1

Introduction 3

Case 1: Segmentation 3
1.1. Assumptions 4
1.2. Identi ed Segments 4
1.3. Consumer Personas 4
1.4. Sum of Squared Error 8
1.5. Conclusion 8
1.6. Recommendations 8

Case 2: E-commerce 9
2.1. Predicted Sales 9
2.2. Budget requirements 10
2.3. Budget/Sales 10
2.5. Conclusion 11
2.4. Recommendations 12

Case 3: Performance 12
3.1. Performance Metrics 12
3.2. Conclusion 13
3.3. Recommendations 13

Case 4: Pricing 14
4.1. Markup/Cost-Plus pricing 14
4.2. Target Return Pricing 14
4.3. Conclusion 14
4.4. Recommendations 14

Recommendations 15
5.1. Segmentation 15
5.2. E-commerce 15
5.3. Performance 15
5.3. Pricing 15

Resources. 16

Appendices 19

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 Introduction
This report is commissioned by Bluebird Footwear which recently decided to adopt a
change of strategy in conjunction with the opening of the University of Northampton's new
£330 million ‘Waterside Campus’. The new strategy aims to appeal to a younger target
audience consisting of Gen Z consumers (BlueBird, 2019).

In line with the previously proposed digital marketing strategy, Bluebird has successfully
undertaken several actions for improving their online presence and e-commerce in order to
better target this segment (Appendix 1-2). This report therefore aims to test and evaluate
the effectiveness of the devised digital marketing strategy and present recommendations
based on the 4 analytics cases shown in the table below;

Marketing Analytic Case Description

Case 1: Organising Segments Identi cation of customer segments based on preferences

Case 2: E-commerce Sales Evaluation of sales e ectiveness for segment and campaigns

Case 3: Performance Metrics Competitive comparison of strategic metrics and performance

Case 4: Pricing Calculation and evaluation of target price for new product line

Case 1: Segmentation
Since consumers have different needs, wants and desires, companies must create varied
marketing strategies that correspond to different consumer groups, known as segments.
Segmentation is thus the process of dividing a market into externally distinct and internally
uniform groups of consumers with similar characteristics, such as demographics,
geographics and psychographics, to target each segment accordingly (Schiffman and
Wisenblit, 2015).

Each of these segments must also be; identifiable, sizeable, reachable and congruent with
the company’s objectives and their available resources to be profitable and viable (The
Economic Times, 2019). Segmentation is also the first process in a so-called STP
Analysis, which will be further explained later in this section.

There are two main segmentation techniques, a priori and post hoc. A prior is when the
type and number of segments are defined before the data is collected, based on
assumptions. Post Hoc on the contrary is when the segments are empirically defined after
the data is collected based on market data analysis (Jehoshua Eliashberg, Wedel and
Kamakura, 2000). Bluebird used the post hoc method since they collected data in advance
through the market research survey.

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1.1. Assumptions
The survey was completed by 15 respondents with the purpose to identify preferences in
relation to; Product, Campaign and Price. To evaluate the results, the following
assumptions were made:

Assumptions ranked 1-9

A: Product Interest in customized products 1 = timeless classics 9 = customized products

B: Campaign Interest in sales campaign types 1 = traditional media 9 = social media

C: Price Price consciousness 1 = low price interest 9 = high price interest

1.2. Identi ed Segments

To identify segments from the collected data, a ”cluster analysis ” was applied which uses
mathematical calculations to distinguish groups of similar customers based on the
variations within each group. The algorithm first discovers groups of closely related data
points and then conducts iterations to bring these groups closer to each other (Apon et al.,
2006). Before conducting the cluster analysis, three different respondent IDs were defined
and used as starting points for the maximum, minimum and median value, representing
the potential customer segments.

Starting points

Respondent ID Segment ID Data value

Respondent 01 Segment 1 Max value for the three variables

Respondent 11 Segment 2 Median value for the three variables

Respondent 15 Segment 3 Minimum value for the three variables

Based on these, the following segments were identified (Appendix 3):

Preferences Product Campaign Price

Segment 1 Timeless Traditional media High consciousness

Segment 2 Customizable Social media Low consciousness

Segment 3 Timeless + Customizable Social media High consciousness

1.3. Consumer Personas

Based on the findings, three consumer personas were developed as fictional
representations of each identified segment in order to better understand their different
wants and needs (Salminen et al., 2018).

