An Economic Evaluation of E-marketing Versus Traditional Marketing in Toranj Tile and Ceramic Company

 
Aim and Introduction:
 In today's digital age, electronic marketing has emerged as one of the most effective strategies for selling products and achieving business objectives, making it essential for companies. In this context, electronic marketing can significantly accelerate a company's progress toward its goals. Toranj Tile and Ceramic Company, a prominent player in the tile and ceramic market, aims to increase profits rapidly and at minimal cost, expand sales within Iran, and penetrate international markets to keep pace with technological advancements. The company also seeks to invest more in innovative methods, which must be justified both conceptually and financially. This research was conducted to evaluate the economic justification for replacing traditional marketing with electronic marketing at Toranj Tile and Ceramic Company. To achieve this, the study compares the economic efficiency of electronic marketing with that of traditional marketing within the company.
Methodology: In the present study, we aimed to address the question of whether replacing electronic marketing with traditional marketing, as currently implemented, has economic justification. If there is economic justification, to what extent does electronic marketing outperform traditional marketing? By examining the accounting documents of Toranj Tile and Ceramic Company, we utilized financial data from 2023-2024 for both the electronic and traditional marketing departments as the base year. The Net Present Value (NPV) and Internal Rate of Return (IRR) were calculated at two discount rates: 20.5% (the one-year long-term bank interest rate) and 25% (the attractive investment rate) for the next ten years. The data encompasses fixed costs, variable costs, and benefits, extracted separately for each marketing method. Fixed costs are expenses that remain constant regardless of production levels, such as the purchase of buildings, office supplies, employee training, production line rental, equipment maintenance, and domain and website hosting for electronic marketing. In the traditional sector, fixed costs include building rent, while domain and website hosting costs are excluded. Variable costs are expenses that fluctuate with production levels, such as salaries and wages paid to employees. Benefits include income generated from product sales. This research employs dynamic methods, which take into account factors such as the time frame and lifespan of the plan, discount criteria, and key performance indicators.
Findings: In the electronic sector, the Net Present Value (NPV) calculations conducted in Excel, as illustrated in Table 6, indicate that the NPV at both discount rates is greater than zero. An investment plan is deemed acceptable when the NPV is equal to or exceeds zero; therefore, electronic marketing is approved for Toranj Company. Furthermore, by utilizing the Internal Rate of Return (IRR) function in Excel and accounting for all cash flows, an IRR of 76% was determined. This rate surpasses the minimum thresholds of 20.5% and 25%, making electronic marketing a viable option for Toranj Company. In the traditional sector, the NPV calculations in Excel, as presented in Table 9, also show an NPV greater than zero, signifying that traditional marketing is acceptable as well. The IRR was calculated at 46%, which also exceeds the minimum return rates of 20.5% and 25%, further confirming the acceptability of traditional marketing.
Discussion and Conclusion: The results indicated that the Net Present Value (NPV) for electronic marketing was 292,830 million Rials, while for traditional marketing, it was 131,140 million Rials at a discount rate of 20.5%. At a 25% discount rate, the NPVs were 233,740 million Rials for electronic marketing and 94,020 million Rials for traditional marketing. Although all four values are greater than zero and acceptable, there is a significant difference among them. Electronic marketing is superior to traditional marketing. The average Net Present Value (NPV) for electronic marketing was 263,280 million Rials, whereas for conventional marketing, it was 112,580 million Rials. In terms of the Net Present Value (NPV) index, electronic marketing is favored over conventional marketing at both discount rates, demonstrating an average NPV growth of 133.86% when traditional marketing is replaced with electronic marketing. The internal rate of return (IRR) for electronic marketing was 76%, compared to 46% for traditional marketing. This confirms that electronic marketing is prioritized over conventional marketing, demonstrating an average growth of 65% in the Internal Rate of Return (IRR) when traditional marketing is replaced with electronic marketing. Based on these results, the hypothesis regarding the economic superiority of electronic marketing over traditional marketing at Toranj Company is confirmed.
Recommendations: Based on the research findings, it is recommended that Toranj Company leverage the advantages of electronic marketing by prioritizing online advertising, such as Google and Instagram ads, to attract customers and enhance brand recognition. The company should also broaden its electronic marketing efforts by creating engaging and informative content, including articles, videos, and images related to the tile and ceramic industry, which can be published on its website and social media platforms. Furthermore, Toranj Company can improve customer communication by developing an online support system that enables customers to easily reach out to the company with their questions and concerns.