·        VENDOR SHOWS:

Attending vendor shows would help the two partners meet new vendors and industry experts. It would help them further update their products. The downside was that, the total cost was $3200which was more than 50% of their budget. Vendor costing can be seen in exhibit5.

·        GOOGLE ADWORDS COMPAIGN:

According to exhibit4, puttingtheir products on google ads was another option. After assuming 1% conversion rate we have come to the conclusion that their gross loss would be $8.3. Also the per click expense and per ad view expense is too high.

 

RECOMMENDATIONS

After analyzing the three options, I would have recommended them to promote the products on online retailers and Etsy as it would be the best option available to them. All the other four options would be expensive and also inefficient. The costliest option was promoting their products through vendors’ shows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBITS

 

EXHBIT 1

DISTRIBUTORS PERCENTAGE CONTRIOBUTION TO SALES
SALES CHANNEL Sales % contribution Gross Margin %
Online sales 25% 62%
Direct Sales 10% 71%
Wholesale 37% 51%
Vendor shows 28% 69%
    63% average gross margin

 

 

 

EXHBIT 2

  FIXED COST COMPARISION          
  ETSY Pristine Planet  
  annual fixed cost 0.6 $550  
   
**ASSUMPTIONS  
Etsy charges $0.2 per four months  
Pristine Planet $50 per initial two month+$50 per month after two months = $550

 

 

 

 

EXHBIT 3

COMPARISION BETWEEN ETSY AND PRESTINE PLANET
  ETSY Pristine Planet
  MINIMUM MAXIMUM MINIMUM MAXIMUM
Annual unique visitors       6,800,000        8,400,000           52,800            171,600
Monthly unique visitors          566,667            700,000              4,400              14,300
**Annual orders with 0.1% unique visitors               6,800                 8,400                    53                    172
**Monthly orders with 0.1% unique visitors             566.67              700.00                4.40                 14.30
revenue generation per month with 0.1% visitors               3,825                 4,725                    30                       97
Advertisement cost ($)             113.33              140.00 45.8 45.8
monthly sales fee ($)             133.88              165.38 0.0 0.0
Total monthly cost $             247.21              305.38              45.83                 45.83
annual cost $         2,966.50           3,664.50           550.00              550.00
Gross Profit         3,577.79           4,419.63           (16.13)                 50.69
Gross Profit margin 93.5% 93.5% -54.3% 52.5%
   
**ASSUMPTIONS  
if only 0.1% unique visitos order from online retailers  
if only 0.1% unique visitos order from online retailers  
etsy  advertisement cost $0.2  
Pristine Planet $50 per initial two month+$50 per month after two months = $550  
lets suppose if one soap cost $6.75  
etsy sales fee 3.5% per monthly sales        

 

 

EXHBIT 4

Google AdWords  Model Projection
adwords monthly expense 150.0
Ad views 1900.0
clicks 200.0
per adview expense  $          12.67
per clicks expense  $            1.33
adview orders 19.0
clicks orders 2.0
sales adview  $        128.25
sales clicks  $          13.50
Total sales  $        141.75
Gross Profit  $          (8.25)
Assumptions:
if we get 1% conversion rate
product price=$6.75

 

EXHBIT 5

VENDOR SHOW COSTING
SEPCIFICS cost
Vendor Space         2,500
Product Samples            400
Printed Materials            200
Travel Costs            100
Total         3,200

Decision Criteria

A successful outcome would give them a boost in the sales that they wanted right at that time. The following are the few decision criteria to achieve the outcome:

  1. The duo had to design a plan considering their $5000 budget constraint. They would have to make sure that their advertising and promotional expense would cost effective yet efficient.
  2. A well-diversified distributors would be needed where they could distribute their budget really well.
  3. The distributor which contributed to the most percent of sales would be chosen. Can be seen in exhibit 1.

    OPTION ANALYSIS

    ·        ONLINE SALES:

    Keeping $5000 annual budget they had to make some smart decisions to promote their product. Online promotion is considered to be a cost effective and efficient way of promoting a product and they had two options in that category, Etsy and Pristine planet. In exhibit 2, after a thorough analysis we can see that although Pristine had an advantage that it supported ecofriendly products, but 140000 annual unique visitors was of no match with 1.8million annual unique visitors of Etsy……………..

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