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1.3.1. Persona 1 - Baby Boomer

DEMOGRAPHICS
65 years old male

Location: Northampton
Occupation: Retired Financial Analyst
Education: BA and Masters Degree in Finance
Family: Lives with wife and dog. Has 2 daughters, 4 grandkids
Annual Income: £36,000

PSYCHOGRAPHICS

Personality:
Hard-working, self-reliant and resourceful, very loyal and loves his family. Curious and likes building things. Enjoys walks
with the doh, watching TV, read articles and books - wants to learn new things and seeks information. Very family loyal and
values discipline, work ethics, quality, craftsmanship and team work.

Motivation/Goals:
He wants to enjoy life more and to make up for lost time with family and wife, likes friendly atmospheres and encounters

Challenges/ Frustrations:
Health issues and age is restraining him, creating feeling of missing out in the things happening around him. Also
frustrated with new technologies since as he doesn’t like to ask for help. Wants to feel independent and self-reliant

WEBOGRAPHICS
Owns one an iPhone 11, iPad and an older laptop which he only uses for matters involving hos insurance or bank. An
experienced ”Googler” and often watch videos and reads articles online. Has a Facebook account where he is moderately
active, but happily posts photos of their grandchildren and vacations. He uses WhatsApp and Messenger for family chats.

PURCHASING BEHAVIOUR
Prefers to shop in person but shops online if the online customer journey is intuitive and not to complex. Highly brand loyal
and has a habitual purchasing behaviour, valuing brands with rich and long history. He has money to spend, but is careful
how they are spent. Values discounts and loyalty programs, but also femands high quality, craftsmanship, excellent service
and rewards in return for his loyalty. Responds well to TV and newspaper adverts and loyalty programs.

KEY IDENTIFIERS PERSONAL QUOTE

* Brand loyal if the product and service is high quality “The best part about retirement is spending time
* Prefers traditional media but uses Google a lot with the grandkids and enjoying the things you did
* Does not like unclear information or instructions not have the time to enjoy before”
* Conscious spender that wants to feel more appreciated

 1.3.2. Persona 2 - Millenial

DEMOGRAPHICS
30 y/o Male
Location: London
Occupation: PR Executive
Education: Masters Degree in Public Relations
Family Situation: Lives with his boyfriend of 4 years
Annual Income: £56,000

PSYCHOGRAPHICS

Personality:
Ambitious, realist, sociable and likes getting personal attention and recognition from others. He is interested in health,
nance, architecture, traveling and spending time with his partner, family and friends. Values civic duty, diversity, resilience
and the freedom of choice. Actively seeks and takes responsibilities in both his career and for his personal growth.

Motivation/Goals:
He’s personal goal is to one day afford to buy an apartment in London and get married before having a family. He have high
professional ambitions but also values his physical and mental health, seeking the perfect work-life-balance.

Challenges/ Frustrations:
Financially restrained but doesn’t want to cut expenses and lose his life standard. Experiences discrimination and a
technology addiction. Hates bad service, poor quality, laziness, lack of morals and values.

WEBOGRAPHICS
Owns the newest iPhones, Macbook and also have a work laptop with Windows. He also uses iPhone extensions and
lifestyle devices, is tech-savvy. He is highly active on Twitter, Facebook, Instagram and Youtube. Uses social media to
alleviate boredom, seeks out engaging and funny content. He posts tweets and instagram stories 2-4 times a week.

PURCHASING BEHAVIOUR
Prefers to shop online as he often seeks the cheapest offer, but likes shopping in store as well, fast and good service is
crucial. Likely to name drop brands which he identify with. Looks for retailers with the lowest price, but occasionally treats
with expensive products. Values quality, but prefers branded clothing and logos as of the associated status of owning
designer items. Responds well to PPC, social media ads, engaging video content, discounts and loyalty programs

KEY IDENTIFIERS PERSONAL QUOTE

* Ambitious, tech savvy and very impatient
* Seeks approval from his social environment
“Follow your dreams - at all costs”
* Looks out for special offers and discounts
* Want to be entertained and have fun

1.3.3. Persona 3 - Gen Z

DEMOGRAPHICS
19 y/o Male
Location: Northampton
Occupation: Student at Northampton University
Education: 2nd year at Product Design BA
Family Situation: Single, lives with parents
Annual Income: £16,000

PSYCHOGRAPHICS

Personality:
Creative, expressive, open-minded and social person interested in sport, fashion, music and social issues. An active member
of the student community, spends his time balancing education, training and social life. Values social justice, sustainability,
self expression and beliefs in the individual ability to create change.

