Question?

Do you mind defining the problem of this case? Thanks.

It was September of 2014- and Philip Murad was considering how to take his company, Philip & Henry, forward. Philip 8: Henry was a "magic show company\" that brought magic shows and magicians to clients anywhere in North America. In Philip Murad's words, it was a marketing company and the product they were marketing was magic. Since Philip founded the company in 1998 it had grown to represent 800 magicians across Canada and United States and managed more than 3000 events annually. These shows could range from small children's birthday parties to corporate shows costing over fty thousand dollars. The company was running smoothly and growing at a consistent rate, but Philip always believed there was more that could be done, especially in the area of marketing. Marketing was Philip's passion and he considered it to be of the highest importance. At this point in time he was trying to determine whether his marketing communications activities were providing as much value to the company as possible. Philip 8; Henry had used online marketing since its inception, and over 80% of its marketing communications budget was devoted to online, specically search engine optimization. Even though this had been successful, Philip wondered if there were other marketing activities that could provide an even greater return. Philip Murad Philip Murad grew up in Montreal. When he was nine years old his older brother bought a ventriloquist's dummy named Henry for $5 and gave it to Philip, inspiring him to take up ventriloquism. He began performing around Montreal, eventually adding magic to his act at age 13. He continued to perform all the way through his university studies at McGill University, using the money he earned from shows to pay his tuition. By the time he was 28, Philip had been performing for almost 20 years and had done thousands of shows, including performances on television. He decided to stop performing, even though he could earn over $500 per show at that time. Instead, he founded Philip 8: Henry [named after himself and his ventriloquist's dummy) and began taking other magicians under his wing to market them. Philip 8: Henry Since it was founded in 1998 Philip 8; Henry had grown 30% year over year on average. The company had 20 full-time employees and managed over 800 magicians across North America [including Alaska and Hawaii]. They performed everywhere, including schools, daycares, birthday parties, and corporate events. Philip Murad owned both Philip 8; Henry Canada and Philip 8; Henry USA. In 2014-, revenues in Canada were about 40% of overall revenues. Philip 8: Henry's mission was to use magic to motivate people and make them feel good about themselves. The company had magicians to suit anyone's needs. Different magicians had different expertise, different name recognition, and even performed different types of magic [e.g. illusion, street magic, escapism, or magi- comedy, to name a few). Because the company served such a diverse clientele, it had to make sure that the magicians they managed and marketed were well trained and met or exceeded standards. In order to make sure of this, Philip and Henry had training and screening processes for all of their magicians to make sure the performances were up to par or better. Each performer represented the company and brand to the customer, so Philip 8: Henry wanted to make sure there was a consistent experience for all clients and that the brand was not diminished due to a substandard magician. Quality was extremely important to Philip 8: Henry. This meant that the company took responsibility for every aspect of the performance. If a magician was sick, Philip 8: Henry would arrange a replacement performer at their own expense. Because word-of-mouth was so important for event planning, Philip 8: Henry needed to make sure they had a strong, reliable brand and that clients knew that they could hire the company and trust that they were getting a quality service. The company had both a Canadian head ofce [in Vaughan, Ontario, a suburb of Toronto) and a U.S. head office [in Amherst, New York, which is a suburb of Buffalo). The company website also advertised that there were over 500 local offices across North America, though this primarily referred to the magicians themselves that lived in communities across the continent. Philip 8; Henry was not a top-heavy organization, but rather a management company for afliated freelance performers. Each sale involved two transactions: the client paid Philip & Henry, and Philip 8: Henry paid the magician a portion of the fee. With 3000 sales in 2014, the company processed 6000 transactions. The gross prot kept by Philip 8; Henry ranged from 10% to 80%, depending on the size of the event, and more importantly, the price paid and the magician hired. Better-known magicians commanded a greater portion of the revenue. Generally speaking, Philip 8; Henry earned healthy margins because of the value they added to both the service and the performer through screening and training and the trust they had built up with the magicians they managed. Philip Murad believed that the company's relationship with its performers was mutually benecial, with each side adding value to the other. Furthermore, as the leading brand for magic performances they had the power to charge a premium over competitors. Customers While Philip 8; Henry saw itself as serving anyone with an interest in a magic performance, the vast majority of its clients t within two segments {there was also a third segment in shows for adults, ranging from small birthday shows to expensive shows on private yachts, but these formed a relatively small portion of revenue). About 80% of revenue was generated from performances for kids, mostly birthday parties but also shows at schools and daycares. The remaining 20% of performances consisted of corporate events. Both segments were reached through online communications