Two cases:
Case A: Company A’s chief marketing officer needs to make a decision about how to spend a company’s advertising budget. Here are the two nominated companies, presented by their analysts. Company #A1 has 10 million verified and 40 million unverified users. Company #A2 has 1 million verified and 70 unverified users. Other indicators are similar.
Case B: Company B’s partnership leader has received two offers from two companies, and each has offered final terms. The company can only select one company due to its short-term production capacity. Company #B1 has a marketplace membership club where users pay to shop with associated benefits (such as Amazon Prime) and asks Company B for a 20% discount; total paying members are 20 million per year. Company #B2 does not have a member club, but claims to reach 30 million shoppers annually and asks Company B for a 25% discount. All unsold items are returned to Company B in both scenarios.
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As we discuss Facebook’s decision to require users to pay for verified badges, what would you do as Chief Marketing Officer for Case A? In fact, which one is better to spend your advertising money on?
I wrote about this when Elon Musk was pioneering it and noted that it would be a good feature for Meta (Facebook’s parent company) and LinkedIn. Accepted today: “‘Meta Verified’ gives you a blue badge along with several other benefits including increased visibility, protection from identity theft, priority customer support and more” for $12/month.
What would you do for Case B, considering an unsold item is coming back and you probably won’t sell it?
Discuss with others in the subcategories of the WhatsApp group. During Tekedia Live on Saturday, we’ll dig into this briefly and examine the implications while focusing on this week’s Business Model and Strategy module.
Note: Any variables or factors not included are assumed to be similar to companies A1 and A2 and should be treated as non-factors. The same applies to companies B1 and B2. This means the following: they have similar credit ratings, payment histories, response rates, etc. The only factors to consider for these different cases are those mentioned and their direct implied implications.
Source: Excerpt from Tekedia Mini MBA courseware
