Marketing Science

Report

Scenario a

 From the original table, we may find that the following information:

• Among these 6 countries, internet advertising budget arranged in order: Germany (187,500 €), United Kingdom (187,500 €), Italy (150,000 €), France (115,000 €), Spain (62,500 €) and Poland (40,000 €).
• Depend on difference of investment on advertising, the acquired customers are different in these 6 countries, Germany (16,200), Italy (15,400), United Kingdom (12,300), France (11,200), Spain (4,800) and Poland (1,900).
• About the net margin, only Poland is negative, so return on investment is also negative, this means the investment of advertising in Poland can’t obtain the corresponding profits. This is the biggest problem of base scenario.
• Except Poland, the acquisition cost/customer of United Kingdom is obviously higher than other countries.
• Market Shares are in the following order: Italy (2.6%), France (2.4%), Germany (2.2%), Spain (1.8%), United Kingdom (1.6%) and Poland (1.6%).

After using the Excel’s Solver function without any budget constraints, there are 5 changes:

• The BrainCell should raise total advertising budget, from 742,500 € to 1,271,028 €.
• As we analysis in original table, due to net margin and return on investment of Poland are negative, so the BrainCell should abandon the Polish market, and no longer invest on Internet advertising in Poland.
• Except Poland, the internet advertising budget of other 5 countries have increased, Germany (373,563 €) is still keep in the first level, Italy (332,301 €) and France (253,167 €) overtake United Kingdom (228,877 €) become the second and third level, and Spain (83,119 €) belongs to the last level. Meanwhile, acquired customers also have relevant increased. Italy (26,177) has the most customers, and Spain (5,845) has the least customers.
• Except Poland, net margin of these five countries have increased. However, because of the internet advertising budget increase more, so return on investment of these five countries decrease. And except Poland, the market share still keep the original ranking.
• Due to the increase of total advertising budget, acquired customers of these five countries also have increased, therefore, total gross margins and total net margin have raised.

Scenario b

In this scenario, the BrainCell should keep same total advertising budget, after using the Excel’s Solver function, we can get the best plan.

• Abandon the Polish market, and redistribute the internet advertising budget. The internet advertising budget of Italy (212,158 €), France (161,924 €) and Germany (227,043 €) have increased, Spain (37,627 €) and United Kingdom (103,748 €) have decreased. The reason of these changes is that acquisition cost/customer is lower in Italy, France and Germany than in Spain and United Kingdom, which means in these countries the BrainCell can obtain more customers by using lower investment.
• Because of the changes of acquired customers in each country, gross margin and net margin also have relevant changes. And in Spain and United Kingdom, although net margins have decreased, the internet advertising budget decrease more, so return on investment in these two countries have raised. In other countries present the opposite cases, so return on investment have reduced.
• With the changes of acquired customers, market shares have same adjustment. Poland become 0, Italy (3.4%), France (3.1%), Germany (2.5%) have increased, and Spain (1.2%), United Kingdom (1.0%) have decreased.
• In this scenario, we keep same total advertising budget, and Solver provide the best plan under this situation, so the total gross margin and total net margin have increased 86,535 €.

Scenario c

 The original table shows a long-term investment scenario (18 months), from it we may get the following information:

• Among these 6 countries, internet advertising budget arranged in order: Germany (187,500 €), United Kingdom (187,500 €), Italy (150,000 €), France (115,000 €), Spain (62,500 €) and Poland (40,000 €). Depend on difference of investment on advertising, the acquired customers are different in these 6 countries, Germany (16,200), Italy (15,400), United Kingdom (12,300), France (11,200), Spain (4,800) and Poland (1,900).

• Gross margin and net margin of these six countries have the same ranking with acquired customers.
• The acquisition cost/customer of Poland is the highest among these countries, which means in Poland, the BrainCell need to invest more on the internet advertising for obtaining customers. And France and Italy are the lowest countries, only 10 €.
• Return on investment of these countries are all positive and more than 100%, however, the gaps are huge. For example, return on investment of France is 777%, and in Poland is only 157%.
• Market Shares are in the following order: Italy (2.6%), France (2.4%), Germany (2.2%), Spain (1.8%), United Kingdom (1.6%) and Poland (1.6%).

 After using the Excel’s Solver function without any budget constraint, there are following changes: