Jose is at a fork road for its click-and-mortar fashion franchise chain under the name Groovy...
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Jose is at a fork road for its click-and-mortar fashion franchise chain under the name Groovy Vibes Fashion. He has sub-divided his customers into three segments based on their varying purchase behaviours: (a) Segment 1 - Cash&dash Joes who make their purchases only when price points of products have reached rock bottom level after repeated discounts. They pay overwhelmingly with cash and are the one segment that costs the company the least to process their business. (b) Segment 2 - Online Leslies who make their purchases online after price points of products have come off their initial premium levels and they cost the company some transaction/processing fees. (c) Segment 3 - Catwalk Janes are fashion early birds without much care for price points. They are in-store purchasers with high demands for perfect alteration services and gift pampering. The cost of doing business with this segment of customers is substantially higher. Jose is considering putting a stronger marketing emphasis in one of these segments and is currently weighing on his options. Should you be in his shoes, and thinking along the line of CLV, bottom line and cost of customer acquisition, what might your decision be? Loyalty levels between segments are similar. Information for Reference Internal Data Total Annual Revenue Total Number of Annual Transactions (Orders) Total Number of Customers Year 2030 $107,081,250.00 180,000 Transactions 125,000 Customers Customer Segments Percentage of Customers (%) Average Annual Segment 1: Cash&dash Joes 50% Spend ($) $364.50 Segment 2: Online Leslies 34% $1,080.00 Segment 2: Online Leslies 34% $1,080.00 Segment 3: Catwalk 16% $1,920.00 Janes Customer Segments Segment 1: Cash&dash Joes Segment 2: Online Leslies Segment 3: Catwalk Janes Gross Profit Margin Before Additional Variable Costs That Are Specific To Individual Segments (% of sales) 25% of Sales 30% of Sales 40% of Sales Additional Variable Costs That Are Specific To Individual Segments Segment 1: Cash&dash Joes (a) In-store Transaction Fee (per transaction) 1.50% of Sales Segment 2: Online Leslies (a) Online Transaction Fee (per transaction) 3.00% of Sales (b) Credit Card Processing Fee (per transaction) Segment 3: Catwalk Janes 2.30% of Sales (a) Credit Card Processing Fee (per transaction) (b) Free Alteration (on average per transaction) 2.30% of Sales $20.00 Transaction (b) Free Alteration (on average per transaction) (c) Bonus Gifts (on average per transaction) $20.00/Transaction $30.00 Transaction Questions (marked out of /26 marks) - Be cautioned of the fact that all working steps and itemized breakdowns where applicable are to be shown clearly without the substantiation of which a correct answer may still score minimal mark, if any. The presentation of your answers is expected to be organized, concise and informative. Work with 2 decimal places when you are performing calculations. Present your answers ($; units; percentages etc., where applicable) in 2 decimal places. 1. (a) Which is the formula to calculate Average Order Value relevant to this question? (0.5 mark) (b) What is the Average Order Value? (1 mark) Working Steps (0.5 mark) 2. (a) What is the population for Segment 1 (Cash&dash Joe)? (0.5 mark) Working steps (0.5 mark) (b) What is the population for Segment 2 (Online Leslie)? (0.5 mark) Working steps (0.5 mark) (c) What is the population for Segment 3 (Catwalk Jane)? (0.5 mark) Working steps (0.5 mark) 3. (a) What is the annual sales revenue for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 mark) (b) What is the annual sales revenue for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 mark) (c) What is the annual sales revenue for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 mark) 4. (a) Which is the formula to calculate the # of annual transactions for each segment? (0.5 mark) (b) What is the # of annual transactions for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 mark) (c) What is the # of annual transactions for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 mark) (d) What is the # of annual transactions for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 mark) 5. (a) What is the annual gross profit before specific additional variable cost(s) for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 mark) (b) What is the annual gross profit before specific additional variable cost(s) for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 mark) (c) What is the annual gross profit before specific additional variable cost(s) for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 mark) 6. (a) What is the annual additional variable cost for Segment 1 (Joe)? (0.5 mark) Substantiate with itemized elements. (0.5 marks) (b) What is the annual additional variable cost for Segment 2 (Leslie)? (0.5 mark) Substantiate with itemized elements. (0.5 marks) (c) What is the annual additional variable cost for Segment 3 (Jane)? (0.5 mark) Substantiate with itemized elements. (1.5 marks) 7. (a) What is the annual gross profit net of all additional costs for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 marks) (b) What is the annual gross profit net of all additional costs for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 marks) (c) What is the annual gross profit net of all additional costs for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 marks) 8. (a) Your decision, if any? (0.5 mark) Why? (1.0 