marketing contribution This is a topic that many people are looking for. thetruthaboutdow.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, thetruthaboutdow.org would like to introduce to you Marketing Performance Metrics – Profitability Metrics . Following along are instructions in the video below:
“To managing profitable growth session. One the focus of this session is on how to to measure and manage marketing profitability marketing return on sales and marketing return on investment session is divided into three parts a short summary and individual next steps to get you started in measuring and managing these important marketing performance metrics net marketing contribution is the most fundamental marketing profitability metric and is a financial metric that fits within the domain of financial reporting net marketing contribution is simply sales times percent. Margin. Marketing and sales expenses.
For example sales of 10. Billion dollars with a 35. Percent margin produces a gross profit of 35. Billion dollars after deducting 1 billion dollars in marketing and sales.
Expenses the net marketing contribution is 25. Billion. This is the marketing profit. The company attained as a result of the company s marketing strategies and investment in marketing and sales expenses marketing our os our second marketing profitability metric is simply the net marketing contribution as a percent of sales this allows us to control for large variances in sales and to compare the marketing profits of a company with business units regions markets or product lines and even individual products marketing roi our third marketing profitability metric is simply the net marketing contribution divided by the investment in marketing and sales expenses utilized to produce that level of marketing profit like marketing.
We can compare a company or business to any region market or product in terms of marketing roi. Many of you will not know your exact marketing and sales expenses. Companies often do not report. This as a separate expense.
If you do not know your marketing and sales expenses. We recommend using 75 of sgna as a way to get started this estimate can be revised later before we go any further let s look at a company application of these marketing profitability metrics. Apple is a great example for the last 10 years their net marketing contribution has been tracked closely with their operating income in 2009. Their net marketing contribution of ten billion dollars helped produce a net profit of 57.
Billion dollars and earnings per share of six dollars and twenty nine cents. While this measure of net marketing contribution was generated at the company level every apple product had a net marketing contribution that contributed to the 10 billion dollars in overall net marketing contribution and can be measured individually the marketing metrics. Handbook provides a software platform that allows you to analyze your own marketing strategies and marketing. Profitability metric 11 allows you to evaluate many different changes in performance and the corresponding impact on net marketing contribution metric.
Allows you to assess marketing. Our os and marketing roi as well as net marketing contribution. This allows you to evaluate how performance changes modify these to marketing profitability metrics in part two we ll examine how marketing profitability can be managed sails are a key driver in the marketing profitability equation and can be broken down into four marketing forces when this expression of sails is multiplied by the percent margin. We achieve the same level of gross profit next subtracting marketing and sales expenses from the gross profit we obtain the same net marketing contribution presented in the previous section metric 14.
And the marketing metrics. Handbook provides a market level model of marketing profitability. Which is useful for managing net marketing contribution for a market or region with many different products metric. 15.
Provides a product level model of marketing profitability. This allows managers to include price and unit costs in managing the net marketing contribution for a product line or product for metrics. 14 and 15. The marketing expenses and sales expenses are input separately to allow for the analysis of different marketing strategies for example sales expenses would be considerably different for direct sales or indirect channel sales in part three we ll show you how to use marketing.
Our os and marketing roi to create a strategic view of marketing profitability..
A marketing profitability portfolio can be created using marketing ro s. And marketing roi this particular marketing profitability portfolio is for a medical devices business with ten major product lines if they had 1 to invest in marketing and sales expenses. They would be best served by investing in product number ten. Where they would earn four dollars and 50 cents and marketing profits for each dollar invested.
Product one would only return 50 cents on each dollar invested metric. 13 and the marketing. Metrics handbook can be used for this purpose metric. 16.
Allows you to benchmark your company against one to four other companies in this figure. We can see that apples high level of marketing roi helps build a stronger pre tax return on assets. We can further validate the importance of marketing roi by comparing this relationship using 100 of the fortune 500 business to consumer companies. Companies with a higher marketing roi tend to produce a higher pre tax roa.
This is also true for other industry sectors..
Such as business to business high tech energy and materials and services. Let s review what we ve covered in session. One these are the three marketing profitability metrics. Presented in session 1 net marketing contribution is the marketing profit.
The company attains as a result of the company s marketing strategies and investment in marketing and sales expenses marketing. Roas is simply the net marketing contribution as a percent of sales and finally marketing roi is simply the net marketing contribution divided by the investment in marketing and sales expenses our first application was to break down net marketing contribution into a managerial model of marketing forces that shape net marketing contribution. We created two handbook metric models one at the market level and one at the product level second application focused on creating a marketing profitability portfolio and benchmarking company marketing roi. The marketing profitability portfolio allows for a strategic view of comparative performance among businesses regions or product lines.
Within a business. The company benchmark provides a good strategic view on how a company is performing when compared to other benchmark companies. Let s close with a reminder that our focus for each session is to learn measure and manage marketing performance metrics that have an own relationship. ” .
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“Introduction to three core marketing profitability metrics: Net Marketing Contribution (NMC), Marketing ROI, and Marketing ROS”,
Marketing Metrics, Performance, Net Marketing Contribution, ROI, ROS, NMC, Business, Training, Market-based Management, Strategy, Marketing and Sales Expenses