Question 4 A gourmet cupcake store in London, Ontario launched a promotional cam

Question

Question 4 A gourmet cupcake store in London, Ontario launched a promotional campaign in an attempt to increase their sales revenues. They targeted parents of young children, encouraging them to serve cupcakes instead of cakes at birthday parties, 40% of the spending went towards "Decorate Your Own Cupcake" events held at the stores for young children, and the other 60% went towards radio advertise ments. The campaign was hugely successful with sales revenue increasing by $150k and a Marketing ROl of 2.7. How much was spent in total on the campaign? How much was spent on each respective part of the campaign?

Explanation / Answer

Solution-

Marketing ROI or Return on Investment = Increase in Sales revenue/marketing expense

Therefore, 2.7 = 150,000/Marketing Expense

Therefore, Marketing Expense = 150,000/2.7 = $ 55555.56

Marketing expense spent on "Decorate your own cupcake events" = 40% of total = 0.4*55555.56 = $ 22,222.22

Marketing Expense spent on Radio Advertisements = 60% of total = 0.6*55555.56 = $ 33,333.33

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