11 MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE APPENDIX Assessing the Financial Impact of the Marketing Plan

The Financial Assessment Process Budgetary considerations play a role in the identification, evaluation, and control of alternative marketing strategies. Top executives must be convinced that the marketing plan and strategy are a good value for the firm. The ratio of the plan’s costs compared to expected returns will be a deciding factor in determining which plans receive approval and funding. Performing a financial assessment of the marketing plan requires a working understanding of both finance and statistical analysis.

Financial Assessment Tools (1 of 2) Contribution Analysis Attempts to determine the amount of output (revenues) that can be expected from a given set of inputs. The formula for contribution analysis: Response Analysis Addresses the question of incremental change. The goal is to estimate accurate response coefficients that can be used to predict the change in sales volume based on a change in one or more elements of the marketing mix.

Sales Response to Advertising Expenditures Exhibit 11A.1

Financial Assessment Tools (2 of 2) Systematic Planning Models Marketing managers often use a planning model to estimate the financial effects of marketing activities proposed in the marketing plan. The inclusion of a detailed planning model in the marketing plan can assist the marketing manager in convincing top executives that the implications of the proposed marketing plan have been considered carefully.

Exhibit 11A.2

Exhibit 11A.3