Motivation/Goals:
Seeks authenticity, personal connection and new experiences, while also nding it important to be as educated and
informed as possible about the world around him. His personal goal is to pursue his dream to be a product designer.

Challenges/ Frustrations:
Concern of personal image, rising college costs, future housing situation, along with in ation. Skeptical to marketing and
mainstream messaging, views consumption as a matter of an ethical concern

WEBOGRAPHICS
Owns one of the newest iPhones and a MacBook Air but mainly uses his mobile for for browsing and shopping. TikTok,
Instagram, Snapchat, Youtube, Reddit, Twitch, Messenger, WhatsApp, podcasts. Highly active, posts several times a week on,
mainly on Instagram, Snapchat and Twitter. To stay updated on the lives of friends and family, as well as latest trends, global
news and current affairs

PURCHASING BEHAVIOUR
Prefers to shop online due to the range of brands, but also through apps and social media stores. Don’t like mainstream
brands, favours niche and expressive brand such as Paloma Wool and Realisation Par. Has no living expenses yet and
therefor affords to spend money on compelling brands. Values aesthetic, individual expression and latest trends as well as
sustainability and ethics.

KEY IDENTIFIERS PERSONAL QUOTE

* Creative, expressive, open-minded and social person “Whenever I'm bored, I can always nd something
* Beliefs in the individual ability to create change fun or interesting to do on my phone”
* Skeptical to marketing and mainstream messaging
* Values aesthetics, sustainability and ethics

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1.4. Sum of Squared Error
The sum of squared error (SSE) is the sum of the minimum distances of each observation
and its group's mean and measures the variation within a cluster. If all the cases within a
cluster are identical, the SSE = 0, which means that the lower the SSE, the more similar
the consumers within the segment, which is why a lower SSE value is desirable
(Stanford.edu, 2020).

The first calculations using the function SUMXMY2 gave an SSE of 14.06, which is
relatively low but not optimal. To reduce this, the mean average was calculated for each
cluster set using ”IF” statements and also the minimum value among all three segments
was calculated. Thereafter, the distance from the revised mean was recalculated. After
conducting the iterations required to bring the segments closer and the SSE showed
minimal improvement, the final reduced squared error was 7.78, which is considerably
lower than the first value, thus providing a better estimation of the data and a more
precious representation of which segment each respondent fall into (Valchanov, 2018).

1.5. Conclusion
Baby Boomer: Persona 1 Assumably belongs to the baby boomer generation as they
prefer traditional media and timeless classics while being price sensitive, indicating that he
is not affected by fashion trends while also having a relatively low digital maternity (Tama-
Rutigliano, 2017).

Millennial: Persona 2 is likely to be Gen Z as he prefers customizable products and social

media while also having low price consciousness, indicating that he views consumption is
an expression of identity and does not respond well to things ”mainstream” (Francis and
Hoefel, 2018).

Gen Z: Persona 3 have a preference for social media and an equal preference for classic
and customizable products, indicating that he is a young working professional and likely
millennial as these gravitate towards both timeless and contemporary fashion while being
conscious spenders (Danziger, 2019).

1.6. Recommendations
STP is a strategic tool for dividing a market into specific segments (Segmentation),
followed by selecting which market segments to target (Targeting); and lastly developing a
unique value proposition (Positioning) for the selected target segment (Kotler and
Armstrong, 2017). After conducting the first process in the STP analysis, the next step is
targeting with the purpose to evaluate which of these segments to focus on (Appendix 4).

The first recommendation is thus to target all three segments as they all are potentially
profitable. Furthermore, since the segments show different preferences regarding product,
campaign and price, it is also recommended to develop different strategies for targeting
each accordingly to their specific characteristics to increase ROMI. Suggestions for this
are presented below. Finally, it is suggested to have a bigger focus on segments 2-3, not
only since both have an interest in the new product line but to reduce the cost of
conventional marketing activities, which segment 1 requires (Silvia, 2019).

 SEGMENT 2: GEN Z

When targeting segment 1 it is recommend to promote their timeless products using traditional media such
as newspapers and TV. These campaigns should focus on clearly communicating the product’s bene ts to
ease the decision-making process (Andrick, 2019). Despite not preferring social media, it is also
recommended to use PPC as baby boomer consumers often are more tech-savvy than what is often
presumed (Tama-Rutigliano, 2017). Important however, is to make the online digital journey as intuitive
and easy as possible in order to win over this segment.

