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Industry Project- Foodborg


Assignment Sheet

Part 1: Foodpedia
Q1. The most idealistic consumer funnel is the one which is cylindrical in shape, i.e. the complete
target audience which is aware of the product, actually purchases the product. But in a practical
scenario, this is not the case. There are a different number of consumers at each of the three stages
of the consumer funnel, namely the awareness stage, the consideration stage and the purchase
stage. Your task is to now calculate the number of consumers present at each stage of the consumer
funnel according to the TG for Foodopedia. Given below are the three stages and you are required to
answer in numerical values the number of people present at each stage.

Instructions
1. Refer to the data exhibits 3.1 to answer this question
2. The TG (Target Group) for Foodopedia is 25-54 year old females
3. TG Reach given is the reach in % achieved by Foodopedia amongst its Target group.

Answer-

a) Awareness stage (in millions) [Note that you should only consider the TG of Foodpedia for
this stage]

The total females in the Target Group are in the age group of 25-34, 35-44, 45-54. The numbers
are respectively 50 million, 35 million, 15 million. Therefore the total in TG = 100 million.

Since the TG reach is 23%, these are the females who are made aware of Foodopedia. Therefore
23% of 100 million = 23 million are the females in awareness stage

b) Consideration stage (in millions)

Unique users would have gone through the website and therefore we could assume that
these are in consideration stage. In the Exhibit 3.1 the number provided is 10 million.

c) Purchase stage (in millions)

Since this is a information website. The converted users are registered users. The number
provided in the exhibit 3.1 is 75,000 or 0.075 million users.
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Q2. Suppose Foodopedia wants to increase its reach (B2C) from 23% to 35% in the next 4 months.
Which digital platforms will you establish the brand on, in order to achieve the objective?

(Word limit: 90)

Expected answer: Digital platform(s) and reason(s) for choosing the platform.

Answer:

In order to increase the reach in the target segment of 25 54 year old females we could
use the following channels:

Social Media: Since it is highly likely that the females in the age group would be using the
Social Media (such as Facebook, instagram or snapchat)
SEO: For searches around keywords such as investment for women etc
Display ads: Display ads in websites and blogs frequented by females such as fashion
blogs, online shopping sites, cookery sites etc
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Part 2: FoodFox
Q3. As we have seen in the module, customer acquisition cost or CAC is a very important revenue
metric for any business. Considering that FoodFox, as a business entity, operates in an extremely
competitive and cash-burning industry sector, it becomes imperative that it tracks the revenue
metrics across all its promotion channels. For this exercise, calculate the CAC that FoodFox incurred
for Channel 1 for the given time period of Jan 2016 to December 2016.

A. 208
B. 250
C. 200
D. 50

Instructions:

1. Refer to the data exhibit 3.2 to answer this question

Answer:

Assumption: Customer acquisition is considered when the customer orders for the first time. The
sign up is not considered acquisition in my answer.

Total Customers Acquired = Channel Reach x Conversions to sign-up x Conversion to first order
= 1,000,000 x 10% x 50% = 50,000 customers acquired

Total Acquisition cost =


Direct cost of channel = INR 50 per conversion = 50 x 50,000 = 2,500,000 INR
Discount coupon value (in INR) = 200 per first order = 200 x 50,000 = 10,000,000 INR
Total Cost = 10,000,000 + 2,500,000 = 12,500,000 INR
CAC = Total Acquisition Cost / customers acquired
= 12,500,000/50,000 = 250

Q4. Another important revenue parameter that you have learnt about is the lifetime value or the
CLV. Considering this, calculate the CLV for FoodFox for Channel 3 if its retention rate is 60%.

A. 1,980
B. 2,500
C. 2,292
D. 2,134

Instructions:

1. Refer to the data exhibit 3.2 to answer this question


2. The retention rate given is for the period from Jan 2016 to Dec 2016

Additional Hints:

1. You can calculate the churn rate as (100 - retention rate) %


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2. For this example, use the acquisition cost in the CLV formula as taught in the module
lectures
3. Take the margin (which is same as profit) as 25% of the order value

Answer:

CLV = Annual Profit per customer x retention years acquisition cost of channel

Profit for first order = (order size discount) x margin = (200 200) x 25 % = 0
Profit for subsequent orders = order size x margin x number of orders in a year =
200x25%x 20 = 1000
Retention = 100% / churn rate = 100 / 40 = 2.5
Cost of Acquisition = direct cost + coupon discount = 400000 + (200 x 50000) = 10400000
Cost per customer = 10400000 / 50000 = 208

CLV = (1000X2.5) 208 = 2500 208 = 2292

Q5. Out of the three channels that FoodFox has used for promotion, which is the best
communication channel for FoodFox? Why? (Word limit: 90)

A. Channel 1
B. Channel 2
C. Channel 3

Instruction:

1. Refer to the data exhibit 3.2 to answer this question

Additional hint:

1. Think along the lines of CAC or CLV or both. Do not go for any reason outside the data given.

Answer:

Q6. Suggest solutions to increase subsequent orders, and hence the CLV. A minimum of two
solutions are required. (Word limit: 90)

Sample answer:

Loyalty Offers: Promotional offers for customers above a fixed number of orders over a period of
2months. For example: A customer makes 8 order per two months via FoodFox. Offering this
customer a loyalty discount of INR 150 per order if he makes more than 10 orders over a period of 2
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months. This will ensure that customers stick to FoodFox and not go to any other competitor
services.

Answer:

Q7. In revenue metric terms, break-even is the point of equilibrium, where there is no profit or loss
for FoodFox. We have varied number of delivery orders from the consumers acquired from each
channel and hence the break-even point is different for different channels. How many orders per
consumer are needed for Channel 2 in order to break-even (per consumer) for FoodFox?

A. 1
B. 2
C. 3
D. 4

Instructions:

1. Refer to the data exhibit 3.2 given.


2. If the answer is in decimals, round it off to the next highest integer. (eg: 7.4 becomes 8)

Answer:

Revenue Cost = 0

Revenue = Cost

Order size x number of orders = cost of total orders

200 x N X 25000 = discount coupon cost + cost of subsequent costs


200 x N X 25000 = 200 X 25000 + 0.75 X 200 X N X 25000
200 X N = 200 + 0.75 X 200 X N
200 N 150 N = 200
50 N = 200 OR N = 4