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Marketing Sales Environment

I'm seeking expert's answers and clarifications to the attached questions on Marketing.

Question 1:
From: Chapter 2: Company and Marketing Strategy: Partnering to Build Customer Relationships
Name of the textbook: Principles of Marketing (14th Edition)
PHILIP Kotler "Northwestern University" & GARY Armstrong "University of North Carolina"
Question title: MARKETING BY THE Numbers "Page 61"
Appendix 2 discusses other marketing profitability metrics beyond the marketing ROI measure described in this chapter. On the next page are the profit-and-loss statements for two businesses. Review Appendix 2 and answer the following questions. (See attachment)

1. Calculate marketing return on sales and marketing ROI for both companies, as described in Appendix 2.
2. Which company is doing better overall and with respect to marketing? Explain.

Question 2:
From: Chapter 3: Analyzing the Marketing Environment
Name of the textbook: Principles of Marketing (14th Edition)
PHILIP Kotler "Northwestern University" & GARY Armstrong "University of North Carolina"
Question title: Focus on Ethics "Page 93"
You've probably heard of some specific heart procedures, such as angioplasty and stents, that are routinely performed on adults. But such heart procedures, devices, and related medications are not available for infants and children, despite the fact that almost 40,000 children are born in the United States each year with heart defects that often require repair. This is a life or death situation for many young patients, yet doctors must improvise by using devices designed and tested on adults. For instance, doctors use an adult kidney balloon in an infant's heart because it is the appropriate size for a newborn's aortic valve. However, this device is not approved for the procedure. Why are specific devices and medicines developed for the multi billion-dollar cardiovascular market not also designed for children's health care? It's a matter of economics; this segment of young consumers is just too small. One leading cardiologist attributed the discrepancy to a "profitability gap" between the children's market and the much more profitable adult market for treating heart disease. Although this might make good economic sense for companies, it is little comfort to the parents of these small patients.
1. Discuss the environmental forces acting on medical device and pharmaceutical companies that are preventing them from meeting the needs of the infant and child market segment. Is it wrong for these companies to not address the needs of this segment?
2. Suggest some solutions to this problem.

Attachments

Solution Preview

The text portion of the solution to Question #1 is provide here. For the full version, please see either the pdf files or the Word file attached.
The solution to Question #2 is provided after the the solution to Question #1.

To calculate marketing return on sales and marketing ROI for both companies, as described in Appendix 2, you will need three formulas:

Formula 1) Net marketing contribution.--this will be used in both the calculation for Marketing return on sales and Marketing ROI. It is calculated as follows

Net marketing contribution = Net sales - Cost of goods sold - Marketing expenses

Formula 2) Marketing Return on Sales is the part of net sales that is related to net marketing contribution. It is calculated as follows

Formula 3) Marketing Return on Investment measures the effectiveness of an investment made by marketing. It is calculated as follows

Step 1) Calculate the Net marketing contribution for Business A.

Substitute the following values into Formula 1. These values are obtained from the profit-and-loss statement for Business A.
Net sales = $800,000,000
Cost of goods sold = $375,000,000
Marketing expenses = $100,000,000

Net marketing contribution = $800,000,000 - $375,000,000 - $100,000,000
= $325,000,000

Step 2) Calculate the Marketing Return on Sales for Business A.

Substitute the following values into Formula 2. These values are obtained from the profit-and-loss statement for Business A.
Net marketing contribution = $325,000,000
Net sales = $800,000,000

Repeat Steps 1 and 2 for Business B.
Step 1) ...

Solution Summary

This solution of over 900 words calculates the marketing return on sales and evaluates the company's successes and also discusses the environmental factors, ethics and suggested solutions for the treatment of heart disease in young patients.

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