SEGMENT 2: GEN Z

For Segment 2 it is recommended to promote the customizable products using PPC and social media
platforms such as Instagram, TikTok, Youtube and Pinterest as the majority of Gen Z consumers use these
as their top source of inspiration. The campaigns should also be ”mobile rst” with focus on visual and
video content with authentic messaging since they easily spot ”washed" marketing (Kastenholz, 2021). It is
also recommend to use social commerce, such as instagram shopping which is growing in popularity in
combination with the use of micro-in uencers and user-generated content given their desire for real and
personal connections with brands (Pad eld, 2021).

SEGMENT 3: MILLENIALS

When targeting Segment 3 it is recommended to promote both timeless and customizable products using
PPC and cross-channel marketing on  social media platforms such as Twitter, Facebook, Instagram and
YouTube (YEC, 2021a). The campaigns should be similar as for Gen Z, but with a slight stronger focus on
engaging and entertaining content. In addition it is also suggested to use campaigns, promos, deals and
loyalty programs due to the price sensitiveness.

Case 2: E-commerce
In reference to the three digital marketing campaigns used by Bluebird, this section will
discuss the results from the e-commerce analytics across the three identified segments. In
order to analyse the results, an Ecommerce Sales model has been used (Appendix 5).

2.1. Predicted Sales

As the term suggests, this describes the expected sales revenue generated, which in this
case is, from each segment and campaign (Law, 2010). The results show that segment 1
has the highest predicted sales, and thus also most orders, followed by segments 2 and 1.

Sales: Segment Sales Split (%) Sales (GBP) Sale/Order (GBP) Total orders

Segment 1 50 % 70 000 250 280

Segment 2 30 % 42 000 250 168

Segment 3 20 % 28 000 250 112

Total Sale Revenue 100 % 140 000 250 560

The sales forecast for campaigns A-C are also directly linked to their predetermined
campaign sales split (%) where campaign C had the highest predicted sales, and therefore
also the most orders, followed by campaigns A and B as shown in the table below.

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 Sales: Campaign Sales Split (%) Sales (GBP) Sale/Order Total orders

A: Newsletter 30 % 42 000 250 168

B: Pay Per Click 30 % 42 000 250 168

C: Social Media 40 % 56 000 250 224

Total Sale Revenue 100 % 140 000 250 560

2.2. Budget requirements

This is the budget required for each campaign and also segment. The calculations show
that campaign A and Segment 1 require the highest budgets while campaign C and
segment 3 require the lowest.

REQUIRED BUDGET Campaign A Campaign B Campaign C Budget/Segment

Segment 1 18 480 5 600 7 840 31 920

Segment 2 11 088 3 360 4 704 19 152

Segment 3 7 392 2 240 3 136 12 768

Budget/Campaign 36 960 11 200 15 680 63 840

2.3. Budget/Sales
The spend-to-sales, budget/sales, ratio is used to measure the effectiveness of marketing
efforts and is calculated by dividing the total budget required by the total sales revenue
generated from it (Investopedia, 2019). The metric thus shows how much of the budget
was spent relative to the sales generated. The lower the budget/sales ratio, the more
successful the campaign was relative to its expenses. The calculations showed the
following budget/sales for the segment and campaigns;

SEGMENT 1-3 Budget Sales Budget/Sales

Segment 1 31 920 70 000 45,6 %

Segment 2 19 152 42 000 45,6 %

Segment 3 12 768 28 000 45,6 %

Total 63 840 140 000 45,6 %

CAMPAIGN A-C Budget Sales Budget/Sales

A: Newsletter 36 960 42 000 88,0 %

B: Pay Per Click 11 200 42 000 26,7 %

C: Social Media 15 680 56 000 28,0 %

Total 63 840 140 000 45,6 %

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 2.5. Conclusion
Segments 1-3
Since the results regarding predicted sales and budget are directly linked to the
predetermined segment sales split (%), they do not provide any new strategic information
of their own. However, all three segments had the same budget/sales ratio of 45,6% which
means that they make equal effective use of their respective required budget.

Another interesting finding is that the conversion rate (CR) for each campaign is the same
for all segments despite findings from Case 1 showing that segment 1 clearly prefers
traditional media, which suggest that segment 2-3 should have a higher CR than segment
1 (Appendix 6).

