Mid Term Test

Max Marks 20

Answer two questions. First question is based on Sotarg case . Please submit the typed paper within 24 hours.

The answers must be typed in with A-4 sheet margin 1'' on all sides . Times new Roman Font 12

INKJET PRINTERS

Julien LEVY is product manager at SOTARG France in charge of

printers and related accessories. After reviewing his sales figures for
the past third quarter, Julien is worried that he might not hit this year’s
annual sales targets. As a consequence, he considers an end-of-year
promotion in cooperation with selected retailers in Paris and the
Greater Paris region.

Julien has been approached by Florent GASPARD, owner and

managing director of Promo Plus, a direct marketing firm in Suresnes,
outside Paris. Florent has offered his services in developing and
implementing a sales promotion campaign to help boost SOTARG’s
end-of-year sales. He suggests an in-store promotional campaign in 10
hypermarkets: Carrefour (4 stores), Auchan (3 stores), Leclerc (2 stores)
and Hyper U (1 store). Florent suggests placing one booth at the
entrance of each hypermarket during the four crucial Saturdays before
Christmas. Promo Plus’s price quote is €250/day/booth including
promotional material and remuneration of a sales promotion specialist.

Julien has to make a decision. Is Florent’s proposal interesting? The

details are as follows:
 -2-

In SOTARG’s business, customer retention rates are as follows: on average, four customers
out of five continue to use their inkjet printer after a full year. In fact, many customers trade
up after a while to more sophisticated laserjet printers. After the second year, only half of the
remaining customers continue. In other words, two customers out of four defect after year
two. After year three, the remaining customers also stop using their printer. Thus, the
maximum lifetime of a customer is three years.

Consumers typically print 200 pages with a SOTARG 100 ink cartridge. In a consumer
household, cartridges thus generally last for 3 months before they need replacing. SOTARG
does not capture all replacement cartridge purchases. In reality, 15% of all customers buy
SOTARG-compatible low-cost and/or recycled cartridges from specialists or over the
internet from vendors such as www.123consommables.com. Thus, at a rather conservative
estimate, an average household typically buys every seventh replacement cartridge from
other sources.

To boost sales, Julien plans to sell a promotional bundle during the holiday season at a retail
price of €50.43. The bundle consists of one SOTARG Inkjet Printer (€33.45/unit), one
Mediabridge Hi-Speed cable (€3.99/unit) and one SOTARG 100 Black Ink cartridge
(€12.99). SOTARG achieves higher margins on cartridges (85% profit margin) and cables
(80% profit margin) than on printers, which are sold at a loss (-40% profit margin).

SOTARG Mediabridge Hi-Speed SOTARG 100

Inkjet Printer USB 2.0 Cable Black Ink Cartridge
Unit Retail Price: €33.45 Unit Retail Price: €3.99 Unit Retail Price: €12.99

SOTARG forecasts annual price increases for its products of 2% per year. SOTARG price
increases come into effect on January 1 each year. The company uses a corporate-wide
discount rate of 10%. To know whether he should move forward regarding
Florent’s proposal, Julien asks himself the following question:

Question 1 (from case) :

What is the lifetime value of a single customer who stays with SOTARG after his/her
purchase of a SOTARG inkjet printer in the current Christmas sales? (Maximum 1
page)
Question 2 (not related to case) :

Write in 400 words, major trends in consumer behaviour change in india during
Covid-19 pandemic.

(Pls write in your words and site references . References willnot count towards the 400
words length)