Mgmt 324 Notes (Marketing Strategy)

Mgmt 324 Notes (Marketing Strategy) - 1 Administration and...

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Unformatted text preview: 1 Administration and Agenda HW2 due 10:00 AM Wednesday; informing me your idea for marketing plan this week. Case cracking Each group choose to submit either Black & Decker or Callaway Golf write-up. Please read syllabus about format of case write-up. B&D due next Wednesday Inform me three preferences (in order) for the official case Introduction to corporate and marketing strategy Frameworks for strategic analyses Ohmaes 3 Cs and 5Cs Ansoffs product/market matrix SWOT analysis BCG matrix Porters 5 forces model A Case Example You are a concert promoter in a medium-sized city. You have the chance to book Mariah Carey, who wants $300,000 to appear. Do you book her? Additional info You have data from previous concerts Price $40 $55 $65 $75 $90 #Tickets 8,000 7,800 6,800 5,200 4,000 The city-owned stadium is the only possible venue, and it holds 8,100 people. You get 90% of ticket sales (the other 10% goes to stadium management), 50% of parking, and 25% of merchandising. Each parking pass costs $10. The data of previous concerts shows that the number of parking pass is usually around 50% of the number of tickets sold. Answer A I have to decide whether to book Mariah. My total fixed cost for this project is $300,000 . Revenue computations: Ticket Price Revenue $40 40*8000*90% = $288k $55 55*7800*90% = $386k $65 65*6800*90%= $398k $75 75*5200*90% = $351k $90 90*4000*90%= $324k As long I as price over $55, I will earn in excess of $300,000 from ticket sales alone. So I decide to book Mariah, and will keep the ticket price at least $55. Answer B The problem is whether or not to book Mariah. My total fixed cost for this project is $300,000. Given the time and effort that I and my team will expend on this project, I will book Mariah, if both of the following conditions are satisfied A) Worst case revenue based on the data exceeds $300,000 B) the expected revenue exceeds $400,000 I assume a) Data from previous concerts are a perfect indicator of this concert. b) Given the unpredictable nature of revenue from merchandising, I assume it is zero. I decide to book Mariah because conditions A and B are both satisfied. Specifically: Worst case revenue from ticket sales is $288,000 (ticket price = $40) and expected revenue from parking pass sales (in the worst price scenario) is 20,000. Totally, the revenue will be more than 300,000. Expected revenue from ticket sales is $349,000 and the expected revenue from parking pass = $15,900 (6360*50% *$10 *50%) Answer B (contd.) My decision is limited by lack of information on how representative previous concerts are. We do not know for sure whether Mariahs concert tickets will be sold better or worse than previous concerts given a certain level of price....
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Mgmt 324 Notes (Marketing Strategy) - 1 Administration and...

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