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Estimating the ROI for Marketing Activities

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The Situation

A firm decided to drive sales by building customer relationships rather than drive sales by advertising. It formerly treated the amount it spent on advertising as an investment that generated sales. By multiplying the gross margin percentage earned on its sales due to that advertising times its corresponding turnover ratio; it calculated its ROI on that advertising.

ROI = Turnover x Gross Margin = Sales x Gross Profit
Investment Sales

As the manager for marketing research at that firm, you job is to explain how you would calculate the return on what that firm is now investing in customer relationship management.

In preparing your proposal to estimate the return on what the firm is now investing in customer relationship management, explain the analyses that must be undertaken in order to measure the return on what the firm is now investing in customer relationship management. In other words, explain how you would estimate the cost of and sales generated by the activities, hardware, software, and personnel involved in CRM and ensure that you demonstrate your learning of the marketing research concepts and frameworks for analysis outlined as follows:

Explain how to use ROI to measure the effectiveness of marketing activities.

Cite any work used please, and thank you!

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The expert estimates the ROI for marketing activities.

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MARKETING PROFITABILITY ANALYSIS THROUGH ROI

There are three (3) steps involved in marketing profitability analysis (Kotler, 2006). The same may be applied in estimating the cost of and sales generated by Customer Relationship Management and other possible marketing efforts of the company.
1. Identify functional expenses. Common functional expenses include salaries, rent, and supplies (among others). Assume that these expenses are incurred to sell the products through the following marketing and collection efforts: CRM, packaging, delivery, billing and ...

Solution provided by:
Elisa Valdez, PhD
Education
  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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