MARKETING RETURN ON INVESTMENT (MROI) & FINANCIAL RETURN ON INVESTMENT(FROI)

MARKETING RETURN ON INVESTMENT (MROI) & FINANCIAL RETURN ON INVESTMENT(FROI)

MARKETING RETURN ON INVESTMENT (MROI) & FINANCIAL RETURN ON INVESTMENT(FROI) are two very important tools for any manager. These tools helps in understanding and evaluating the efforts made for organisation. Both tools are critical to measure the success of investment made and can lead to effective decision making, if employed well. 

The MROI can be easily calculated in descriptive way by doing some dipstick test marketing to measure the perception and check any effect in brand loyalty. This could also be calculated through numbers as well.

MROI: MARKETING RETURN ON INVESTMENT

MROI is a way to calculate the return on marketing investment.The focus is on finding the impact of marketing activities on the organisation revenue and margin.

The MROI can be calculated with the following formula

MROI = (Incremental Margin because of additional marketing investment-Marketing Investment})/Marketing Investment

Incremental Margin is the difference of margin occurred because of additional Marketing Activities while Marketing investment is the amount we have spent on marketing efforts.

For example, The company XYZ makes a revenue of Rs. 1 lakh with a 10% margin of Rs. 10000. To increase the margin and revenue the company decide to run an online campaign with a budget of Rs. 10000. With the online campaign the sale is increased to Rs 2.50 lakhs with an increased margin amount of Rs.25000.

The MROI is = (25000-10000)/10000 =1.5 = 150%

MROI is important and necessary to measure the impact of marketing efforts made. But the important part is to identify the incremental margin which can be result of various other activities. MROI helps in followings:

• Measuring the impact of marketing activities
• Helping in taking corrective marketing actions
• Predicting the impact of marketing activities in future

FROI: FINANCIAL RETURN ON INVESTMENT

The FROI is ratio of margin to the investment made. FROI takes an holistic view of investment, an organisation makes to increase the revenue. It could be in manufacturing, Human resource training or R&D activities. This helps in understanding the return on investment and then decide whether the investment decision was right or wrong.

FROI = (Gain from Investment- Cost of Investment)/Cost of Investment)

FROI helps in evaluating the impact of any particular investment made. This defines whether the investment was useful or not.

Both MROI and FROI are important tools in their categories, whereas the MROI focus specifically on Marketing campaigns/activities, FROI is meant for any of the organisational activities. The tools helps in corrective decision making.

Effective Planning Process

The essence of success for any manager is effective planning. In fact planning is the most important management function. The achievement of any successful manager depends, how well he plans.  The sales manager has to plan to increase their sales, Advertising manager has to plan his campaign to drive the desired results and Logistics Manager plans to make sure that the material reaches to customers on time.

WHAT IS PLANNING:

In simple language it is the answer of questions:

• What is to be done?
• How it should be done?
• When is to be done?
• By Whom it should be done?

So how one should plan?  The planing process starts with setting up the objectives. Once the objectives are achieved, then you start identifying the ways to achieve the objectives.The planner define the resources required to accomplish the task. Once the resources are identified, a timeline it set to achieve the desired objectives. After the identification of resources, the alternaive actions are determined and evaluated. Once the all actions are evaluated, the right action is selected and then implementation takes place.

In this process of planning, most of planner forget an important step to make the plan successful: The Monitoring System and Assessment Method. The monitoring and assessment system help us in effective implementation of planning and if required then guide us for modification in original plan to achieve our goals.

