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Slide 1 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Star Marketing Spend Effectiveness.

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Presentation on theme: "Slide 1 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Star Marketing Spend Effectiveness."— Presentation transcript:

1 Slide 1 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Star Marketing Spend Effectiveness Kent Van Horn Dan Schwartz Students Sourav Das K Subramanian NV Saikumar TVS Mentors Suresh Chand, PhD Krannert Faculty

2 Slide 2 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Who Are We? Kent Van Horn Kent is a junior economics student at the Krannert School of Management. He is also majoring in Management. Dan Schwartz Dan has completed his first year of the MBA program at the Krannert School of Management. His Concentration is in operations. Previously, he worked as a project manager at General Electric and as a consultant at Total Quality Logistics, a 3 rd party logistics provider.

3 Slide 3 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Lets Look at the Agenda… Problem Industry Analysis Traffic vs Retail Sales Head Effectiveness Recommendation Indore

4 Slide 4 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation What is the Problem? StaR Sales Decline Average of 500 less sales per month for the last 3 years Unclear Effect of Promotion Many different promotion methods used Results of promotions unclear

5 Slide 5 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Two Wheeler Economy Segment

6 Slide 6 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Agenda Problem Industry Analysis Traffic vs Retail Sales Head Effectiveness Recommendation Indore

7 Slide 7 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Marketing Microenvironment Customer Mass market economy Favors fuel economy Finances Competitors Hero Honda Bajaj Collaborators Dealers Suppliers Company Largest volume product for TVS thousand sold per month

8 Slide 8 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Economy Segment Marketing Mix Product Star City TVS Sport Price Rs. 36,000 onwards ex showroom Rs. 34,000 onwards ex showroom Placement Retail Dealers Sub- Dealers Promotion Many Sales Promotions Discounts, Rebates 10+ Advertising Schemes ATL-TV, Print, Radio BTL- Demos, Activations

9 Slide 9 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Market Segmentation Economy Segment <40,000 Rs ex showroom years old 2 million bikes per year Decreased in due to economy Increasing again in 2010 Buy Decision Price Fuel efficiency High durability Specs not important

10 Slide 10 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Who is Our Target Group? TVS StaR City Male, Married Self employed SEC BCD TVS Sport Male, Unmarried Salaried/Self employed(2 nd Generation) SEC BCD Key Takeaway: TVS Sport targets a younger, wealthier market

11 Slide 11 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Situation/Opportunity Analysis Strengths Brand awareness Reliability TVS brand name Weaknesses Price point Fuel economy Limiting design Price conscious consumers Opportunities Sell on reliability Differentiate from competitors Threats Quality not perceived by customers

12 Slide 12 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Macro-Environment Environment ThreatOpportunity EconomicTightening Lending Policies Growing Middle Class DemographicSocioeconomic Shift Uniqueness Target Political / Legal Environmental Regulation Government Incentives TechnologicalObsolescence, Alternative Power Incremental Product Modification SocioculturalDemand for CarsDissatisfaction with Public Transit GlobalJoint Venture or Import Export trade with Pakistan

13 Slide 13 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Market Analysis Hero Honda Splendor Reliability Undifferentiate d CD Deluxe Value Bajaj Platina Fuel Efficiency TVS Star City Toughness Lasts a while Sport Sporty Key Takeaway: Concentrated market with few players

14 Slide 14 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Market Analysis CD Deluxe Splendor Plantia Star City Sport Key Takeaway: TVS products are differentiated in this segment

15 Slide 15 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Agenda Problem Industry Analysis Traffic vs Retail Sales Head Effectiveness Recommendation Indore

16 Slide 16 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Look at the Distribution Channel TVS Dealer Sub-dealer 30% 70% Customer (Urban) Customer (Rural) Margin split 50/50 between dealer and sub-dealer

17 Slide 17 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Comparing Retail Sales Vs. Traffic Key Takeaway: Retail Traffic and Sales are closely related.

18 Slide 18 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Agenda Problem Industry Analysis Traffic vs Retail Sales Head Effectiveness Recommendation Indore

19 Slide 19 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Head Effectiveness Regional spend compared to sales: Correlation = R 2 Highly correlated spends have highest effect Y=m x+b Positive m values indicate sales increase Negative m values indicate sales decrease Both advertising and promotion

20 Slide 20 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Brand vs Promotion

21 Slide 21 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Brand vs Promotion

22 Slide 22 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Weighted Sales Method to compare sales: Weighted Sales = 0.5 x Month n Sales + Month (n+1) Sales x Month (n+2) Sales x Month (n+3) Sales

23 Slide 23 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation West Bengal Regression Analysis Key Takeaway: Print, advertisements, demos and hoardings appear to increase sales. There is a strong correlation between all India sales and West Bengal. Too many variables makes a difficult to use model.

