In the lesson “Finance for Marketers”, you have been introduced to the Marketing Return on Investment (MROI) concept. Now, it is time to practice the discussed concept through a simple example.
A farm equipment company was considering an email campaign to remind customers to have tractors serviced before spring planting. The campaign is expected to cost €1,000 and to increase revenues from €45,000 to €50,000. Baseline revenues for tractor servicing (with no marketing) were estimated at €25,000. The email campaign was in addition to the regular advertising and other marketing activities costing €6,000. The firm uses contribution to assess financial value and the contribution on tractor servicing revenues (after parts and labor) averages 60%.
Please note: Each of the metrics discussed in the lesson can be calculated from the information provided in the description above.
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The financial value attributable to marketing is:
The financial value attributable to the email marketing campaign amounts to:
The Marketing Return on Investment with the email campaign amounts to:
The Marketing Return on Investment without the email campaign amounts to:
The Return on Incremental Marketing Investment (ROIMI) of the email campaign amounts to: