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Scenario 6: Module 6 (Promotions)
LusterLast: Business Year 2020
You should be feeling pretty good. Ashanti is pleased with your performance and seems to be letting company management know about your efforts and critical thinking skills. In fact, as a reward for your diligent work, she has asked you to attend the annual American Marketing Association (AMA) meeting in Miami. While there, you engage in conversations with several marketing executives from other consumer packaged goods companies, and they tell you how they generated incremental sales through targeted marketing programs.
Last year’s performance bonus was good. However, you think that sales could grow even further with increased marketing spending. Before telling Ashanti, you elect to do some homework first.
You have set out to calculate baseline sales, estimated incremental sales from marketing spending (promotional lift), expected promotional lift from marketing, and the cost of attaining incremental sales from marketing spending. The only promotion that has been done is advertising on Facebook. You are further encouraged because of the current elasticity of demand for the category.
The MIS department provides you with below.
LusterLast: Business Year 2019
Total Sales ($) Marketing Spending ($) Baseline Sales ($)
25,850,000 1,500,000 24,675,000