FEATURES OF SUCCESSFUL PLANNING:

• Planning needs to be goal oriented
• Good Planning requires time bound actions
• Planning needs to be flexible,
• Planning is the beginning and not an end,  the plans must have modification feature
• Planning must result in decision making

BENEFITS OF PLANNING:

• Planning helps in reducing time required to achieve the goals
• Helps in effective direction
• Helps in reducing the wasteful activities
• Helps in controlling  & coordination of actions
• Helps in decision making
• Helps in managing risks and uncertainties

LIMITATIONS OF PLANNING:

• Sometime planing leads to rigidity
• Planning may involve huge cost
• Planning may not work in dynamic environment
• Planning is not a guarantee to success
• Planning can be time consuming

Even after having some of the limitations, Planning is still a must tool for each of the successful manager. The effective planning defines the correct actions to achieve the organisational goals.It helps  in efficient utilization of available resources. The realistic planning helps in achieving the organisational goals in most competitive way. Hence go on and plan to achieve the goals you have set!

DIGITAL MARKETING & TRADITIONAL BRAND MANAGERS

DIGITAL MARKETING & TRADITIONAL BRAND MANAGERS

Digital revolution has digitalized everything; the shops at nukkads are converted in to digital market places. Markets are open 24X7 courtesy to online market places making Indian Customers experience what they never have seen.

Traditional business who thrived on traditional marketing channels; distributors, retailers are tweaking their marketing mix to lure the digital customers. On other side some of the CEOs are busy in either launching their own  E-commerce sites or negotiating hard with existing market places. 

Inside the board room, strategies are drawn to attract the digital customers. Brand Managers are entrusted to design marketing plan with focus on digital customers. The mandate is to devise strategy to increase the market share on the E-Commerce sites.

The traditional Brand Managers who have studied the Marketing Gurus in late 1990 and early 2000 are in deep discussion with Digital Specialist born in 1990s and try to understand the whole Gamut. What they traditionally studied and practiced are changing.  OTS, CPM are converting in  SEO, PPC, & CPI Digi-words.  The digital agencies are mushrooming in corporate parks, small buildings and even in one room offices. Each of them are convincing the brand managers that they can bring big traffic to the business site, which will lead to revenue generations. The traditional managers are confused about this, what they learn in first week of month changes by the end of next month. It is a challenging task to keep the pace with constant evolving digital market. 

Howe ever the traditional brand managers need to understand  this change and  has to adapt to situation, they need to understand that the qualities required for a good digital brand managers are same as they are for traditional managers. The digital marketing is not the rocket science and is one of the easiest subject to learn and practice. You can always hire an agency who can successfully guide your digital actions. However it is important that you understand the basic requirements of the digital success. The understanding will help you in selecting right partner from mushrooming digital agencies and shall help you to evaluate their actions.

To understand and master the subject, you required to have the some key marketing traits in yourself. 

So what are the key to transform you in a successful digital marketing manager? The key to be successful brand manager in this digital era is AIDA. AIDA in traditional marketing is marketing acronym which a consumer or marketer experience in the buying process. But in Digital world it is different. The AIDA in digital marketing is Agility, Interest, Data Savvy and Act.

AGILITY: The Brand Manager needs to be agile & quick to adept. He must not be rigid to what has planned & wait till the campaign ends. Instead brand manager must evaluate & improve the plan on regular basis during the campaign and keep changing the mix.

INTEREST: The brand managers must be interested to learn and keep himself updated with the rapid changing technology and practices in digital marketing. They must have creative desire to experiment, learn and try new advertising mixes. An internal desire to know and experiment helps brand manager in optimising the marketing campaign.

DATA SAVVY: The Brand Manager must be Data Driven.  Unlike other traditional media which also works on perception, Digital marketing is measurable and data oriented. Brand manager must be good with data analytics and should have ability to draw the conclusion from data provided.

ACTIONS: The Digital Brand manager must be quick to act. He must be able to act upon the learning made from data.  The actions need to goal oriented, specific and measurable.

The AIDA method will help you to learn the digital marketing nuances quickly and shall quickly transform you in a successful Digital Marketing Manager. AIDA will make you execute the digital marketing campaign and will deliver the sales and marketing result. Hence Adopt the AIDA model and break the traditional media boundaries.