Case study

Fine Leather Goods (FLG) is a leather goods manufacturer based in Johannesburg founded by two friends, Jordan and Tsepiso, who have a passion for fine craftsmanship. FLG offers handmade leather jackets, shoes, purses and other accessories to discerning customers. As the head of product development, Tsepiso is responsible for the entire production line, from pattern design and material selection to overseeing cutting and stitching the leather, and quality checking completed products. Jordan is in charge of administrative duties, such as finding suppliers, negotiating contracts and deliveries, inspecting received goods, and paying suppliers. Jordan's duties often involve a lot of travel. FLG recently launched a retail Website and a social media advertising campaign. The campaign includes advertisements and sponsored content on various social media platforms. Using analytics from the social media APIs and their own Website, Jordan and Tsepiso have some idea of how effective their campaign was. 100 000 people viewed one of FLG's advertisements or sponsored content. Of that 100 000, 2 000 clicked on a link and visited the FLG Website. 100 visitors made a purchase, and 40 of them returned to buy again.

Question (h)

If FLG spent R200 000 on their advertising campaign, calculate the [6] following values:

i. Acquisition cost

ii. Conversion rate

iii. Retention rate