Answered: What do we learn from the cost…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Question

Mini-Case -Where Should We Place Our Ad? A software company that is fairly well regarded for two large product lines has TurboTax in its sights. They’ve developed a tax package that they think their current customers will like, and they think this software will give them a chance to bring new customers to their other products. The company has developed an informative, yet succinct, and even somewhat humorous ad. One of the top managers is saying the company ought to ship out the ad in brochure form, along with a DVD with a demo file on it, as a form of direct mail. A new manager is thinking that sounds retro but doesn’t say that; instead, the manager argues that because the product is high-tech, they should reach out to customers through an email campaign. The email content would contain several embedded links to online demos on the website. The boss is indifferent (doesn’t know much about marketing, history, biology, or what a slide rule is for), but they care about costs. So a third manager called up some media providers and compiled the following price estimates. Question- -What do we learn from the cost assessment manager? -Which of the first two managers’ directions (direct mail or email) would you support? -What is the strategy? If the company wants to emphasize customer acquisition, what would you recommend? If the company wants to emphasize customer retention, what would you recommend? -What else would you like to know for a more thorough assessment?

8:48
Enlarged View
New Customers
Direct mail (list
rental)
AA
$1750
2%
20
$2,000
$250
Email (list rental)
$500
10%
3%
30
$3,000
$2,500
ng.cengage.com
M
5G
X
C
Direct mail
CRM syste

8:48
Enlarged View
Cost per 1000 (CPM)
Click-thru rate
Rate of purchase
For every 1000 reached, yield:
Say software price is $100, income:
Net income (sale - cost)
AA
ng.cengage.com
M
5G
X
New C
Direct mail (list
rental)
$1750
2%
20
$2,000
$250

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