Raintree Developers has been measuring its marketing return on investment (or marketing ROI) to assess its marketing performance for the past few years

Question

Explain why this method may not accurately reflect the company's performance and what Raintree can use to better estimate its performance.

Answer 1

(Students' answers may vary. The answer given below is indicative.)
Marketing ROI is the net return from a marketing investment divided by the costs of the marketing investment. ROI is a measure of the profits generated by investments in marketing activities. Marketing ROI can be difficult to assess because the benefits of marketing are not always easily translated in dollar amounts. For instance, returns such as advertising and brand-building impact cannot be easily put into dollar returns. However, marketing ROI can be assessed in terms of more quantifiable standard marketing performance measures such as brand awareness, sales, or market share. Beyond standard performance measures, Raintree can also use customer-centered measures such as customer acquisition, customer engagement, customer retention, customer equity, and customer lifetime value.