and telephone. Approximately three-quarters of phone calls were inbound [mostly birthday party clients) and one-quarter of phone calls were outbound (almost all corporate clients). The outbound calls involved both calling past customers as well as cold-calling new ones. Referrals from former clients were essential for both segments [see Exhibit 1 for examples of client testimonials). To best compete in both markets Philip 8; Henry positioned themselves as providing reliable, professional, and wholesome fun. 0n the one hand, clients wanted a certain degree of professionalism and quality, as they paid a considerable amount for the performance. On the other hand, these performances were meant to be enjoyable, and a businesslike approach did not need to come at the cost of the excitement and magic of the shows. Birthday Parties The typical customer for a children's performance was a busy working parent who wanted to reach a reliable company. They wanted a quality show, professionalism on the part of the company and performer, and a written invoice. The company also guaranteed satisfaction and would do everything possible to make sure the event was executed as planned. Philip 8: Henry were reachable online and by telephone 24 hours a day, seven days a week, and parents booking shows would contact them at any of those times. Philip 82 Henry charged $289 for a standard birthday party performance. Competitors for this market, on the other hand, usually consisted of individual performers who marketed their own services. They had little brand recognition [and essentially none outside of the community in which they operated). These competitors were local magicians, and had not unied or created working arrangements with other magicians. They tended to differentiate on price and would charge between $175 and $300 for a performance. Unfortunately, many of these performers had a poor reputation for reliability and quality, with little recourse available to the client if something went wrong as no guarantees were provided. Furthermore, because these competitors were individual people, they were not always available to answer phone calls and would lose business because they were unavailable. Philip 8: Henry, on the other hand, was able to combat this challenge of trust. The national brand was supported by the fact that the performers were local and had built up trust in their community through word of mouth. There were no other large-scale competitors for Philip 8: Henry operating on an international, national, or even large-scale regional basis. In Philip Murad's words, Philip 8: Henry was king of a very small hill. This did not mean that there was no competition. The company faced competitors from the numerous substitutes available to parents who were looking for birthday party entertainment [e.g. live animal shows, balloon artists, indoor playgrounds, to name just a few of a very long list). Corporate Clients Corporate clients, on the other hand, were ckle and had many competitors to choose from. While Philip 8; Henry had the qualities of professionalism, a well- known brand name, and a good reputation [all characteristics looked for by event planners], entertainment at corporate events could be chosen from many options. Those planning the events knew that a poor event could have resulted in the loss of their job, so they put a lot of time and effort in selecting a performer. They typically looked for something that was fun yet wholesome, and tended to be conservative in their choices. While the fee for a corporate event varied wildly depending on the size and the magician involved, the average price paid by a corporate client was $3500 to $7500. Some of Philip 8; Henry's competitors in this area were speaking bureaus, which represented a number different types of acts [including magicians], independent party planners that had standing business relationships with performers, and non- magicians such as comedians or musicians. Also competing in this space were magicians who had attained fame through high-profile performances in Las Vegas or on television. More indirect competitors were other ways companies could have entertained or involved their employees, such as retreats, motivational seminars, training, and/ or competitions. Other Services Philip Murad saw great potential in getting children interested and involved in magic. It remained one of his key goals for the company. If a child was interested in magic, there would be greater demand for performances. Additionally, Philip believed that a valuable goal of Philip 8: Henry was to create future magicians. To that end, Philip 8: Henry tried running after-school programs. While these programs did lead to a small increase in performance sales in the areas where they were run, they did not t well with the competencies of the organization. Philip 8; Henry trained and screened those who already had skills as magicians, but the magicians affiliated with the company did not necessarily have experience in teaching magic to beginners. As such, the program sessions tended to consist of performances by the teacher rather than the teaching of skills, talents and magic tricks. This was also far more logistically complicated to implement than performances. As such the company ended these programs and did not see a future in them. Making magic appealing to children remained a goal but Philip 8: Henry did not want to be in the magic-education business. Marketing Communications Philip was very passionate about marketing and believed that its proper management was crucial to any business. He was an early adopter of online advertising and search engine optimization, beginning his marketing communications in this channel in 1998 [see Exhibit 2 for a screenshot of the Philip 8:. Henry website, and exhibit 2 for a sample Philip 8: Henry ad). In 2014 Philip 8: Henry was paying $25,000 per month on Google Adwords. This was a service wherein companies bid to purchase keywords, and