Landing on this page means you have come searching for answers to the question: “How do I maximize my total marketing contribution?”
To answer this we first need to establish an understanding of what Total Marketing Contribution is and why it is important.
What is Total Marketing Contribution? Why is it important?
Total Marketing Contribution is typically how you are graded or compared to your peers within your course (there are other indicators but instructors typically opt to grade you on this). While your marketing contribution is calculated as…
Marketing Contribution = Sales Revenue – Cost of Goods Sold (CoGS) – Marketing Expenses.
To get your Total Marketing Contribution you just sum up all the marketing contribution your firm has generated for the duration of your simulation (so far).
How do I maximize my Total Marketing Contribution?
There are essentially four methods you can use here:
- Increase Sales Revenue while CoGS and Marketing Expenses remain constant
- Reduce your CoGS while Sales Revenue and Marketing Expenses remain constant
- Reduce your Marketing Expenses while Sales Revenue and CoGS remain constant
- Increase Sales Revenue while reducing your CoGS and Marketing Expenses.
Typically, you will want to aim for the fourth method used above.
To increase your Sales Revenue while reducing (or at the very least maintaining) your marketing expenses you need to ensure your Marketing Budget is spent as efficiently as it possibly can be.
How do I spend my Marketing Budget efficiently?
Make sure you are reaching your customers through the most effective methods and appealing to their desires/wants/needs. Check the market information report, check to see what the market segment you are marketing to has the highest sensitivity to (higher sensitivity means higher change in sales volume). Check the Media Viewing Habits of the market segments, and take into account the media reach of the different media types.
When you have sales promotion available to you (after the first rollover), check the how old your product is within the Distribution Cover and Sales promotion report and see how to target your sales promotion based on your product’s lifecycle within the Market Information report.
When evaluating your decisions from the previous period you can look to reports like:
- Some Product Details (or All Product Details)
- Product Awareness Increase By Media
- Distribution Cover and Sales Promotion (once Sales Promotion comes available to you)
(Note that market research reports will come out of your marketing budget so purchase these reports wisely).
How do I reduce my Cost of Goods Sold?
The best method for reducing your Cost of Goods Sold is conducting product development to reduce the cost of your product you’re selling. Consider the following critical points:
- “Is the Research and Development cost worth the reduction in the production costs?”
- “This will reduce my production costs but I need to reduce my price to remain competitive, thus reducing my gross margin per unit. Is it worth it? If I reduce my price and the production costs to maintain my gross margin per unit, will this increase my Sales Revenue anyway? Is this market segment sensitive to changes in price?”
When evaluating your firm to see if you need to further reduce your firm’s production cost through product development, you can review the following reports:
- Product Contribution
- Pricing Overview
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