Case Study: Oreck

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Case Study: Oreck

Situation

Oreck was a private-equity-owned firm that needed to assess the impact of direct market efforts on specialty and traditional retail business operations. The company had only recently stabilized the business following the disruption caused by Hurricane Katrina. Also, due to the ongoing recession, sales revenues were down across the market for white goods and small appliances.  Direct sales were decoupling from direct media spend concurrent with traditional CPG firms beginning to utilize long form advertisements. Oreck had a major need to revitalize its brand while improving customer acquisition, conversion, and retention rates.

Engagement

Denneen & Company was engaged to support corporate strategy development to improve media allocation and spend and franchise retail economics, as well as help shape Oreck’s future business model.  Once the proper business understanding was achieved, the team deployed a specialized tool to run hundreds of models in order to determine the optimal modeling methodologies to predict each sales channel’s net revenue generation.  Models were conducted for all channels isolating the effects of seasonality, industry dynamics, and media spend.  These three factors explained 88% of all sales variation in direct sales and 68% in specialty retail channels and subsequent model testing was able to predict sales in these channels within 2% of actuals.  Finally, four distinct expansion models were developed and the range of options for business strategy were evaluated.

Results

A multi channel, multi form media mix model was deployed to gain efficiencies in media spend. These efficiencies enabled Oreck to reduce overall advertising spend while optimizing sales performance by channel.