24 Slide 24 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation What About Tamil Nadu? SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations8 ANOVA dfSSMSFSignificance F Regression Residual Total CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0% Intercept E Weighted TV E E E Press E E Key Takeaway: For every 1500 Rs. Spent on press, TVS can expect one additional sale. Combining variables leads to a cleaner model. Sales = x Weighted TV Spend x Press

25 Slide 25 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Purdue ItemIndianForeignerDan Taj20750N/A Rickshaw SpiceFlamingMildKetchup FoodNaanRiceMcDonald's TravelBusRickshawHonda Civic DrinkTeaCoffeeBeer

26 Slide 26 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Opportunity Breakdown Key Takeaway: TVS Star City and Sport are Economically Inferior goods that decrease in sales in wealthier areas. There are some areas where there is opportunity for more sales.

27 Slide 27 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Opportunity Breakdown Key Takeaway: 73.2% of the sales in TVS City can be explained by its linear relationship with total market segment sales during that month. For every 9 products the market increases, 1 TVS City sale is expected. Delhi

28 Slide 28 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Opportunity Breakdown Key Takeaway: Uttar Pradesh, West Bengal and Andhra Pradesh all have very high potential for future sales.

29 Slide 29 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation India Promotion Regression Diwali

30 Slide 30 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation India Advertising Regression

31 Slide 31 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Agenda Problem Industry Analysis Traffic vs Retail Sales Head Effectiveness Recommendation Indore

32 Slide 32 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Our Trip to Indore! Field Study to Indore Indore Consumer Sub- dealership Primary TVS Dealership

33 Slide 33 StaR Spend Effectiveness

34 Slide 34 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Indore Consumer Feedback Indore ConsumerHouse 1House 2House 3 Which bike do you own?SplendorStarCitySplendor Why this bike? Mileage, road presenceMileage, max load Mileage, bad TVS experience What adds have you seen for Star City? TV: Cricket Star, MS Dhoni Print: Paper and Magazines TV: Cricket Star, MS Dhoni heavily influenced Print: Paper and Magazines Print: Paper and Magazines What do you think of the promotional gifts? Good, but not enough to influence decision Liked them, but not ecstatic about themNot impressed Key Takeaway: Customer perceived mileage is key.

35 Slide 35 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Sub-Dealer Store Traffic?6-7/day Average Sales?52/month, 62 YTD Pay Cash First Visit?25% What Impacts Sales?Diwali>Wedding Season Is Price a Factor?TVS Fixes Prices Star City Sales?75-80% Stockout Loss?2-4/month

36 Slide 36 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation TVS Primary Dealership Customer Service Greeted within 1 minute Follow up calls Green/Pink cards Repairs 300 Rs. Profit per bike repair repairs per day service bays

37 Slide 37 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Misaligned Priorities? Top 3 Features that Affect Purchase Intent PartyPrimarySecondaryTertiary Consumer 1MileageRoad PresencePower Consumer 2MileageMaintenanceMax Load Consumer 3MileageMaintenancePower Sub-DealerStrong SturdyMileageMaintenance TVS Primary DealerLooks/ImageMileageBrand Key Takeaway: Customer perceived mileage is key although dealers focus on other selling points.

38 Slide 38 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Summarizing Our Findings Sales based on perception Wedding season increases sales Sub-dealer closer to customer Customer needs misunderstood

39 Slide 39 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Agenda Problem Industry Analysis Traffic vs Retail Sales Head Effectiveness Recommendation Indore

40 Slide 40 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Recommendations Untapped Markets (West Bengal) Increase Spend Sponsor Dealerships Too Many Advertising Heads Used Reduce Number Increase Demos Consumer Perception Educate Consumer Below the Line

41 Slide 41 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation Recommendations Increased Sales Improved Head Selection Capture Untapped Markets Improved Customer Perception

42 Slide 42 StaR Spend Effectiveness

43 Slide 43 StaR Spend Effectiveness Problem Indore Industry Analysis Traffic vs. Sales Head Effectiveness Recommendation TVS StaR Targets SEC-BCD


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