when those keywords were used in searches a link to the purchasing company was provided on the web page, above the general search results. For example, if the word "magician\" was entered into the search field, three results would appear above the results generated by Google's search algorithm, one of which was for Philip 8: Henry's website. Philip 8: Henry had a very close business relationship with Google due to the longevity of their association as well as the amount of money involved. There was a representative at Google that specically handled the Philip 8: Henry account, and Philip Murad had been invited to conferences at Google. Positive results were evident starting from the time that Adwords had been a part of the marketing communications plan, and in 2014- about 75% of their bookings came through this tool. As Philip put it in 2014, \"At the beginning we set up Adwords, and the phone would start ringing, though it's more challenging now.\" The rest of Philip 8; Henry's monthly marketing budget, $5000, was spent on outbound telesales, the performance of which Philip believed to be \"pretty good.\" At the same time he wanted to try new ways of reaching customers and develop new strengths in marketing and to diversify his marketing communications plan. In the past he had advertised anywhere online he thought might have been useful, such as yellowpages.com, but no channel had proved as benecial as Google. Philip 8: Henry did no conventional or media advertising. More recently the company had started to incorporate social media marketing, and had an employee assigned to that aspect of the communications plan. Even so, the company Facebook page and Twitter feed had barely any content [for example, Philip 8: Henry had set up a Twitter account in 2009, and had only tweeted once between then and 2014-). They had done YouTube campaigns and had a channel on the site, but found that the videos they created did not do very well. As of 20 14 they had uploaded six videos but most had a very low number of views [the highest was around 38,000 views] and virtually no comments. Even if the videos had higher viewership, Philip was skeptical as to how this channel would monetize. One area in which Philip saw potential was in direct mail marketing, though he was unsure who to target and how to approach them. Both the kids' party market and the corporate market could be responsive to a direct mail campaign [although with different approaches for each]. In particular, Philip was intrigued by the possibility of sending direct mail to children, as they would have played an important inuencing role in the family for this product. Furthermore, children tended to get very excited when they received something in the mail, adding to the positive feeling they would have had for magic. This could also have had the added benet of timing the direct mail to lead up to the child's birthday, possibly increasing the likelihood of the family hiring a magician for the party. The biggest challenge to this plan was to be able to obtain the necessary information (name, address, and birthday) about the child in a way that the parents would deem appropriate. Advertising to children was regulated, in Canada, by the advertising industry itself through the Canadian Marketing Association and other industry organizations. While there was no specific government legislation about sending direct mail advertisements to children, to have done so without parental consent would likely have violated the industry's own regulations. Furthermore, most parents would have questioned the validity and ethics of a company that sent advertising material to their children without having rst obtained their consent. The other concept that attracted Philip was that of the "long tail.\" The name referred to tails of statistical distributions, which if they were particularly long, would contain more members than the central part of a distribution. This can also be applied in a marketing context For example, the distribution may be of products sold on Amazon.com. There would have been a relatively low number of books that sold in great quantity, and a very large number of books that sold only one or two copies. What Amazon had found was that the collective sales of the low-selling books were much, much larger than the collective sales of the bestsellers, because there were so many more low-sellers [i.e. the long tail). Applied to a company's customer base, the long tail meant that attention should have been given to the large number of customers that may have each only provided a little bit of revenue, but collectively represented a majority of the revenue. This concept could have been applied to Philip 8; Henry, especially in the childrens' party market. Most parents would have only hired Philip and Henry once or twice, but there were many, many families out there. This would raise the question of how Philip 8: Henry could maximize their revenue from this large group of customers who might have only hired them once in their life. For online marketing and social media, the concept of long tail meant targeting those low-frequency, low-intensity customers in a cost-effective way. Viral marketing was a typical way of trying to engage the long tail. For search engine optimization and Adwords, it meant trying to nd "long-tail keywords," or keywords that were less directly related to the product, but might be used by non-core customers. An example of this would be bidding on keywords related to birthday parties in general [as opposed to magic-themed birthday parties], or, going further, trying to find keywords that would have indicated a birthday was approaching without it necessarily being related to a party. Decisions Philip 8: Henry had found great success over its nearly 20-year life, but as with any business, there were still opportunities to improve. Philip believed that the greatest opportunities lay in improvements to marketing communications and nding new ways