60.1K

Verified Solution

Link Copied!

1. Calculate and analyze Thursdays' break-even for the influencer marketing strategy.

2. Calculate and analyze the projected profitability of the Exchange Tower store for the 2020/2021 fiscal period.

3. Calculate and analyze the projected profitability of the online store if the Exchange Tower store were to close for the 2020/2021 period.

Given the nature of the economy and the continued closure of Thursdays' Exchange Tower location, Piltz wondered whether closing this store permanently would be a strategic way to generate additional funds to put toward online advertising. If the Exchange Tower store were to close, Piltz planned to use 15 per cent of the store's annual recurring cash costs to finance partnerships with micro-influencers on Instagram (see Exhibit 2). Micro-influencers - that is, Instagram influencers who had between 1,000 and 100,000 followers-were known to have the highest engagement rates of all influencer types. 24 Using the influencer budget, Piltz was willing to offer participating micro-influencers $1,500 each to recommend Thursdays to their respective followers in the form of a sponsored post. Piltz would also provide each influencer $150 worth of merchandise to wear when creating their posts. Additional details of the partnerships were to be determined at a later date. Piltz planned to offer this partnership opportunity only to influencers with an average of 50,000 followers. To ensure a wide geographic reach, Piltz would handselect influencers from a variety of different cities across Canada and parts of the United States. EXHIBIT 1: SHOP THURSDAYS' SELLING PRICES AND WHOLESALE COSTS BY PRODUCT TYPE (IN CA\$) Source: Company files. EXHIBIT 2: SHOP THURSDAYS' ANNUAL PROJECTED COSTS, 2021 FISCAL PERIOD Exchange Tower Store Note: Health and safety costs referred to the purchase of hand sanitizer, disposable masks, and other disinfecting products to keep shoppers protected from the spread of COVID-19. Source: Company files

Answer & Explanation Solved by verified expert

See Answer