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Boosting Roi With Experimental Design: by S K Chand Pasha R K Krishna Vazrapu Hari Priya.N

This document discusses how experimental design can help boost return on investment (ROI) for marketing activities. It defines ROI as the ratio of profit to investment. Experimental design allows firms to test different customer stimuli to understand what drives responses. The four pillars of marketing ROI are outlined as analytics, decision support tools, processes, and organizational alignment. Experimental design specifies treatments, test units, and dependent variables to help maximize customer profitability and calculate accurate ROI projections for marketing strategies and campaigns.

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Rajit Kumar Krishna
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143 views19 pages

Boosting Roi With Experimental Design: by S K Chand Pasha R K Krishna Vazrapu Hari Priya.N

This document discusses how experimental design can help boost return on investment (ROI) for marketing activities. It defines ROI as the ratio of profit to investment. Experimental design allows firms to test different customer stimuli to understand what drives responses. The four pillars of marketing ROI are outlined as analytics, decision support tools, processes, and organizational alignment. Experimental design specifies treatments, test units, and dependent variables to help maximize customer profitability and calculate accurate ROI projections for marketing strategies and campaigns.

Uploaded by

Rajit Kumar Krishna
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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BOOSTING ROI with

EXPERIMENTAL DESIGN
By
S K Chand Pasha
R K Krishna Vazrapu
Hari Priya.N
Introduction
• Interest in—and demand for—greater marketing
accountability has grown dramatically in recent
years.
• With the increase in competition among firms it is
important for the firm to calculate what factors are
driving customer stimuli and what is their expected
return on their investement.
• In order to obtain the data on return of their capital
ROI is used and to know customer response stimuli
they use experimental design.
What is ROI?
• Return On Investment (ROI) is a financial
measurement.
• ROI can be termed in simple way as the ration
of profit to investment in percentage form.

• In ROI return signifies the profit i.e is


generated not the revenue.
Key Finacial Factors of ROI
• 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 Value
• Customer Life Time Value
Power of MROI
• ROI is the ultimate measure for guiding
marketing investments.
• Marketing ROI is unique.
• Marketing ROI must be primary measure used
by companies and organizations to remain
competitive.
• Marketing ROI is most beneficial with
executive level involvement.
Key Challenges of ROI
• Generating reliable future value projections.
• Getting access to data.
• Standardizing measurement, values, and
practices.
• Establishing cost-effective measurement
processes.
• Establishing valid control groups
Continued…
• Matching results back to the appropriate
marketing initiative in multichannel
marketing environments.
• Allocating expenses
• Understanding residual value.
• Organizational barriers such as compulsion
structures.
• Total sum approach
Overview of ROI
• It is necessary to understand the degree of
impact that each challenge could have for a
firms environment.
• The goal is to gain greater insight for
marketing strategic decisions and prioritizing
marketing investments.
• Most of these challenges can be managed by
technology, best practices, and behavior shifts.
Four Pillars of Marketing ROI
• Pillar one : Analytics
These enables marketer to collect data regarding
the outcomes of its events and analyze that data to
understand 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 tools
collect, integrate and apply data.
Pillar Three : Processes

INSIGHT
MEASURE

POST EVENT
TARGET SETTING
ANALYSIS

EXECUTION PLANNING

COMMNICATEE CREATE
• Pillar Four : Organizational Alignment
– The final pillar ensures that the organizational
support and motivation needed to develop and
maintain marketing ROI capability is forthcoming.
Without this pillar, it is impossible to meet the
challenges that inherent changes
AN OVERVIEW OF THE MARKETING ROI
PROCESS

ROI Projections

Marketing Marketing
Results
Strategy Campaign

Marketing
Campaign
Vision of Marketing ROI
• A standardized ROI formula will be used as the
primary marketing measure.
• An ROI threshold will be established.
• Budget allocation will be based upon max
profits.
• Marketing activities are designed, measure
and managed to max customer profitability.
Contd…
• Complex analysis & Roi calculation will be
automated or performed by experts.
• ROI will be properly aligned with strategic
decision.
A NEW MARKETING SCIENCE

 Experimental design is distinguished by the


fact that you define and control the
independent variables before putting them
into the marketplace, trying out different
kinds of stimuli on customers rather than
observing them as they have naturally
occurred.
Marketing Experimental Design

• Specify Treatments

• Test Units

• Dependent Variables
Conclusion
• Though Return on Investment generally talks
about profit made by the investment .
Experimental design tries to tells us about
how customers are responding o particular
stimulus which helps in increase in sales and
profits which can help us to calculate our ROI
• So Return on Investment is indirectly
dependent on marketing experimental design.
• REFRENCES
– James D Lenskold, Marketing ROI- the path to
campaign, customer, and corporate profitability
– Eric Almquist and Gordon Wyner, Boost your
Marketing ROI with Experimental design

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