An economic evaluation of E-marketing versus traditional marketing in Toranj Tile and Ceramic Company

Aim and Introduction: In today's era, electronic marketing is one of the fastest ways to sell products and achieve business goals, making it essential for businesses. In this context, electronic marketing can accelerate a company's progress toward its goals. Toranj Tile and Ceramic Company, a key player in the tile and ceramic market, aims to earn more quickly and at the lowest cost, expand sales within Iran, and reach international markets to keep up with technological changes. The company also seeks to invest more in new methods, which must be justified in principle and financially. This research was conducted to test the hypothesis of economic justification of replacing electronic marketing with traditional marketing in Taranj Kashi and Ceramic Company. Therefore, to achieve this, the comparison of the economic efficiency of electronic marketing against traditional marketing has been studied in the Kashi and Ceramic Company of Taranj.
Methodology: In the present study, an attempt was made to answer the question of whether the replacement of electronic marketing with traditional marketing (which is currently implemented) has an economic justification. In the case of economic justification, how much superiority does electronic marketing have over traditional marketing? By examining the accounting documents of Toranj Tile and Ceramic Company, the financial data from 2023-2024 for both the electronic and traditional marketing departments were used 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 rate of investment) for the next ten years. The data includes fixed costs, variable costs, and benefits, extracted for each marketing method separately. Fixed costs are costs that do not change with 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. The traditional sector's fixed costs include renting the building, but domain and website hosting costs are excluded. Variable costs are costs that change with production levels, such as salaries and wages paid to employees. Benefits include income from the sale of products. This research is based on dynamic methods, which consider factors such as the time and lifespan of the plan, discount criteria, and key indicators.
Findings: In the electronic sector, based on the NPV calculation in Excel and as shown in Table 6, the NPV at both discount rates was greater than zero. Since an investment plan is considered acceptable when the NPV is equal to or greater than zero, electronic marketing is approved for Toranj company. Additionally, using the IRR function in Excel and considering all cash flows, an internal rate of return of 76% was obtained. Since this rate exceeds the minimum rates of 20.5% and 25%, electronic marketing is acceptable for Toranj company. In the traditional sector, based on the NPV calculations in Excel and as shown in Table 9, the NPV was greater than zero, indicating that traditional marketing is also acceptable. The IRR was calculated at 46%, which also exceeds the minimum return rates of 20.5% and 25%, confirming that traditional marketing is acceptable.
Discussion and Conclusion: The results showed that the NPV in electronic and traditional marketing at a 20.5% discount rate was 292,830 million Rials and 131,140 million Rials, respectively. At a 25% discount rate, the NPVs were 233,740 million Rials and 94,020 million Rials, respectively. Although all four values are greater than zero and acceptable, there is a significant difference between them. Electronic marketing is superior to traditional marketing. The average NPV for electronic marketing was 263,280 million Rials, while for conventional marketing it was 112,580 million Rials. In terms of the NPV index, electronic marketing is preferred over conventional marketing at both discount rates, with an average NPV growth of 133.86% when replacing traditional marketing with electronic marketing. The IRR for electronic marketing was 76%, compared to 46% for traditional marketing. This confirms that electronic marketing is a priority over conventional marketing, with an average growth of 65% in the IRR when replacing traditional electronic marketing. Based on these results, the hypothesis regarding the economic superiority of electronic marketing over traditional marketing in Toranj company is confirmed.
Recommendations: Based on the research results, it is suggested that Toranj company, due to the superiority of electronic marketing, should focus on online advertising, such as Google and Instagram ads, to attract customers and increase brand recognition. The company should also expand its electronic marketing activities by creating engaging and useful content, such as publishing articles, videos, and images related to the tile and ceramic industry on its website and social media platforms. Additionally, Toranj company can enhance customer communication by developing an online support system that allows customers to contact the company and address their questions and concerns easily.