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Slide 1StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Star Marketing Spend Effectiveness
• Kent Van Horn• Dan Schwartz
Students
• Sourav Das• K Subramanian
• NV SaikumarTVS Mentors
• Suresh Chand, PhDKrannert Faculty
Slide 2StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Who Are We?Kent Van Horn
Kent is a junior economics student at the KrannertSchool of Management. He is also majoring in Management.
Dan Schwartz
Dan has completed his first year of the MBA programat the Krannert School of Management. His Concentration is in operations. Previously, he workedas a project manager at General Electric and as a consultant at Total Quality Logistics, a 3rd party logisticsprovider.
Slide 3StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Lets Look at the Agenda…
ProblemIndustry Analysis
Traffic vs Retail Sales
Head Effectiveness RecommendationIndore
Slide 4StaR Spend EffectivenessProblemProblem IndoreIndustry
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
Slide 5StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Two Wheeler Economy Segment
05-06 06-07 07-08 08-09 09-100
20000
40000
60000
80000
100000
120000
140000
160000
StaR
Splendor
Platina/CT 100
CD Delux
Fiscal Year
Ret
ail S
ales
Slide 6StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Agenda
Problem Industry Analysis
Traffic vs Retail Sales
Head Effectiveness
RecommendationIndore
Slide 7StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Marketing Microenvironment
Customer
• Mass market
economy• Favors
fuel economy
• Finances
Competitors
• Hero Hond
a•Bajaj
Collaborators
•Dealers
• Suppliers
Company• Largest
volume product for
TVS• 35-40
thousand sold per
month
Slide 8StaR Spend EffectivenessProblemProblem IndoreIndustry
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
Slide 9StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Market Segmentation
Economy Segment
• <40,000 Rs ex showroom
• 15-49 years old• 2 million bikes per
year• Decreased in 2008-
2009 due to economy• Increasing again in
2010
Buy Decision
• Price• Fuel efficiency• High durability
• Specs not important
Slide 10StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Who is Our Target Group?
TVS StaR City
• Male, 25-35 • Married
• Self employed
• SEC BCD
TVS Sport• Male, 20-30• Unmarried
• Salaried/Self employed(2nd
Generation)• SEC BCD
Key Takeaway: TVS Sport targets a younger, wealthier market
Slide 11StaR Spend EffectivenessProblemProblem IndoreIndustry
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
Slide 12StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Macro-EnvironmentEnvironment Threat Opportunity
Economic Tightening Lending Policies
Growing Middle Class
Demographic Socioeconomic Shift
Uniqueness Target
Political / Legal Environmental Regulation
Government Incentives
Technological Obsolescence, Alternative Power
Incremental Product Modification
Sociocultural Demand for Cars Dissatisfaction with Public Transit
Global Joint Venture or Import
Export trade with Pakistan
Slide 13StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Market Analysis
Hero Honda
• Splendor• Reliability• Undiffere
ntiated• CD Deluxe
• Value
Bajaj•Platina
• Fuel Efficie
ncy
TVS• Star City• Toughness• Lasts a
while• Sport• Sporty
Key Takeaway: Concentrated market with few players
Slide 14StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Market Analysis
CD Deluxe
Splendor
PlantiaStar City
Sport
Key Takeaway: TVS products are differentiated in this segment
Slide 15StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Agenda
ProblemIndustry Analysis
Traffic vs Retail Sales
Head Effectiveness
RecommendationIndore
Slide 16StaR Spend EffectivenessProblemProblem IndoreIndustry
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
Slide 17StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Comparing Retail Sales Vs. Traffic
0 2000 4000 6000 8000 10000 120000
2000
4000
6000
8000
10000
12000
f(x) = 0.813710779102402 xR² = 0.989484086508745
Traffic
Ret
ail S
ales
Key Takeaway: Retail Traffic and Sales are closely related.
Slide 18StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Agenda
ProblemIndustry Analysis
Traffic vs Retail Sales
Head Effectiveness
RecommendationIndore
Slide 19StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Head Effectiveness
Regional spend compared to sales:
Correlation = R2
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
Slide 20StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Brand vs Promotion
Slide 21StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Brand vs Promotion
Slide 22StaR Spend EffectivenessProblemProblem IndoreIndustry
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 + 0.5 x Month (n+2) Sales +0.25 x Month (n+3) Sales
Current month Previous month Month before previous month
3 Months prior 0
20
40
60
80
100
120
50
100
50
25
Percent
Slide 23StaR Spend EffectivenessProblemProblem IndoreIndustry
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.
