What three specific pieces that would make change decision

Reference no: EM132651407

You are a social media marketing analyst for Zara. Your manager asks you two analyze two different influencer-marketing programs for a new campaign that will run throughout Europe.

Option 1

Hire a large group of micro-influencers (<10k followers) to promote your new line on instagram. You will pay your micro-influencers an average of €1000 each in a given year. You expect each micro influencers to generate €2,000 in cash flow from sales.

The number of micro-influencers in your program will be as follows:

Year 1 - 120 micro influencers

Year 2 - Increase to 175 micro influencers total

Year 3 - Increase to 275 micro influencers total

Option 2

Hire a select group of mega influencers (>100k followers) to promote the new line on instagram. You will pay each mega-influencers an average of €7,500 each in a given year. You expect each mega-influencer to generate €20,000 in cash flow from sales.

The number of mega-influencers in your program is as follows:

Year 1 - 10 mega-influencers

Year 2 - Increase to 15 mega influencers total

Year 3 - Increase to 25 mega influencers total

For both options, assume all cash flows occur at the end of the year

Interest Rates on Spanish government bonds

3 yr - 3%
5 yr - 4%
10 yr - 6%
30 yr - 9%

Interest Rates on U.S. government bonds

3 yr - 4%
5 yr - 5%
10 yr - 7%
30 yr - 10%

Question 1: Which option will you recommend to your manager? Why? What are three specific pieces of information that would make you change your decision?

Reference no: EM132651407

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