marks) (b) Lessons learnt and/or Opinions? (3 marks) Jose is at a fork road for its click-and-mortar fashion franchise chain under the name Groovy Vibes Fashion. He has sub-divided his customers into three segments based on their varying purchase behaviours: (a) Segment 1 - Cash&dash Joes who make their purchases only when price points of products have reached rock bottom level after repeated discounts. They pay overwhelmingly with cash and are the one segment that costs the company the least to process their business. (b) Segment 2 - Online Leslies who make their purchases online after price points of products have come off their initial premium levels and they cost the company some transaction/processing fees. (c) Segment 3 - Catwalk Janes are fashion early birds without much care for price points. They are in-store purchasers with high demands for perfect alteration services and gift pampering. The cost of doing business with this segment of customers is substantially higher. Jose is considering putting a stronger marketing emphasis in one of these segments and is currently weighing on his options. Should you be in his shoes, and thinking along the line of CLV, bottom line and cost of customer acquisition, what might your decision be? Loyalty levels between segments are similar. Information for Reference Internal Data Total Annual Revenue Total Number of Annual Transactions (Orders) Total Number of Customers Year 2030 $107,081,250.00 180,000 Transactions 125,000 Customers Customer Segments Percentage of Customers (%) Average Annual Segment 1: Cash&dash Joes 50% Spend ($) $364.50 Segment 2: Online Leslies 34% $1,080.00 Segment 2: Online Leslies 34% $1,080.00 Segment 3: Catwalk 16% $1,920.00 Janes Customer Segments Segment 1: Cash&dash Joes Segment 2: Online Leslies Segment 3: Catwalk Janes Gross Profit Margin Before Additional Variable Costs That Are Specific To Individual Segments (% of sales) 25% of Sales 30% of Sales 40% of Sales Additional Variable Costs That Are Specific To Individual Segments Segment 1: Cash&dash Joes (a) In-store Transaction Fee (per transaction) 1.50% of Sales Segment 2: Online Leslies (a) Online Transaction Fee (per transaction) 3.00% of Sales (b) Credit Card Processing Fee (per transaction) Segment 3: Catwalk Janes 2.30% of Sales (a) Credit Card Processing Fee (per transaction) (b) Free Alteration (on average per transaction) 2.30% of Sales $20.00 Transaction (b) Free Alteration (on average per transaction) (c) Bonus Gifts (on average per transaction) $20.00/Transaction $30.00 Transaction Questions (marked out of /26 marks) - Be cautioned of the fact that all working steps and itemized breakdowns where applicable are to be shown clearly without the substantiation of which a correct answer may still score minimal mark, if any. The presentation of your answers is expected to be organized, concise and informative. Work with 2 decimal places when you are performing calculations. Present your answers ($; units; percentages etc., where applicable) in 2 decimal places. 1. (a) Which is the formula to calculate Average Order Value relevant to this question? (0.5 mark) (b) What is the Average Order Value? (1 mark) Working Steps (0.5 mark) 2. (a) What is the population for Segment 1 (Cash&dash Joe)? (0.5 mark) Working steps (0.5 mark) (b) What is the population for Segment 2 (Online Leslie)? (0.5 mark) Working steps (0.5 mark) (c) What is the population for Segment 3 (Catwalk Jane)? (0.5 mark) Working steps (0.5 mark) 3. (a) What is the annual sales revenue for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 mark) (b) What is the annual sales revenue for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 mark) (c) What is the annual sales revenue for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 mark) 4. (a) Which is the formula to calculate the # of annual transactions for each segment? (0.5 mark) (b) What is the # of annual transactions for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 mark) (c) What is the # of annual transactions for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 mark) (d) What is the # of annual transactions for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 mark) 5. (a) What is the annual gross profit before specific additional variable cost(s) for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 mark) (b) What is the annual gross profit before specific additional variable cost(s) for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 mark) (c) What is the annual gross profit before specific additional variable cost(s) for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 mark) 6. (a) What is the annual additional variable cost for Segment 1 (Joe)? (0.5 mark) Substantiate with itemized elements. (0.5 marks) (b) What is the annual additional variable cost for Segment 2 (Leslie)? (0.5 mark) Substantiate with itemized elements. (0.5 marks) (c) What is the annual additional variable cost for Segment 3 (Jane)? (0.5 mark) Substantiate with itemized elements. (1.5 marks) 7. (a) What is the annual gross profit net of all additional costs for Segment 1 (Joe)? (0.5 mark) Working steps (0.5 marks) (b) What is the annual gross profit net of all additional costs for Segment 2 (Leslie)? (0.5 mark) Working steps (0.5 marks) (c) What is the annual gross profit net of all additional costs for Segment 3 (Jane)? (0.5 mark) Working steps (0.5 marks) 8. (a) Your decision, if any? (0.5 mark) Why? (1.0 marks) (b) Lessons learnt and/or Opinions? (3 marks)
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