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Marketing Problem Solving

The document presents two problems: a break-even analysis for a new product and a marketing budget allocation for a retail store. The break-even analysis reveals that 2,500 units must be sold to break even, with a profit of ₱500,000 at 3,000 units and 4,000 units needed for a ₱1,500,000 profit. The marketing budget analysis shows that email marketing has the highest ROI of 3.38 and should receive priority funding.

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msaffy1998
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4 views3 pages

Marketing Problem Solving

The document presents two problems: a break-even analysis for a new product and a marketing budget allocation for a retail store. The break-even analysis reveals that 2,500 units must be sold to break even, with a profit of ₱500,000 at 3,000 units and 4,000 units needed for a ₱1,500,000 profit. The marketing budget analysis shows that email marketing has the highest ROI of 3.38 and should receive priority funding.

Uploaded by

msaffy1998
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

1.

Break-Even Analysis Problem


A company is launching a new product with the following
costs:
 Fixed costs: ₱2,500,000 (equipment, initial marketing)
 Variable cost per unit: ₱750
 Selling price per unit: ₱1,750
Questions:
a) How many units must be sold to break even?
b) What is the profit if 3,000 units are sold?
c) If they want a profit of ₱1,500,000, how many units must
be sold?

2. Marketing Budget Allocation Problem


A retail store has a ₱120,000 quarterly marketing budget.
Based on past performance data:
 Social media ads: ₱100 cost per click, 8% conversion
rate, ₱2,500 average order value
 Email marketing: ₱5 per email sent, 15% open rate, 5%
click-to-purchase rate, ₱2,250 average order
 Google Ads: ₱175 per click, 6% conversion rate, ₱3,000
average order value
Questions:
a) What is the ROI (Return on Investment) for each channel
per ₱50,000 spent?
b) Which channel should receive priority funding?
Solutions for no.1:
a) Break-even = Fixed Costs ÷ (Price -
Variable Cost)
= ₱2,500,000 ÷ (₱1,750 - ₱750)
= ₱2,500,000 ÷ ₱1,000
= 2,500 units
b) Profit = (Price × Quantity) - (Fixed Costs
+ Variable Costs × Quantity)
= (₱1,750 × 3,000) - (₱2,500,000 + ₱750 ×
3,000)
= ₱5,250,000 - ₱4,750,000
= ₱500,000 profit
c) Units needed = (Fixed Costs + Desired
Profit) ÷ (Price - Variable Cost)
= (₱2,500,000 + ₱1,500,000) ÷ ₱1,000
= 4,000 units
Solutions for no. 2:
Social media:
 Clicks per ₱50,000: ₱50,000 ÷ ₱100 = 500 clicks
 Conversions: 500 × 0.08 = 40 sales
 Revenue: 40 × ₱2,500 = ₱100,000
 ROI: ₱100,000 ÷ ₱50,000 = 2
Email marketing:
 Emails sent: ₱50,000 ÷ ₱5 = 10,000 emails
 Opens: 10,000 × 0.15 = 1,500
 Purchases: 1,500 × 0.05 = 75 sales
 Revenue: 75 × ₱2,250 = ₱168,750
 ROI: ₱168,750 ÷ ₱50,000 = 3.38
Google Ads:
 Clicks: ₱50,000 ÷ ₱175 = 286 clicks
 Conversions: 286 × 0.06 = 17.16 sales
 Revenue: 17.16 × ₱3,000 = ₱51,480
 ROI: ₱51,480 ÷ ₱50,000 = 1.03
Answer: Email marketing has the highest ROI and should
receive priority.

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