COHORT NAME

GROUP NO.

Marketing Audit and Evaluation SBR 1

GMBA Jan 2016
CEO
Vipul Gulati
Group 2
GROUP
Ashna Chowdhry
MEMBERS

Saurabh Ved
Geet Kalsi

Q1: Calculate the value of word-of-mouth recommendation for one of the businesses in
Frankenmuth. What formula do you use why? How is word-of-mouth related to the
lifetime value of an incremental customer?

In order to calculate the value of WOM recommendation, we will have to look at multiple factors such
as below

Number of times an existing customer will refer : V

To how many people will the recommendation be made : W
Of the referred people, what is the number of people that are potential customers or

percentage of potential customers: X

The conversion rate of potential customers or the probability of them buying: Y
Customer Life time value of the customer acquired through WOM marketing: Z

Calculating WOM = V*W*X*Y*Z

WOM for Bronners Christmas Wonderland Store: 0.95 *56.76*0.60 *0.72*Z (Taking Values from
Exhibit 2)

To calculate CLV or Z, the below formula can be used

(Gross profit of average purchase +Average Number of purchases per customer annually)*
(Gross profit of an average purchase *Average Number of purchases per customer annually *Average
number of years customer will continue to purchase *Probability customer will continue to purchase)

Q2: How should Annette Rummel recommend the Frankenmuth 2000 budget be spent?
Annette Rummel played an integral part of the investment program Frankenmuth 2000, which was
aimed at stimulating infrastructure growth in Frankenmuth. This included upgrading water and gas
lines, burying the overhead cables and wires. A part of this budget was also kept aside for
developing better sidewalks, benches and street signs.

However the case brings an important analysis that most of Frankenmuths economy depended on

restaurants
lodging and
tourism and retail shops

Hence we feel that Annette should look at recommending the budget be spent for improving the
value and quality of businesses in the above categories. Frankenmuth as a town comprised of many
small businesses which were either individually run or family run and they relied heavily on the
value and power of word of mouth marketing. From Exhibit 4 we can clearly see the customers were
happy and satisfied with Frankenmuths offerings and services and were very likely to recommend ,
upto 86% of people who had requested for a brochure said they would recommend this place to a
friend or relative. We also feel that Annette should look at increasing the number of festivals,
parades and other trade fairs to increase tourism in the town thus resulting in creating more value
for businesses and people of the town.

Q3: How would you respond to the questions the business owners of Frankenmuth posed
in the last exhibit in the case?

Here are a few pointers to help us understand the position of business owners

1. The business owners in Frankenmuth, have been speaking of word of mouth driving their
business, but lack metrics to evaluate the same.
2. To effectively respond to their questions, we would emphasize on first identifying the extent
to which word of mouth is driving their businesses.
3. To measure the word of mouth referrals, we need to create a database that collects and
monitors the visitation and spending patterns of all visitors, even from those customers who
pay cash. In the short term, we need to start accumulating this database, which in turn in the
long run would benefit us. Inferring the conversion rate and actual purchases would be
possible from this data.
Also, based on the marketing study commissioned by the Chamber of Commerce, it is evident that
tourists gave safety and cleanliness highest points in Frankenmuth. Therefore,

1. Our quality standards should primarily focus on these factors followed by the tasteful
appearance of the community and the attitude of the business employees.
2. Training the business employees, empowering them, would help gather more information
from the customers as well as help providing the customers with a better experience,
moreover, give them an experience to talk about.
3. When customers experience something different and unique, they get a talking point, which
creates a buzz in the market. Even if customers have a negative experience, the employee
training programs should empower them to take the right decisions to counter the effect of
the negative experience, and minimize the impact of the same.

Conclusion: If we talk of integrating all organizations, and look at creating standards for the town
as a whole, certain parameters like, cleanliness, attitude of the employees and dealing with

customers would hold common across all businesses. If we look at the demographic data of the
visitors till date, we can conclude Frankenmuth is perceived as an ethnic community than a tourist
trap, their repeat visits are a clear indicator of the same. It is imperative for the businesses in
Frankenmuth to uphold the characteristics of their community and leverage on the same to create
memorable experiences for the visitors. For the repeat customers, coming to Frankenmuth is like
reliving the memories they made here with their families, its more like tradition for them to repeat
the same with the following generations. Creating a slogan for Frankenmuth would just portray it as
a tourist destination and take the tradition charm out of it. It is this charm that visitors come here
for. Our ways of business should never hamper this connect that people have with Frankenmuth.