I have no idea how to calculate ROMI.
Could someone help me how to calculate, Please?
Problem:
Conversion
Pretend you work for the Tournament Player's Club (TPC), which owns several top-notch golf courses in the U.S. Your marketing process is 3 steps: Your 1st goal is to get "Targets" (local golfers who do not yet have a membership to a TPC course) to attend a free weekend golf clinic. The purpose of the clinic is to make Guests familiar with the clubhouse, pro shop, staff, and amenities. It costs you $210 to host each Guest including instructor fees and driving range usage. When Targets accept this offer, they are reclassified as "Guests." Your 2nd goal is to motivate Guests to participate in a weekend tournament. The purpose of the tournament is to expose Players to your exceptional and challenging courses. Each Player costs $280 for green fees, cart usage, beverages, and tournament staff. Guests who accept this offer are reclassified as "Players." Your final goal is to get Players to sign-up for a membership, which costs $28,000 per couple and is payable in monthly installments of $699. It costs you $36 to process each membership application. All membership applications are approved. Players who accept your membership invitation are reclassified as "Members." You have a budget for this program of $3,750,000.
Question:
How many new members do you need to satisfy an ROMI of $5?
Thank you.
Doesn't your return on marketing investment depend upon how many Targets, Guests and Players you host?
Thank you Ms. Sue.
Yes, question is how many new members do you need to satisfy an ROMI of $5.
Are there any formula to calculate ROMI in this case?
Thanks.
Thank you so much, Sra!
I think I have you for the same marketing class with Capone at SDSU. I couldn't open the lecture slide, so I am also struggling to find the answers.
Hi, pAO!
I got two answers and I do not know which is correct.
Target ROMI =$5
Budget $3,750,000
Price = ??
Target Revenue = ( Marketing Investment x $ROMI)
Customers = (Revenue/ price)
I do not know if I have to devide $28000 by two?
Because a membership costs $28,000 per couple? Also $699??
To calculate the Return on Marketing Investment (ROMI), you need to determine the amount of revenue generated from your marketing efforts and compare it to the cost of your marketing program. Here's how you can calculate the ROMI for this particular program:
1. Calculate the total cost of the marketing program:
- For each Guest: $210
- For each Player: $280
- For each Member: $36 (only for the processing of membership application)
Total marketing program cost =
(Number of Guests * $210) + (Number of Players * $280) + (Number of Members * $36)
2. Calculate the revenue generated from the program:
- For each Member: $28,000 (total membership cost)
Total revenue generated =
(Number of Members * $28,000)
3. Calculate the ROMI:
ROMI = (Total revenue generated - Total marketing program cost) / Total marketing program cost
Now, let's solve the problem to find out how many new members you need to satisfy an ROMI of $5:
Given that the budget for the program is $3,750,000, and you want to achieve an ROMI of $5, we can set up the equation:
$5 = (Total revenue generated - $3,750,000) / $3,750,000
Simplifying the equation:
5 * $3,750,000 = Total revenue generated - $3,750,000
Total revenue generated = (5 * $3,750,000) + $3,750,000
Now, substitute the calculated values into the equation to find the total revenue generated. Divide the total revenue generated by $28,000 (the membership cost) to find the number of new members needed to achieve the desired ROMI of $5.