11-1 Ch. 11App: The Financial Impact 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.

11-2 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.

11-3 Sales Response to Advertising Expenditures Exhibit 11A.1

11-4 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.

11-5 Exhibit 11A.2

11-6 Exhibit 11A.3