Marketing Management

Assignment 1
Achal Goel (199278088) Aakash Kumar(199278087)
Utkarsh Tiwari (199278092) Navnee Rajput(199278094)
Rishabh Singh (199278085)

Que. 1) What is the expected outcome of each of the targeting scenarios? (Complete both the Ad
Revenue and Financial calculators to fully understand the financial impact of the scenarios)

Ad Revenue Calculator
Current 2007 Base S1 S2 S3
TV HH 110000000 110000000 110000000 110000000 110000000
Avg Rating 1% 1% 1.20% 0.80% 1.20%
Avg
Viewers
(1000's) 1100 1100 1320 880 1320
Avg CPM $2 $1.80 $1.80 $3.50 $2.50
Avg Rev/ $2,200 $1,980 $2,376 $3,080 $3,300
Ad min
Avg min/
week 2016 2016 2016 2016 2016
week/ year 52 52 52 52 52
Ad Rev
/Year $23,06,30,400 $20,75,67,360 $24,90,80,832 $32,28,82,560 $34,59,45,600
Incremental
Prog
Expense $0 $1,50,00,000 $0 $1,50,00,000 $2,00,00,000
 TFC Estimated Financials for 2006 and 2007
2006 Actual 2007 Base S1 S2 S3 Assumptions

Revenue
Ad Sales $23,06,30,400 $20,75,67,360 $24,90,80,832 $32,28,82,560 $34,59,45,600
Affiliate Fees $8,00,00,000 $8,16,00,000 $8,16,00,000 $8,16,00,000 $8,16,00,000 Grows 2% per year
with population

Total Rev $31,06,30,400 $28,91,67,360 $33,06,80,832 $40,44,82,560 $42,75,45,600

Expenses
Cost of Operations $7,00,00,000 $7,21,00,000 $7,21,00,000 $7,21,00,000 $7,21,00,000 Grows 3% per year
with inflation

Cost of Programming $5,50,00,000 $7,00,00,000 $5,50,00,000 $7,00,00,000 $7,50,00,000 Add incremental

programming expense
='Ad Revenue

Ad Sales Commissions $69,18,912 $62,27,021 $74,72,425 $96,86,477 $1,03,78,368 3% of ad sales

revenue
Marketing & Advertising $4,50,00,000 $6,00,00,000 $6,00,00,000 $6,00,00,000 $6,00,00,000 Increased spending
of $15M

$4,00,00,000 $4,12,00,000 $4,12,00,000 $4,12,00,000 $4,12,00,000 Grows 3% per year

SGA with inflation

Total Expense $21,69,18,912 $24,95,27,021 $23,57,72,425 $25,29,86,477 $25,86,78,368

Net Income $9,37,11,488 $3,96,40,339 $9,49,08,407 $15,14,96,083 $16,88,67,232

Margin 30.17% 13.71% 28.7% 37.45% 39.5%

Market Coverage 80% HH 15% HH 50% HH

Que. 2) Develop a factual analysis of the segmentation options and evaluate the pros and cons of
each.
 Scenario 1: Cross segmentation of all 3 groups – maintain a broad appeal.
Pros -
o Broadest target customer base.
o 20% increase in rating
o Additional expenses avoided
o Margin is 28.70%
Cons –
o CPM remains same
o Competition may penetrate premium segments and erode TFC’s pricing ability.

 Scenario 2: Focus more on the fashionistas

Pros –
o Increase in CPM.
o Highly valued demographic (Female aged 18-34) – Stronger presence.
o The advertisers can go for context-based marketing – focused programming and marketing
is possible.
Cons -
o Rating less than 0.8
o 15 million increase in programming cost
o 15% households only are covered – (small segment)

 Scenario 3: Fashionistas+ Shoppers/Planners

Pros –
o 20% increase in rating
o CPM increased to 2.5 USD
o Margin is the highest.
o Cluster size is highest. (Needs are similar, hence easy to cater combined)
Cons -
o Poor customer penetration and therefore higher pricing may not be realised immediately.

Que. 3) If you were Dana Wheeler, what would you recommend and why?
Following are the recommendations –
 We would go for scenario 3 as it is a combination of 2 segments - Fashionistas+
Shoppers/Planners. In this case, there would be highest margin of 39.5%.
 Choosing this scenario would lead to a higher customer base which is greater than the customer
base of the other 2 segments.
 Although, customer penetration is poor, in the long run, we would be having freedom of
experimentation as we have 2 segments to cater to.