Short Cases

19708 WordsMar 9, 201179 Pages
MM21c short cases:MM21c-front matter 12/23/08 12:59 PM Page 1 MANAGING MARKETING IN THE 2 1S T C E N T U R Y : SHORT CASES www.mm21c.com MM21c short cases:MM21c-front matter 12/23/08 12:59 PM Page 2 2 MANAGING MARKETING IN THE 21ST CENTURY TABLE OF CONTENTS 1. SONIK CD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2. ICI FIBRES LTD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3. THE ARDEN COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4. UNIPRO INC. . . . . . . . .…show more content…
On average, subscribers purchased 19.9 CDs annually, mostly through Sonik’s website. Annual subscriber retention rate was 90 percent. Sonik accumulated CDs from various suppliers and fulfilled its own orders. Annual fixed costs of fulfillment were $400,000; shipments averaged 3.7 CDs per package. Annual marketing expenses were $230,000; Sonik spent 90 percent on acquiring new subscribers and 5 percent on subscriber retention. Sonik’s cost of capital was 12 percent. It was considering three growth options: a. Continue the Niche Strategy: Sonik believed it could acquire 20,000-30,000 new customers per annum for the next several years without major new investment. Sonik also believed that spending $0.5 million per annum would increase customer retention to 95 percent. b. Mass-Market Strategy: Abandon the subscription model, add many other music genres, and build a mass-market brand. Sonik estimated it would need an initial investment of $1-2 million to build brand awareness, plus an additional $0.5 million per annum for distribution and warehousing. Sonik believed it could add 40,000-50,000 new subscribers per quarter at a subscriber acquisition cost of $12.50; annual margin, $15; and 60 percent customer retention rate. c. Distribution Strategy: In addition to CDs, Sonik distributed products for other online retailers. AmeriNet Radio operated 43 radio stations in the southeast U.S. and sold CDs
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