to connect with his customers. He was very open to new ideas as long as they improved the business. Nothing was untouchable; if there were a good idea for a change to just about any aspect of the business, he would listen. The network of magicians established by Philip 8: Henry trusted the company to operate in their best interest, and found value in being associated with an international brand. This, and the strength of the brand itself, provided the company with some leeway to make changes. That said, the core of the company was its positioning and people, and Philip was very protective of the value these represented. Was a greater focus on social media the way to go, or was direct mail the best way forward? Was the relationship with Google still providing the returns it did, or was a change needed? Ultimately, specic questions such as these came down to the issue of what was the best way to attract new business and continue to promote the brand, the performers, and magic in general. Philip still believed in the power of magic but understood the needs of a business as well. Exhibit 1 - client testimonials from the Philip & Henry website "The show was age appropriate for 3 - 6 year olds, very timely and very professional. You did a wonderful job and it was a pleasure working with you." 123 Grow With Me "For the rest of the day the children pretended to be magicians." YMCA Cedar Lake Child Care "Very entertaining, low-keyed, humorous & appropriate." Index School KinderCare EARNING CENTERS "Children enjoyed the show a great deal! Thanks so much!" House of Little People "The children really enjoyed themselves and are looking forward to the program next term." Bishop Strachan School "The children (even the 1 year olds) were amazed!.I am recommending the show to the pastor for future events here at Harrodsburg Baptist Church." His Kids Christian Learning Center Townhip of North Fayette "My son, who is only 5, has just completed this kiddy program. He loved it!" Town of Ajax Parks & Recreation "In the hallways at Alderwood each night I could see the children trying their tricks on their parents and then adding the wonderful line."I can't tell you how I did it.cause it is magic." Alderwood Action After School Inc "Thank you for coming out to our assemblies yesterday. I have been getting such positive comments from both students and staff about your performance! We will certainly keep you in mind as we plan for activities in the future." THE HUN SCHOOL Dana Liebmann Donati, Director of Personal Consulting The Hun School of Princeton OF PRINCETON "We have invited magicians from Philip & Henry Productions to our child care program on several occasions. We serve approximately 500 school-aged children in 5 sites and the magicians have always been able to accommodate any number of children in our program. The child participation is always fun and exciting.The magicians are always professional and successful in entertaining the children." West Portal C.A.R.E "There was not a single child without a smile. I even noticed the teachers enjoying themselves! You really know how to capture the attention of your audience. I look forward to future performances by Philip & Henry." Thank You! Anita Campitelli We really Richmond Hill Montessori enjoyed your performant during ou "Your effective use of magic and humor was a powerful tool in an effort to reach our youngest students to say "no" to drugs and alcohol. Both the students and their teachers were complimentary of your performance and are clearly looking forward to a return visit." Donna T. Denny, School Counselor Waterson Elementary School "The children were so excited by the magician. It was amazing to see how many were trying magic on their own after the show was over. The magician just held the audience in captivity. We were all in awe and would highly recommend this show to everyone!" Janet Dunsky, Director Monroe Summer Learning Program 'On behalf of the Switlick Child Care staff and students, I would like to take thisExhibit 2 - screenshot of the Philip & Henry website Call Now Live Service 24/7 1- 866-257- KIDS FUN PHILIP & HENRY 7497 Wic bring maple shows & magicians to you arewhere in North America Any day, Ary ww. All year bang! Magic Shows Magic Workshops Mingle Magic | Bution Shows Follow Us On f E You Lol Today's take s Wed Nowtimber 12. Call Us now, 14 hours a fay PHILIP & HENRY 1- 866-257-7497 LOCAL MAGICIANS notes of all Ages Per Over 29 Your ihate Megoers and Bunkorials came to your sport. Our magiours offer a wrists of ifthing fought services the Mage Shoen. Mayo Workshops. Stage Mage. Goto up Table Mige Meging Magiclank GrandiBusion Browns, Birdwing Nagiours. au Negiours. and Customized Bagas Cordait Us Today Is Your Special Event Book a Magician Now Before Your Date Disappears! Call 1-959-257-1497 Check Availability . Instant Quote. Book A Show . BBBONLINE RELIABILITY PROGRAM INSTANTLY CHECK AVAILIBILITY . PRICE wed, November 12. Email Hors Phoas " Cty Birthday Carparts Evertx permision to call and ser Click for Audio pricing of products and services that only they offer Required Fields Wbata having and The Du Servican Inc. Pipede Majkian Beershis We respect your privacy Choose a Lecation Click harm to check out our Altlain Program PHILIP & HENRY What Our Customers Say: "Thank you for a wandsfull rugic show for my son's birthday" "Minga Mays was perfect for sat Corporat Event" Ducovary Churned "Thank you for a guest mack show in our topants Eat" Visit More Radarances OUR MAGIC SHOWS CONTACT US FOR Birthday Parties Parka & Rac 1 Chiu Cars I Freda Steam I Holiday Shows High Schoola 1 Cnidse Ships I Chevron's Corporate Events I CanasUbradenExhibit 3 - advertisement for Philip and Henry $ It's Magic! Reserve inn-axing magicians For your special event anywhere in North America! We offer magic programs for your school. daycare. .-'r 1. camp. corporate event. L -'v adult party and any m special occasion. We also Feature our very own magic store on-line