INDIAN INSTITUTE OF MANAGEMENT CALCUTTA

LONG DURATION PROGRAM ON BUSINESS ANALYTICS [EPBA-09]

MARKETING ANALYTICS - 2020
Deadline: August 9, 2020
Name: Tamal Sarkar
Student ID: 2239890
Part 1:

Provide a summary and dashboard of your best simulation run result.

Final Result: Part 1A

Objective: Profit Maximization (Best Run) Dashboard:

Run Archive
Date Current Cumulative
Year Profit
08/08/20 2022 $325M
16:38PM
GMT+5:30

Report:

Income Statement (in

$US)
2015 2016 2017 2018 2019 2020 2021 2022
Revenue $178.2M $179.7M $196.7M $225.3M $331.9M $347.2M $306.1M $321.1M
Costs
Variable Costs $53.5M $53.9M $59.0M $67.6M $114.5M $139.7M $123.2M $129.2M
Fixed Costs $87.0M $87.0M $87.0M $87.0M $87.0M $87.0M $87.0M $87.0M
Other Costs $30.0M $29.7M $30.0M $32.9M $37.6M $55.4M $57.9M $51.1M
Total Costs $170.5M $170.6M $176.0M $187.5M $239.1M $282.1M $268.1M $267.3M
Operating Profit $7.8M $9.1M $20.7M $37.8M $92.8M $65.0M $38.0M $53.8M
Cumulative Operating $7.8M $16.9M $37.6M $75.4M $168.2M $233.2M $271.2M $324.9M
Profit

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 Decision History
2019 2020 2021 2022
Units to Produce (units) 48.0M 58.0M 51.5M 52.5M
Channel Price (per 100 loads) $7.00 $6.00 $6.00 $6.00
Formulation Pods Pods Pods Pods
Product Features and Odor Odor Odor Odor
Positioning elimination elimination elimination elimination
Trade Channel Spend
Convenience $6.3M $9.2M $9.7M $8.5M
Club $6.3M $9.2M $9.7M $8.5M
Grocery $6.3M $9.2M $9.7M $8.5M
Mass $6.3M $9.2M $9.7M $8.5M
Total Trade Channel Spend $25.1M $36.9M $38.6M $34.1M
Media Spend
Print $3.1M $4.6M $4.8M $4.3M
TV $3.1M $4.6M $4.8M $4.3M
Radio $0.6M $0.9M $1.0M $0.8M
Digital Ads $5.6M $8.3M $8.7M $7.7M
Total Media Spend $12.5M $18.5M $19.3M $17.0M

Target Market Segment:

The target segments were selected on the basis of proportion of people favoring the following:

Pods formulation, Odor elimination as brand attribute, Market share and brand demand.

• Income group: Under $20,000 and $20,000-

$39,999 (lower and average income)
• Ethnicities: Hispanic and White
• All households
• Regions: West, Southeast and Central
(based on the demand prediction across regions- it
was found that, these three regions accounted for
90% of brand demand).
• Age: Under 35 and 35-44

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 Part 1B
Objective: Market Share Capture, Dashboard:
while maintaining a decent Operating Profit and
high revenue generation (Alt. approach)

Run Archive
Date Current Cumulative
Year Profit
08/08/20 2022 $272M
01:28AM
GMT+5:30

Name Market Share (at

the end of 2022)
Turbo 38.5%
Blue 29.6%
Store 20.8%
Fresh 11.0%

Income Statement (in $US)

2015 2016 2017 2018 2019 2020 2021 2022

Revenue $178.2M $179.7M $196.7M $225.3M $468.9M $428.5M $359.8M $402.9M
Costs
Variable Costs $53.5M $53.9M $59.0M $67.6M $251.7M $230.0M $173.8M $216.2M
Fixed Costs $87.0M $87.0M $87.0M $87.0M $87.0M $87.0M $87.0M $87.0M
Other Costs $30.0M $29.7M $30.0M $32.9M $37.6M $75.0M $71.6M $60.1M
Total Costs $170.5M $170.6M $176.0M $187.5M $376.3M $392.0M $332.4M $363.3M
Operating Profit $7.8M $9.1M $20.7M $37.8M $92.7M $36.6M $27.4M $39.6M
Cumulative Operating $7.8M $16.9M $37.6M $75.4M $168.1M $204.6M $232.0M $271.6M
Profit

3
 Report:

Strategy
Value Rank Leader
Leader Profits for 4 years(in USD Mil)
Parameter Value 95
Gain Market 75
30% 2 Turbo 38.50%
Share 55
Revenue 403 1047 35
2 Turbo
(in USD) Mil Mil 15
-5
Operating 39.6 39.6 -25
1 Blue 2019 2020 2021 2022
Profit (in USD) Mil Mil
Blue Turbo

4
 Part 2:

Q1: Based on your analysis of the market data dashboard for the last 4 years, what is your diagnosis of
the fundamental problem with the Blue detergent brand? What was the primary simulation objective
you set for the Blue detergent brand – Sales Volume, Market Share, or Profits?

