data of the 8 competitors
• Average response time is 8.9 hours
• Any competitor should have a high engagement and low response time to be classified as the competitor with robust social media practices
• From the analysis, it can be concluded that Competitor-1 & 4 are front-runners for the position
• Competitor-1’s average response time is 10 times that of Competitor-4. Also 37k follow Competitor-4 as opposed to 27k for Competitor-1
• Hence, Competitor-4 has the most robust social media practices
ROBUST SOCIAL MEDIA PRACTICES