Topics
customer relationship management, profitability, strategy, promotion, environment
Teaching Notes
Using a CRM strategy is probably one of the best solutions for the problem in the following case study. Please note that there is an updated version of this activity now available, which also includes an interactive spreadsheet.
Review the activity below or download the PDF student worksheet
Student Worksheet: Developing a CRM Strategy
Student Discussion Activity
Help Save Our Music Festival
You’ve been called in as a consultant to help the organizers of a “religious music festival” and your task in this activity is to develop a strategy to increase attendance for this organization’s main event.
This festival is held each year over an October weekend in a small country town about 2-hour drive from a major city. The festival has been held for 7 years with moderate success. However, the organizers believe that it has far greater potential.
Recent Attendee Survey Results
Attended before?
- Yes = 21%
- No = 79%
Age Group
- Under 15 = 12%
- 15-19 = 30%
- 20-24 = 38%
- Over 24 = 20%
Awareness of event
- 52% family/friend
- 18% church
- 15% brochure
- 12% web site
- 3% other
Attend with a group?
- Yes = 74%
- No = 26%
Are you religious?
- Yes = 59%
- No = 41%
General Background Information
Promotion Methods Used
- Web site
- Brochures sent to major church youth groups
Pricing
- Adult = $15 per day or $30 for 3 days
- Students = $10 per day or $20 for 3 days
Facilities
- Basic food/drink outlets
- No alcohol
- Some security/medical
- Portable toilets
Accommodation/Transport
- Caravans and camping within 15mins
- No transport
| FINANCIAL OVERVIEW |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
Year 7 |
| Attendance |
700 |
1,200 |
1,900 |
2,500 |
2,800 |
3,000 |
3,200 |
| Avg Entry Fee |
25 |
25 |
25 |
25 |
25 |
25 |
25 |
| Total Entry Fee |
$ 17,500 |
$ 30,000 |
$ 47,500 |
$ 62,500 |
$ 70,000 |
$ 75,000 |
$ 80,000 |
| Food/Drink Sales |
$ 21,000 |
$ 36,000 |
$ 57,000 |
$ 75,000 |
$ 84,000 |
$ 90,000 |
$ 96,000 |
| TOTAL INCOME |
$ 38,500 |
$ 66,000 |
$ 104,500 |
$ 137,500 |
$ 154,000 |
$ 165,000 |
$ 176,000 |
| Web Site |
0 |
0 |
0 |
$ 5,000 |
$ 5,000 |
$ 5,000 |
$ 5,000 |
| Brochures/Posters |
$ 20,000 |
$ 20,000 |
$ 20,000 |
$ 20,000 |
$ 20,000 |
$ 20,000 |
$ 20,000 |
| Security/Facilities |
$ 10,000 |
$ 10,000 |
$ 10,000 |
$ 10,000 |
$ 20,000 |
$ 20,000 |
$ 30,000 |
| Administration |
$ 15,000 |
$ 15,000 |
$ 15,000 |
$ 15,000 |
$ 15,000 |
$ 15,000 |
$ 15,000 |
| Cost of Food/Drink |
$ 10,500 |
$ 18,000 |
$ 28,500 |
$ 37,500 |
$ 42,000 |
$ 45,000 |
$ 48,000 |
| Equipment hire |
$ 30,000 |
$ 30,000 |
$ 30,000 |
$ 30,000 |
$ 30,000 |
$ 30,000 |
$ 30,000 |
| TOTAL COSTS |
$ 85,500 |
$ 93,000 |
$ 103,500 |
$ 117,500 |
$ 132,000 |
$ 135,000 |
$ 148,000 |
| GROSS PROFIT |
$ (47,000) |
$ (27,000) |
$ 1,000 |
$ 20,000 |
$ 22,000 |
$ 30,000 |
$ 28,000 |
Environmental Analysis
Corporation
- It is important that the event maintains a religious message.
- Looking for the event to earn a profit of $100,000 plus in coming years.
- Limited/no funds to contribute now – needs to be self-supporting.
Competitors
- Other concert events are growing in popularity – likely to clash on some weekends.
- Non-music (e.g. sporting events) are competitors as well
- Increasing numbers of ‘no alcohol’ events for teenagers/young adults.
Customers
- Focus groups indicate that participants are generally satisfied.
- Travel is a concern – and need to organize their own group travel.
- Word-of-mouth recommendation appears to be the strongest reason to go.
Social
- More emphasis/acceptability of more diverse events
- More affluent teens and young adults.
- Decreasing church attendance levels.
Technology
- Virtually all teens and young adults have access to internet.
- Quality of music and sound is expected to be very high.
Economic
- Continued economic growth expected.
- Youth unemployment still expected to remain at high levels.
Political
- Big problems with public liability – will need $30,000 insurance policy next year.
- Likely to be increasing requirements on health (e.g. food), security and safety.
Student Discussion Questions
- What is their financial/profit forecast without a strategy change?
- Therefore, how much extra profit will a strategy change need to generate?
- Outline a relationship-based marketing strategy to recover this profit shortfall.
