MGMC01H3 Chapter Notes -Usenet, Income Statement

372 views4 pages
Published on 5 Dec 2014
School
UTSC
Department
Management (MGM)
Course
MGMC01H3
Professor
Sharon Kan
999682972
Case 9:
Intelliseek
Abstract
The internet has become an effective tool to accumulate consumer insight. With the advance of
technology, consumer perception has evolved from brands being in command to consumer
opinion as a pivotal factor in decision making. While Intelliseek is able to mine text and translate
qualitative into quantifiable data about products and companies, the information is useless
without interpretation; thus, understanding how to present results is a critical proponent of
Intelliseek’s purpose in transforming this opportunity into profits.
Problem Analysis
The following is a decision case to which Intelliseek must determine the best approach in
presenting its results and maximizing profits to encourage renewal and retention whether by
streamlining or customizing reports for its clients. Consumer Generated Media (CGM)
dominates traditional media in terms of reach, trust, cost, impact, control, and perceived
frequency; however, while this process is seemingly resourceful, with revenue growth more than
tripling in over 3 years, profits have been dissatisfactory.
Issues Analysis
Market research is integral to a company’s decision making process. With trends favoring
established platforms that allow consumers to reflect on experiences and make judgments
about brands, products, and services via usenet, discussion boards, and blogs, CGM is
becoming more significant. Intelliseek’s CGM aims to solve the frustration of traditional market
research strategies including focus groups and surveys as a result of consumer relying more
predominately on word of mouth and non-conventional promotional efforts. However, even as
trust in recommendations made by consumers reach 90% over 45% from TV advertising,
Intelliseek has not been able to generate profits. With reference to exhibit 8, outlining the
income statement for the years ending 2003 and 2004, earned revenues are $4.1 MM and $5.5
MM and total expenses are $7.7 MM and $6.6 MM respectively. Thus, Intelliseek is
accumulating more expenses than its earned revenues or is conversely not earning enough
revenue to cover its expenses; Intelliseek is ultimately operating at a net loss. Intelliseek needs
to identify a way to reduce its expenses and increase its revenue in order to incur desired
profits.
Intelliseek’s earnings before interest, taxes, depreciation and amortization for 2003 and 2004
are negative $3.6 MM and $1.1 MM correspondingly. Evidently, operating expenses solely are
sinking revenues entirely. Throughout both years, Intelliseek is investing the greatest amount in
R&D. R&D addresses the development of products; however, it also yields the highest risk and
most uncertainty for return on investments. Intelliseek needs to consider the best method to
minimize its expenses, predominately in R&D, so that Intelliseek can maintain a positive
income.
Intelliseek currently suffers from low retention rates as although clients were receptive to the
importance of CGM and its capacity to produce observations concerning a company’s service,
approximately 60% of all contracts were not renewed. With reference to exhibit 9, displaying
the client satisfaction survey, clients appreciate the service but were uncertain of how to utilize
the data and implement it to company strategies; thus, as companies do not check the website,
they felt no need to renew. On the other hand, for the clients that did remain, demands for
renewal exhibited higher involvement requiring more engineer and sales team efforts,
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Document Summary

The internet has become an effective tool to accumulate consumer insight. With the advance of technology, consumer perception has evolved from brands being in command to consumer opinion as a pivotal factor in decision making. While intelliseek is able to mine text and translate qualitative into quantifiable data about products and companies, the information is useless without interpretation; thus, understanding how to present results is a critical proponent of. Intelliseek"s purpose in transforming this opportunity into profits. The following is a decision case to which intelliseek must determine the best approach in presenting its results and maximizing profits to encourage renewal and retention whether by streamlining or customizing reports for its clients. Consumer generated media (cgm) dominates traditional media in terms of reach, trust, cost, impact, control, and perceived frequency; however, while this process is seemingly resourceful, with revenue growth more than tripling in over 3 years, profits have been dissatisfactory.

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