What is the Industry Benchmark Report?
The Industry Benchmark Report is a summary of all firms’ Net Marketing Contribution reports so that you can benchmark yourself against your competitors as shown in the figure below.
In real life, this information would be difficult to obtain, but this report has been made available to you so that you can learn from your competitor(s).
There are several key parts of this report that you need to understand.
Sales & Gross Margin
The Sales Revenue listed for each is the total wholesale sales revenue of all the firm’s products. The Cost of Goods Sold is the total cost of goods sold of all of the firm’s products that were sold, which is the number of units of a particular product sold multiplied by its manufacturing cost.
Gross Margin is the amount of profit that each firm made after the manufacturing costs were deducted.
You have no control over either the wholesale price or the manufacturing cost of your product, so your aim to maximize sales revenue by running the most cost effective advertising campaign that you can.
This section shows the combined Market Research, Agency Fees, Media Advertising, Customer Relationship and Marketing Communications expenditure for each firm.
The Evaluation Research expenditure lets you know how much market research your competitors are purchasing.
The Agency Fees let you know whether your competitors are using an Agency or not and how much it is costing them.
The Media Advertising expenditure allows you to see how much money your competitors are spending on Advertising, but now how they are allocating it to each media type.
Customer Relationship and Marketing Communications expenditure lets you know how much your competitors spent on implementing their selected options.
Net Marketing Contribution
Net Marketing Contribution is the amount of profit remaining after manufacturing (cost of goods sold) and marketing expenditures have been deducted. The only costs still to be deducted are other functional overhead costs for your firm, e.g. finance, administration, etc.
Net Marketing Contribution is a measure of how profitable your firm is as a result of its strategic marketing plan. There is only one way that you can improve it, increase your Sales Revenue per dollar of Marketing Expenditure.