An Internet company, Boundless.com, discusses the development of marketing metri

Question

An Internet company, Boundless.com, discusses the development of marketing metrics on the web at: https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/introduction-to-marketing-1/evaluating-marketing- performance-23/marketing-performance-metrics-134-7590/, go to this web site and read the materials that discuss marketing metrics. Pay particular attention to the metric ROMI—return on marketing investment—which is a relatively new metric to help marketers measure the performance of activities across the marketing mix. The purpose of ROMI is to measure the degree to which marketing spending contributes to profits. Read the material that discusses how ROMI is used to assess marketing performance. Then, based on the material in this chapter, critique the effectiveness of ROMI as a measure of marketing performance. Be sure to explain the positive contributions of this measure as well as the drawbacks and problems with using such a measure to assess marketing performance.

Explanation / Answer

[Incremental Revenue Attributable to Marketing * Contribution Margin (%) – Marketing Spending] / Marketing Spending ($).

Positive contributions of ROMI:

Drawbacks and problems of ROMI:

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