1. Assuming she receives the additional funding, how should Bornstein allocate her budget across the various digital categories? Given that the additional funding requested must be shifted from Sephora’s other marketing spending, where would you propose to cut? Why?
According to 2010 data, 45% of Sephora's media spending is in retail marketing that includes catalogs, store animations and print followed by 35% in Online marketing that includes search, affiliate and social media and 20% in Beauty Insider marketing that includes mails, gifts and events. The major chunk of media spending goes to traditional retail spending which in my view needs to be cut down. The reason for cutting catalog and print costs is that each day the number of people shifting to the digital media are increasing. The number of people using Smartphone, tablets and computers to read various newspapers, magazines online is increasing day by day. Also, Sephora's clients are women in the age category of 25-35 years who prefer digital media than print media. Sephora does not need to stop and mailing catalog for good because these catalogs showcase Sephora as an expert, trend-setter and an important aspect of the company's image. We can decrease the number of prints and send them to selected customers.
a. Mobile - 25%
b. Twitter - 10%
c. Facebook - 10%
d. YouTube - 30%
e. Video Contest - 5%
f. Beauty Talk - 20%
Mobile - 25% ($250,000) - The predicted result seems to be high as nowadays more and more customers are using their mobile devices for shopping. Developing an app on mobile device may cost close to $100,000 - $200,000 and its annual maintenance may cost close to $20,000. Sephora does not have an app for android phones. With the prediction of increasing android market in USA, the allocation is justified.
Twitter - 10% ($100,000) - Twitter has emerged as a good platform for customer interaction, ongoing trends in the market and two...
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