Gap kids has several options:
1 run a loyalty program in which customers who spend $500 dollars in a year gets$50 off on a coupon for their next purchase of $100, the total cost is $25,000 to manage and implement this program.
2 a direct mail campaign costs $10,000 for every 100,000 names the company purchases then company sends each person $5 off for $50 purchase coupon. the cost for mailing each coupon is $30.
3 signs a 2 yr deal with Crystal Hogan and customers who spend $50 at gap in 3 months will get tickets and passes for the concert.The deal will cost gap $1.8 million dollars.
4 increase in advertising expenditures from last yr by $10,000 per month for the next 12 months.Last yr a direct competitor had a similar increasein sales of $12,ooo monthly.
Now make a quantitative as well as qulaitative analysis of this.
ABC company cost a funcation for next four month is c=500000+5q
To make a quantitative and qualitative analysis, we will evaluate each option based on its cost, potential impact on sales, customer satisfaction, and long-term benefits.
1. Loyalty Program:
Quantitative Analysis:
- Cost: $25,000
- Potential Impact: $50 off coupon for every $500 spent, which encourages customers to spend more.
- ROI Calculation: Calculate the number of customers needed to break even on the $25,000 cost. Assuming a $100 purchase per customer, it would take 500 customers to break even. If this target is achievable, the program can be considered successful.
Qualitative Analysis:
- Customer Satisfaction: Customers who reach the spending threshold will feel rewarded and motivated to make repeat purchases.
- Long-term Benefits: The loyalty program encourages customer loyalty and repeat business, leading to potential long-term revenue growth.
2. Direct Mail Campaign:
Quantitative Analysis:
- Cost: $10,000 for every 100,000 names + $30 per coupon mailing
- Potential Impact: $5 off coupon for $50 purchase, which can attract customers to visit the store and make a purchase.
- ROI Calculation: Calculate the number of customers needed to break even on the campaign cost. Assuming a 10% conversion rate (10,000 customers redeeming the coupon), it would require each customer to spend $600 to recover the cost. Evaluate the feasibility of achieving this spend per customer.
Qualitative Analysis:
- Customer Satisfaction: Customers receiving the coupons might appreciate the discount and may be motivated to make a purchase.
- Long-term Benefits: The campaign can attract new customers and create brand awareness, potentially leading to future sales.
3. Crystal Hogan Concert Deal:
Quantitative Analysis:
- Cost: $1.8 million
- Potential Impact: Customers need to spend $50 in 3 months to earn concert tickets and passes, which can drive sales in the short term.
- ROI Calculation: Evaluate the projected increase in sales needed to recover the $1.8 million investment. Consider factors like customer demand, response rate, and competitive activities. Assess if the potential sales increase justifies the cost.
Qualitative Analysis:
- Customer Satisfaction: Customers interested in the concert will value the offer, potentially attracting new and existing customers to make qualifying purchases.
- Long-term Benefits: The association with a popular concert may enhance Gap's brand image and customer loyalty.
4. Increase in Advertising Expenditures:
Quantitative Analysis:
- Cost: $10,000 per month for 12 months
- Potential Impact: Assuming a similar increase in sales as the competitor, evaluate the potential increase in monthly revenue. Calculate the break-even point in terms of additional sales and assess the likelihood of achieving this increase.
Qualitative Analysis:
- Customer Satisfaction: Increased advertising can improve brand visibility and customer perception.
- Long-term Benefits: Increased advertising can generate long-term brand recognition, customer acquisition, and long-term revenue growth.
To choose the best option, consider a combination of quantitative analysis (ROI, cost recovery) and qualitative analysis (customer satisfaction, long-term benefits). Assess the feasibility of each option based on available resources, customer preferences, and overall business goals.