Marketing

Assignment 2: Direct Marketing Math

 

Question 1:

 

A mailing of 100,000 pieces with a total promotion cost of $50,000 generated $180,000 net sales.  The average order size was $60 and each order contributed $25 to promotion costs after paying for the cost of goods, fulfillment, and an overhead allocation.  Calculate the following:

 

Calculate the following:

 

Calculate	Answer
Total Orders
Total Contribution
Total Profit
Profit as a Percentage of net sales
Response Percentage
Orders/Thousand
Promotion Cost/Thousand
Contribution/Thousand
Profit/Thousand

 

  

Question 2:

A company has the following cost profile:

 

Cost of Goods:  34% of net sales

Operating Expenses: 10% of net sales

Overhead Expenses: 8% of net sales

 

What is the contribution to promotion costs and profit?

 Find the sales/thousand break-even if:

a. Promotion cost is $500/thousand

 

 

a. Promotion cost is $500/thousand and there is a targeted profit of 10 percent