You are a brand manager of a toy company, and one of your concerns is the correc
ID: 2649608 • Letter: Y
Question
You are a brand manager of a toy company, and one of your concerns is the correct timing and allocation of your promotional activities. For the past three years, you have steadily increased the share of the overall budget allocated to the promotional support of your brand's sales. On analyzing the sales for the past three years, you see a lot of variability. You are unable to predict whether your promotional spending increase has resulted in a corresponding increase in sales. What factors would you change to estimate the long-term sales trend?
Justify your answers with examples and reasoning.
Explanation / Answer
The following factors should be changed:
(1) Remove sales from the areas where no advertisement is being made. Suppose a mobile company in Japan decides to market its phones on a region wise basis and not on a national basis. So, the mobile company should remove the sales figures of those regions where there is no marketing activity from the total sales. This will give a correct figure to the company, whether the sales are increasing as a result of increased promotional activities.
(2) If the product's demand is cyclical, then there will be variability. For example, the sale of air conditioners in many third world countries happen only in case of extreme summer conditions. If weather is pleasnt, the sales of air conditioners in these countries decline substantially. Statistical and forecasting models should be implemented to remove the effect of cyclic demand, for a better understanding.
(3) Sometimes, there is a lag between spending on promotional activities and increase in sales. This lag has to be identified and then incorporated in the trend analysis model.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.