Campaign A-C
The results clearly show that campaign: A have a significantly higher budget/sale ratio
(88%) in comparison to PPC (26,7%) and social media (28%). Not only is it the least
effective, but also negatively impacts the overall use of the total marketing budget (45,6%).

This is further illustrated in the table below, which shows a hypothetical scenario in which
Bluebird only would use campaigns B and C. The calculations show that Bluebird
theoretically could generate the same revenue but with a 40% lower budget if they did not
use campaign C at all.

CURRENT
SCENARIO Sales split (%) Orders Responses Budget Sales Budget/Sales

A: Newsletter 30 % 168 16 800 36 960 42 000 88,0 %

B: Pay Per Click 30 % 168 11 200 11 200 42 000 26,7 %

C: Social Media 40 % 224 11 200 15 680 56 000 28,0 %

Total 100 % 560 39 200 63 840 140 000 45,6 %

HYPOTHETICAL
SCENARIO Sales split (%) Orders Responses Budget Sales Budget/Sales

A: Newsletter 0% 0 0 0 0 0,0 %

B: Pay Per Click 50 % 280 18 667 18 667 70 000 26,7 %

C: Social Media 50 % 280 14 000 19 600 70 000 28,0 %

Total 100 % 560 32 667 38 267 140 000 27,3 %

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 2.4. Recommendations
Segments
Since all segments showed an equal spend-to-sales ratio of 46,5%, the first
recommendation is to continue to target all three segments. It should, however, be
suggested that Bluebird continuously evaluates the use of digital campaigns when
targeting segment 1 since they primarily prefer traditional media.

Campaigns
The results for budget/sales ratio for the campaigns clearly indicates that campaign A:
Newsletter, is the least effective and has an overall negative effect on the total budget/
sales ratio. However, newsletters are still valuable for other purposes besides generating
sales, such as sharing valuable content and creating engagement (Sattler, 2021).

The third recommendation is therefore to improve their newsletter strategy in order to

increase the conversion rate and reduce the budget/sales ratio. The last recommendation,
however, is to reduce the number of newsletter campaigns until a more effective strategy
has been developed, and instead allocate larger parts of the budget to PPC and social
media campaigns as these are the most effective.

Case 3: Performance
3.1. Performance Metrics
Performance metrics are used for measuring and evaluating business performance in
different contexts (Sorger 2013). To identify Bluebird’s competitive advantages in relation
to their competitor, Boot N’ Shoe Co, data has been collected from both companies in
order to calculate and compare their performance metrics (Appendix 7).

Brand Equity Index

This metric measures the relative strength and value of a brand determined by consumer
perception (Stone, 2020). A high brand equity means that customers are willing to pay
more for the products, thus facilitating higher profit margins and long-term growth (YEC,
2021b). The findings show that Bluebird has a significantly stronger brand, with a figure
almost twice as high as Boot N’ Shoes.

Brand Equity Index

Contribution Margin (CM) describes the incremental profit for each sold unit and shows
how profitable a product or product line is, depending on if the CM is positive or negative
(Gallo, 2017a). The calculations show that both companies have a positive and relatively
similar CM, with Boot N’ Shoe Co showing a slightly higher figure.

Customer Lifetime Value

Customer lifetime value (CLV) is the revenue one customer is expected to generate over
their entire relationship with a company and is a key metric for indicating potential long-
term growth and also how much a company can afford to spend on customer acquisition
(Akula, 2021). The findings show that Bluebird has a significantly higher CLV (£387) than
Boot N’ Shoe Co (£115.94).
12

Customer Lifetime Value

Customer Profit (average) is a metric for analyzing customer profitability by calculating
how much profit a company makes per customer minus the cost of serving the customer
(Jacobs, Johnston and Kotchetova, 2001). The calculations show that Bluebird have a
167% higher customer profit despite having the same customer cost (£90, 000).

Customer Pro t (average)

Customer Profit (average) is a metric for analyzing customer profitability by calculating
how much profit a company makes per customer minus the cost of serving the customer
(Jacobs, Johnston and Kotchetova, 2001). The calculations show that Bluebird has a
167% higher customer profit despite having the same customer cost (£90, 000).

