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For this assignment, you’re going to have to argue for a decision. Using the graph write a paper of at least 600 words, with at least 2 references (APA format), that suggests a solution and defends it. Be sure to include the evidence from the spreadsheet that supports your decision.
Here is the scenario: You are advising the owner of Widgets R Us on whether to hire an outside marketing company to do a campaign for your latest widget or if you’re going to develop the marketing in house. What are you going to recommend and why?
Remember, there are reasons besides economic ones to make decisions. For example, who controls the product? How long will the different options take? Considering and addressing these types of questions in your assignment paper will show you are preparing to work as a business leader.
| Outside Marketing for New Widget | |||
| Quick Click Marketing | WeSellU | Cosmic Marketing | |
| Base Contract | $4,000.00 | $3,950.00 | $4,300.00 |
| TV ad creation | $10,000.00 | $10,500.00 | $9,900.00 |
| TV ads in select markets | $250,000.00 | $250,000.00 | $250,000.00 |
| Market segment identification | $2,000.00 | NA | $2,750.00 |
| Direct Mail – 10,000 pieces | $4,000.00 | $4,100.00 | $3,800.00 |
| Internal Marketing for New Widget | |||
| Low | High | ||
| TV ad creation | $4,000.00 | $12,500.00 | |
| TV ads in select markets | $250,000.00 | $250,000.00 | |
| Market segment identification | $0.00 | $1,400.00 | |
| Direct Mail – 10,000 pieces | $3,900.00 | $4,200.00 | |
Expert Answer
Looking at the data, the cost item ‘TV ads in select markets’ can be kept outside consideration as for all the options, it has the same cost (i.e. it is an irrelevant cost). Also, we do not know, whether we can split the items within different options i.e. say doing ‘TV ad creation’ from Outside Marketing and ‘Market segment identification’ from Internal Marketing and so on. Hence one of our assumptions is that we can’t split the items in this way and we have to select the package as a whole. The graphical analysis that follows in shown below.
The graph suggests that for all three outside vendors’ cases, the total cost comes outside the range of low and high estimates of the internal case. Hence if the condition of item splitting is not there, definitely the internal marketing will be more cost effective. Logically speaking, the splitting option will also give a conclusion in favor of the internal marketing as the cost of the base contract will add up in every case and the total cost of an individual item will be more in the case of any of the outside marketing possibilities. The following graphs confirm the same.
When considering the non-economic factors, we can say that we have to consider the effectiveness and quality of each campaign as well beside considering the cost. If we do it internally, we may not have enough capability to perform all the items. Widgets RU is a company having a distinctive capability in technology, but it may not have that in the field of marketing and sales promotion. For example, we may not be in a position to design proper TV commercials or make use of best technologies of software in market segmentation. On the other hand, internal efforts will be more in line with our business strategy and internally all the resources controllers will be more aligned with the strategy. External vendors will lack that. The efficiency or time associated with implementing these efforts is also an important consideration we need to consider in this case. If it takes too long to launch these initiatives then we may not get the best outcome in terms of the revenue.