Ans. Problems with Blue:

• Relatively conservative company in which most marketing and manufacturing decisions were
made on the basis of experience and gut feel about the market
• Lack of awareness that the age group Under 35 consists of higher proportion of its market
share and brand demand (as seen in the simulation dashboard)
• Very low market penetration in North-east region
• Lack of sales forecast has resulted in low sales volume in the past years
• Needs to position as Skin friendly
• Packaging needs to be improved

Primary simulation objective:

The approach to this simulation has been done by choosing 2 different strategies:
1. Focus on maximizing Profit (as preferred by CEO, Sheila James)- Result: $ 325 M in cumulative
profits
2. Focus on gaining Market Share and high revenues- Result: 30 % of Total Market, average
revenue of more than $ 400 Mil for the last 4 years and the only brand to be profitable for the
last 3 years (ref. Reports in page 4)
The goal of these efforts was to allow K-W managers to make key decisions about marketing and
production based on analysis of “what works” as evidenced by data. Out of the 2 approaches, the
approach of Profit maximization is selected with the focus of raising the operating profit from $ 75 M
to $ 325 M (an increase of 333 %) in 4 years. The market share has increased from 11% to 17.7%
Q2: What was your positioning strategy for Blue detergent? Did you try to go upmarket with Blue and
compete with Turbo? Why or why not? How did that turn out?

How did you go about choosing your target segment for Blue detergent? Describe the target market you
selected. Did you try to appeal to a particular geographical region? Which one? How successful were
you with this strategy?

Ans. Target Market Segment:

• Income group: Under $20,000 and $20,000-$39,999 (lower and average income)
• Ethnicities: Hispanic and White
• No household focus
• Regions: West, Southeast and Central (based on the demand prediction across regions- it was found
that, these three regions accounted for 90% of brand demand).
• Age: Under 35 and 35-44
• Price-$7 for 2019 and $6 for 2020-22

The strategy has resulted in increase in brand sales at the expense of Store (Exhibit 2(a)). It has also
resulted in increase of valuable market share among the youth, capturing a total of around 40% total
detergent market in the age group of below 44 years (Exhibit 2(c)).

The target market share increased from 11% in 2018 to 17.7% by the end of 2022 and the operating profit
increased from $75M to $325M in the same time frame, second to Turbo (Exhibit 2(b)).
The profit was highest in 2019 at $92M and steadily declined as the demand is dependent on market price
dynamics (pricing chart at Exhibit 3(a).

5
 Exhibit 2(a)

Exhibit 2(b)

Exhibit 2(c)

6
 Q3: Describe the price competition and price elasticity in the detergent market from this case. Did
you adjust the price to gain market share? How did it work?

Ans. The price elasticity is high in the laundry detergent segment as the demand varies with
change in price of our brand as well as from competitors (refer Exhibit 2(a) and Exhibit 3(a)). The
pricing competitiveness can be viewed in the Exhibit 3(a) as to maintain our marketing objectives.
The price in the current model has been adjusted to gain market share and maintain an increased
profitability. Hence, the price has been kept in range of $5-$7.

Exhibit 3 (a)

Q4: If you were recruited to manage the Blue detergent brand now, what would you have done
differently? What kind of additional data would help to solve its problems? What kind of marketing
analytic approaches would best address your decision-making needs for the Blue detergent brand?
Ans. Brand manager at Blue:

Following would my focus areas as new brand manager at Blue:

• Try to further optimize the marketing expense to focus on target market and introduce
separate campaigns like featuring new “Strong stain removal” campaigns as well as region
specific campaigns like Softness for North-east, “Cold Water Wash” for North east and West,
“Scent” for South east. These can be introduced in addition to current “Odor elimination”
• Would explore media channels to gather the data points, leverage on social media presence
and make more informed marketing decision like introduction of bulk packaging, smaller
pods at $4.99 and increasing the price of regular pods to $7.
• Working closely with trade channels to ensure lower lead time for detergents with popular
scents like vanilla, lavender and free samples and coupons to be given to prospects
• Working closely with Production team to ensure the costs and inventories are optimized,
packaging is improved and economies of scales are met.
• Lastly, as a brand manager I would like to introduce some recommendation algorithms using
ML and AI that would flag out and highlight the production as well as commercial issues
present in the current decisions.