Revenue CAGR, Years 1-3

The Compound Annual Growth Rate (CAGR) is a measurement for growth over multiple
time periods, in this case, 3 years. The metric describes the theoretical rate at which an
investment would grow if it had the same growth rate every year with the profits being
reinvested each year (Fernando, 2022). CAGR provides a quick way of evaluating growth
potential. The results show that Bluebird’s figure is much higher (15,87%) than their
competitors’ (4,77%).

Revenue YOY Growth, Years 1-2

Revenue Year on Year (YOY) Growth, compares the financial performance from one time
period to the previous year (Majaski, 2020), which in this case is years 1-2. Bluebird shows
a 33% increase while their competitor only has 4.77%. Bluebirds’ financial performance is
thus improving at a distinctively higher rate than Boots N’ Shoe’s.

3.2. Conclusion
Several competitive advantages have been identified based on performance analysis.
Bluebird not only has a higher brand value and performance but also better customer
performance with significantly higher CLV and customer profit. The high Revenue CAGR
growth and Revenue YOY Growth also show an advantage regarding market growth
performance and future profitability. Despite this, Boot N’ Shoe Co performed better in
terms of market approach performance, with higher CM and ROMI. The conclusion,
however, is that the competitive disadvantages are marginal in comparison with their
overall performance. For instance, Bluebird has £0.06 less in contribution margin, while
having a £20,000 higher average customer profit (Appendix 8).

3.3. Recommendations
Based on the findings, the first recommendation is to improve their customer relationship
management (CRM) and invest in a CRM software. This could not only optimize customer
satisfaction but also increase both average order value and purchasing frequency which
ultimately increases CM and CLV (Davis, 2021). It would also allow Bluebird to collect
valuable customer data, optimize cross-selling and automate campaigns, which could
increase ROMI (Crail, 2021). As a complement, the second recommendation is to
implement a loyalty and reward programme in order to further generate sales and create
customer engagement (Kecsmar, 2022). This could also be further justified by the fact that
two of the segments from case 1 showed a high price consciousness, which makes a
loyalty program more desirable.
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Case 4: Pricing
As part of the launch plan for Bluebird’s new customisable product line, the product price
has been set to £250. However, the CEO has expressed concerns that this might be too
high for the target segment. This section will therefore compare two pricing techniques,
Markup/Cost Pricing and Target Return Pricing, in order to find and select an appropriate
target price.

4.1. Markup/Cost-Plus pricing

Markup pricing, or cost-plus pricing, is a method where the price is calculated by adding a
fixed markup percentage on top of the unit cost of a product or service. The price is
therefore based entirely on internal factors such as production cost, rather than external
factors such as market demand and competition, which is considered to be one of the
method’s main disadvantages.

Another disadvantage is the fallacy that the method provides a guarantee of covering
costs, which it does not necessarily do (Dholakia, 2018). However, the method is easy to
use while also justifying price changes since these are directly related to changes in
production and supply costs (Hart, 2019). With a desired 70% markup, the price is
calculated to be £153 (Appendix 9).

4.2. Target Return Pricing

Target return pricing is a method where the price is set to return the desired profit or
expected rate of return on investment. Similar to the markup strategy, this method sets
prices to achieve company-defined returns while also being practical and easy to use. The
method is also more flexible since the price can easily be manipulated in order to achieve
higher ROI (The Economic Times, 2020).

On the other hand, the method does not consider market factors such as demand and
competition. However, this could also be debated since the desired target ROI often is
selected in reference to the industry average rate of return (Drummond and Towse, 2019).
Bluebird has set a target ROI of 50% which results in a selling price of £49 (Appendix 9).

4.3. Conclusion
As the results show, the calculated markup price for Bluebird is £153 per unit while the
target price return price is £49. In a hypothetical scenario with 1,000 unit sales, the markup
price of £153 per unit would generate £10,700 in profit, and the target price of 49£ per unit
would generate £3,000 in profit (Appendix 10). In contrast, instead of 1,000 unit sales, the
target return price would therefore require 35 667 unit sales to generate the same profit.

4.4. Recommendations
It is recommended for Bluebird to use the markup price of £153 since it generates
significantly higher profits. Despite being the highest of the two calculated prices, this
could also be further supported through the findings in Case 3: Performance metrics which
showed that Bluebird has a high Brand Equity index, indicating that customers are willing
to pay more for their products. Furthermore, £153 is considerably lower than the proposed
selling price of £250, which also is a better target price since the findings from Case 1;
Segmentation showed that segments 1 and 3 are highly price-conscious.
14

Recommendations
Based on the data and findings from the four cases, several opportunities for further
optimizing Bluebird’s wider digital marketing strategy have been identified in terms of
segmentation, e-commerce, performance and pricing.

