A farm equipment company was considering a direct mail campaign to remind customers to have tractors serviced before spring planting.
The campaign is expected to cost $1000 and increase revenues from $45,000 to $50,000. Baseline revenues for tractor servicing (i.e. revenues with no marketing expenditures whatsoever) were estimated at $25,000.
The direct mail campaign was in addition to the regular advertising and other marketing activities costing $6000. Contribution on tractor servicing revenues (after parts and labor) averages 60%.
Questions:
4A) Calculate the ROMI for the direct mail campaign alone. 4B) Calculate the ROMI for the company’s total marketing spend (i.e. the regular marketing budget plus the direct mail campaign). (3 pts)