One tool that business oriented people use in determining the effectiveness of any advertising campaign or marketing strategy is the calculation of Marketing ROI or return on investment from and for marketing. Often times, Marketing ROI is confused with another tool or methodology in calculating investment return called Return on Marketing Investment. This is also abbreviated as ROMI. Marketing ROI is a business and statistical formula used to see if the advertising methodologies used to promote a product or brand name brought about favorable results for the company in terms of increased number of customers or membership and increased product sales.
According to statisticians, if the marketing return on investment is improved, there is a big possibility that the effectiveness of marketing strategies, actions, tactics, and activities will also show ideal results. It is claimed that marketing is correlated with profits. This is because the strategies used will take in more customers and sales. And all businessmen know that customers are the very bloodline of every business establishment. The actual calculation of marketing ROI is as follows: the marketing investment is subtracted from the incremental distribution campaign. The difference is divided by the marketing investment and the answer is multiplied by 100 .
Analysis of expenses incurred in marketing will help business leaders decide which part of marketing activities need trimming. It is easy to assume that on marketing style is more expensive than the others. Normally, this is what will be trimmed down or totally put to a stop since the literal expense is high. However, there needs to be a tool to determine if the expenses incurred for this marketing methodology is also at par or correlated with the revenue it is earning. Sometimes, what seems to be an expensive marketing advertisement is the very marketing strategy that brings the business on top of the others. If a business leader makes the mistake of removing that marketing campaign, the business will definitely suffer.
An advice that is apt for businessmen is to audit their marketing strategy. There is a need to identify basic statistical figures to help the company gain clearer perspective of the right direction to take. This includes identifying a demography, who the target market is, profiling this target market, knowing the spending power of the target market, frequency of spending, etc.
The second most important ting in determining marketing ROI is the use of data analysis. When a new marketing strategy is used, a statistician needs to know its actual impact by gathering data, such as sales increase, brand awareness through surveys, medium of, marketing strategy whether it was done on the radio, television, print ads, tabloids, internet, or cell phone, etc. Once this information are available, the statistician may proceed in analyzing whether the marketing strategy is effective or not. Then the formula mentioned earlier is put to use.
Doing good business is not about assumptions. Just because a competitor used a marketing strategy does not mean it will also work for another. The key things one should consider is the ultimate mission vision of the company. This is certainly because marketing strategies will force the company to re shape or change its image, and thus, lose its business purpose. And if a business does not have a soul or does not have an attitude, customers feel it.
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