Slide 24StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
What About Tamil Nadu?SUMMARY OUTPUT
Regression Statistics
Multiple R 0.803728697
R Square 0.645979819
Adjusted R Square 0.504371747
Standard Error 500.4544063
Observations 8
ANOVA
df SS MS F Significance F
Regression 2 2285019.811 1142509.906 4.561744314 0.074571014
Residual 5 1252273.064 250454.6127
Total 7 3537292.875
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 4004.047724 320.4351853 12.49565562 5.82318E-05 3180.342858 4827.752591 3180.342858 4827.752591
Weighted TV 0.000142536 8.98236E-05 1.586845974 0.173408604 -8.83627E-05 0.000373435 -8.83627E-05 0.000373435
Press 0.000744406 0.000311571 2.389202224 0.062449331 -5.65126E-05 0.001545325 -5.65126E-05 0.001545325
Key Takeaway: For every 1500 Rs. Spent on press, TVS can expect one additional sale. Combining variables leads to a cleaner model.
Sales = 4004 + 0.00014 x Weighted TV Spend + 0.00074 x Press
Slide 25StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Purdue
Item Indian Foreigner DanTaj 20 750 N/ARickshaw 30 90 150Spice Flaming Mild KetchupFood Naan Rice McDonald'sTravel Bus Rickshaw Honda CivicDrink Tea Coffee Beer
Slide 26StaR Spend EffectivenessProblemProblem IndoreIndustry
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.
Slide 27StaR Spend EffectivenessProblemProblem IndoreIndustry
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.
0.00 10000.00 20000.00 30000.00 40000.00 50000.000
1000
2000
3000
4000
5000
f(x) = 0.113825080059844 xR² = 0.8951284343461
Sales
Market Segment Size
TV
S C
ity
Sale
s
Madhya Pradesh
Gujarat
Maharashtra
Uttar Pradesh
West BengalDelhi
Slide 28StaR Spend EffectivenessProblemProblem IndoreIndustry
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.
Slide 29StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
India Promotion Regression
Diwali
Slide 30StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
India Advertising Regression
Slide 31StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Agenda
ProblemIndustry Analysis
Traffic vs Retail Sales
Head Effectiveness
RecommendationIndore
Slide 32StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Our Trip to Indore!
Field Study to Indore
Indore Consumer
Sub-dealershipPrimary TVS Dealership
Slide 33StaR Spend Effectiveness
Slide 34StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Indore Consumer Feedback
Indore Consumer House 1 House 2 House 3Which bike do you own? Splendor StarCity Splendor
Why this bike?Mileage, road presence Mileage, 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 them Not impressed
Key Takeaway: Customer perceived mileage is key.
Slide 35StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Sub-Dealer
Store Traffic? 6-7/dayAverage Sales? 52/month, 62 YTDPay Cash First Visit? 25%What Impacts Sales? Diwali>Wedding SeasonIs Price a Factor? TVS Fixes PricesStar City Sales? 75-80%Stockout Loss? 2-4/month
Slide 36StaR Spend EffectivenessProblemProblem IndoreIndustry
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
• 100-150 repairs per day• 10-20 service
bays
Slide 37StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Misaligned Priorities?
Top 3 Features that Affect Purchase IntentParty Primary Secondary Tertiary
Consumer 1 Mileage Road Presence PowerConsumer 2 Mileage Maintenance Max LoadConsumer 3 Mileage Maintenance PowerSub-Dealer Strong Sturdy Mileage MaintenanceTVS Primary Dealer Looks/Image Mileage Brand
Key Takeaway: Customer perceived mileage is key although dealers focus on other selling points.
Slide 38StaR Spend EffectivenessProblemProblem IndoreIndustry
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
Slide 39StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Agenda
ProblemIndustry Analysis
Traffic vs Retail Sales
Head Effectiveness
RecommendationIndore
Slide 40StaR Spend EffectivenessProblemProblem IndoreIndustry
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
Slide 41StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
Recommendations
Increased Sales
Improved Head
Selection
Capture Untapped Markets
Improved Customer Perception
Slide 42StaR Spend Effectiveness
Slide 43StaR Spend EffectivenessProblemProblem IndoreIndustry
Analysis Traffic vs. Sales
Head Effectiveness
Recommendation
TVS StaR Targets SEC-BCD