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Introduction

Interest in and demand for greater marketingaccountability has grown dramatically in recentyears.

With the increase in competition among firms itis important for the firm to calculate what factorsare driving customer stimuli and what is theirexpected return on their investement.

In order to obtain the data on return of theircapital RO I is used and to know customerresponse stimuli they use experimental design.

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What is RO I?

Return On Investment (RO I) is a financialmeasurement.

ROI can be termed in simple way as the rationof profit to investment in percentage form.

In ROI return signifies the profit i.e isgenerated not the revenue.

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Key Finacial Factors of RO I

Net Present Value (NPV )Gross Margin

Gross Margin = NPV(Revenue Cost of Goods Incremental Expenses )

Discount Rate Discount Rate = Amount/(1+discount Rate )

Incremental Customer ValueCustomer Life Time Value

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Key Challenges of RO I

Generating reliable future value projections.Getting access to data.

Standardizing measurement, values, andpractices.Establishing cost-effective measurementprocesses.Establishing valid control groups

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Continued

Matching results back to the appropriatemarketing initiative in multichannelmarketing environments.Allocating expensesUnderstanding residual value.Organizational barriers such as compulsionstructures.Total sum approach

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Overview of RO I

It is necessary to understand the degree of impact that each challenge could have for afirms environment.The goal is to gain greater insight formarketing strategic decisions and prioritizingmarketing investments.

Most of these challenges can be managed bytechnology, best practices, and behaviorshifts.

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Four Pillars of Marketing RO I

Pillar one : AnalyticsThese enables marketer to collect data regarding

the outcomes of its events and analyze that data tounderstand why those outcomes were produced.

Pillar Two : Decision Support Tools ( DST)This pillar a cts as interface between complex

analytical output and the marketer. These toolscollect, integrate and apply data.

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Pillar Three : Processes

POST EVENTANALYSIS

TARGET SETTING

PLANNINGEXECUTION

COMMNICATEE

MEASURE INSIGHT

CREATE

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Pillar Four : Organizational Alignment The final pillar ensures that the organizational

support and motivation needed to develop andmaintain marketing RO I capability is forthcoming.Without this pillar, it is impossible to meet thechallenges that inherent changes

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Vision of Marketing RO I

A standardized RO I formula will be used as theprimary marketing measure.

An ROI threshold will be established.Budget allocation will be based upon maxprofits.Marketing activities are designed, measureand managed to max customer profitability.

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Contd

Complex analysis & Roi calculation will beautomated or performed by experts.

ROI will be properly aligned with strategicdecision.

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A N EW M A RKETING SCIEN CE

Experimental design is distinguished by thefact that you define and control theindependent variables before putting theminto the marketplace, trying out differentkinds of stimuli on customers rather thanobserving them as they have naturally

occurred.

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Conclusion

Though Return on Investment generally talksabout profit made by the investment .Experimental design tries to tells us abouthow customers are responding o particularstimulus which helps in increase in sales andprofits which can help us to calculate our RO I

So Return on Investment is indirectlydependent on marketing experimental design.

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REFREN CES James D Lenskold , Marketing RO I- the path to

campaign, customer, and corporate profitability Eric A lmquist and G ordon Wyner , Boost your

Marketing RO I with Experimental design

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