Q2: Consider the following scenario. A company that focuses on selling perfumes in small sales kiosks...

Q2:

Consider the following scenario.

A company that focuses on selling perfumes in small sales kiosks in Malls across the UAE has experienced a significant drop in revenue. Customers are approached by promoters with a standard sales pitch, and kiosks are positioned in areas assumed to be where majority of the footfall in the mall is. Propose two (2) strategies to assess how to investigate the reasons behind this drop in revenue. Ensure to detail and motivate your recommended strategies.

Explain.

Expert Solution

Two strategies to assess the reason behind the drop in revenue are -

Customer attitude scale for Marketing Research - The company should use an interval scale to measure the feedback of the consumers; also known as rating scales. The criterias could include pricing, satisfaction, comfort,etc . The responses would ideally be from Strongly disagree to Strongly agree or a scale of 1 to 5, 1 being strongly disagree.
- Why this would work ? - An interval scale survey would give us qualitative analysis as well as give us approval ratings in the form of numbers which could help to measure product failure / success
- Motivation - The idea is to get a consumption side perspective.
Financial record analysis - The company can go through its previous financial records and analyze its costs to benefit ratio while identifying the problematic areas. It can try to internally reduce its cost of production so that the difference between the revenue recieved and cost incurred is not huge. Decreasing the marginal cost of production will make it more profitable to produce a better quantity of perfume at a lower rate, which will definitely make it more luring to the customers. It is a cost effective way of increasing the revenue.
- Why this would work ? - A financial record analysis would help to know where the costs of procurement or say operations are unnecessarily more than the actual selling price of the product being procured. This would help to know the trouble areas that the company has to focus on, in context of cost minimization / optimization
- Motivation - The idea is to get a production side perspective.

Rahul Sunny answered 2 years ago

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