MMK365: Marketing Insights Assignment

Question 1 (5 + 15 = 20 marks)

OZSTORE is an Australian based department store operating since 1983. The very first OZSTORE store was started in Melbourne and later the operation was expanded to Sydney and Perth. Also, OZSTORE started a new online store in 2012 to serve all around Australia and overseas customers. Currently the OZSTORE’s active customer base is approximately 50,000 local customers excluding those who shop online.

OZSTORE has a loyalty program started on their tenth anniversary. There are three different tiers of membership namely Blue tier, Silver tier, and Platinum tier. OZSTORE has concerns over the lack of popularity of its loyalty program, particularly with younger customers. They have conducted a survey of 300 customers randomly selected.

OZSTORE provided you with the dataset (“data_question1&2.xlsx”). You are asked to help OZSTORE understand the data and obtain the insights.

1. What is the best central tendency statistic for Age in this dataset?
2. Using regression analysis investigate the effect of customers’ Age and purchase channel (i.e., shopping at OZSTORE online store vs. not shopping at the online store) on their average spending during a visit. What insights can you draw? What would you recommend OZSTORE do based on these insights?

Question 2 (15 marks)

What factors influence the probability of an OZSTORE customer to become a member of the company’s loyalty program? What insights can you draw? What will you recommend OZSTORE to do based on these insights?

Question 3 (15 + 5 = 20 marks)

Melbourne based marketing consultancy firm Melcon offers annual consumer insight analysis to its clients. Its primary clients are supermarkets, clothing stores and electronics retailers. The following table provides the number of customers, expenses per client, service fee per client, and retention rate for each of the three sectors. The company applies a discount rate of 15% and has a 3-year planning horizon.

1. Calculate the CLV for Melcon clients in each of the three sectors, over the planning horizon (3 years).
2. Suppose if Melcon wants to hire new customers, which sector should it target and why?

Question 4 (6 + 14 = 20 marks)

Mary, a micro-entrepreneur, operates an online store that sells sports clothes. Mary would like to know whether changing the colour of the logo from red to blue helps bring more conversions. Mary shows you both logos in the following Table:

When Mary conducts an A/B test, she randomly assigns customers to both logos and collects the data for conversions (“data_question 4.xlsx”).

You are Mary’s friend, and she asked you to help obtain the insights with regards to whether changing the colour of the logo from blue to red helps bring more conversions.

Please help Mary assess whether changing the colour of the logo from red to blue helps bring more conversions. Explain your answer. Based on your results what recommendations do you have for Mary? (Please first discuss the validity of the test and if valid then conduct the A/B test to answer her question.)

Question 5 (10 marks)

The following cumulative concentration (lift) chart presents the performance of RFM on a dataset of 900,000 customers. Based on the information given on the chart: What is the top 20% cumulative lift of the model? What does this number mean? How does the model perform compared to the random targeting (blue diagonal line)? 

Question 6 (5 + 5 + 5 = 15 marks)

Please help solve the problems in the following scenarios for the decision maker/managers.

1. Suppose a micro-winery sells 1000 bottles of wine for $100 per bottle. With a price elasticity of -3 what would be the demand when the price is increased to $110?
2. Carmen’s Kitchen would like to know how many sales of its muesli bar packs (in dollars) it would require to generate $100,000 in profit. The muesli bar packs sell for $7.50 each. There are 5 bars in each pack. It costs Carmen’s Kitchen $0.20 to make each muesli bar. Carmen’s Kitchen has a fixed cost of $50,000.
3. A product costs $10 to make and sells for $40. Fixed costs are $60,000. Find the target volume required to break-even.