Question
Imagine you are the marketing manager who is planning to run a coupon campaign for your product. Your staff prepared the following table of information
Imagine you are the marketing manager who is planning to run a coupon campaign for your product. Your staff prepared the following table of information for you to review.
- Coupon Face Value (discount offered by the coupon) $0.40
- Processing Fee (back-end processing costs for each coupon) $0.07
- Regular Product Price (price of the product before discounting) $2.40
- Profit Margin 30%
- Coupons Distributed 30,000,000
- Cost/1000 Coupons Distributed $10
- Distribution Costs $300,000
- Redemption Rate 7%
- Coupons Redeemed 2,100,000
- Redemption Costs $987,000
- Total Campaign Costs $1,287,000
- Cost per Coupon Redeemed $0.61
- Total Campaign Profit $1,512,000
- ROI 17.5% Using this information, determine the percentage of incremental sales to buyers that would not have purchased in the absence of the coupon that would be needed to break even on the promotion.
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