5.1. Segmentation
The first recommendation is for Bluebird to target the three identified segments and use
various online and offline marketing strategies for each segment according to its
preferences. It is also suggested to continuously evaluate the profitability of each segment,
especially segment 1, as traditional marketing tends to be less cost-effective.

5.2. E-commerce
It is recommended to continue to use PPC and social media since they have the highest
ROI while decreasing the number of newsletter campaigns until a more effective strategy
for these has been developed in order to reduce the budget/sales ratio and increase
ROMI. Effective marketing campaigns will become even more important if Bluebird
chooses to adopt the suggested price from case 4 since this will reduce gross profit.

5.3. Performance
In terms of performance, it is recommended to improve their CRM strategy and invest in a
CRM system, not only to improve customer relationships but also to increase customer
lifetime value, contribution margin and ROMI. In addition, it is also recommended to
implement a loyalty program to further increase overall performance metrics.

5.3. Pricing
The final recommendation is to adopt a Markup / Cost-plus pricing strategy as this is the
most profitable option. It should however be suggested that Bluebird continuously monitor
its competitors and market demand in order to ensure that the prices remain optimal.

15

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Andrick, S. (2019) What to consider when creating marketing to target “digital boomers,”
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Appendices
Appendix 1. Marketing actions undertaken by BlueBird

Marketing Actions Description

New Product line Launched new product line of sporty, casuals and customizable footwear

Website Upgrade Updated their website to improve the online customer experience

E-com System Implemented an E-commerce system to handle online sales

Digital campaigns Launched three major digital marketing campaigns to drive tra c

Appendix 2. Digital marketing campaigns

ID Campaign Type Description

A Online Newsletter Online newsletter with promotions, sent to a list of opt-in prospects

B Pay Per Click (PPC) Actioned through Search Engine Marketing (SEM) via AdWords

C Social Media Promotion of the new product line on Facebook and Twitter

Appendix 3. Segment Preferences

PRODUCT
Timeless A C B Customized
Classics Products

CAMPAIGN
Traditional A C B Social
Media Media

PRICE
Low Price High Price
B C A
Consciousness Consciousness

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ffi
 Appendix 4. The STP Model

SEGMENTATION TARGETING POSITIONING

Divide market into Select which Determine how

distinct groups of segments to focus to position your
similar customers your marketing product for each
(segments) efforts on target segment.

De ne the market for Create market Evaluate segments

the organization segments on a set criteria

Select which Evaluate attractiveness Construct segment

to target of the segments pro les (personas)

Develop positioning Develop a Review the

strategy marketing mix performance

Source: (Kotler & Keller, 2005, p.24-36)

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Appendix 5. Ecommerce Sales Model

INPUTS

Sales Forecast: Sales revenue expected to be generated

Average Revenue Per Sale: Average per customer order

Segment: % of Sales: Percentage of sales generated from each segment

Campaign Sales Split: Revenue generated from each campaign

Campaign Conversion Rate: Conversion rate of each campaign

Cost per Response: The total cost associated with each campaign

OUTPUTS

Sales prediction by segment: Sales revenue to be generated from each segment

Budget Requirement: Budget required to execute the campaigns

Spend to Sales Ratio: Marketing budget spent, as a % of sales generated

Source: (Sorger, 2013)

Appendix 6. Input Table: Campaigns

Source: Case 2. Excel

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Appendix 7. Performance Data

Source: Case 3. Excel

22
Appendix 8. Comparison of Performance metrics

Bluebird Boot N’ Shoe Co

BEI CLV CP CAGR YOY CM ROMI

Appendix 9. Pricing Calculations

Source: Case 4. Excel

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 Appendix 10. Comparison of Pricing Strategies

1,000 Orders Price Unit Cost Orders Total Sales Total Costs Pro t

Markup Price 153 46 1 000 153 000 46 000 107 000

Target Return Price 49 46 1 000 49 000 46 000 3 000

£107 000 Pro t Price Unit Cost Orders Total Sales Total Costs Pro t

Markup Price 153 46 1 000 153 000 46 000 107 000

Target Return Price 49 46 35 667 1 747 683 1 640 682 107 001

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