ROL

Part III-ROI Michael Forte, founder and CEO of Northeastern Dental (ND) has created a chain of dental offices in South Florida that serve small communities outside of the main cities. The firm was launched three years ago and makes profit by providing dental services. However, they are not thinking about expanding into Orthodontics The company finds itself at a fork in the road where it must ratchet up sales to continue its ambitious goals or cut costs to insure survival, Recently the firm opened four new offices as a part of its ownbrand expansion plans. The company budgeted a substantial amount to promote the new offices and its Dentists. The investments were made before the recent economic downturn and are now getting a close review. The CEO is particularly focused on the firm's expenditure in the direct marketing category. You have a Direct Marketing firm that specializes in the medical and dental area. Since data on its target market show a propensity for searching for dentist via the internet and its website produces a steady stream of appointments - the CEO is skeptical of continued investments in direct marketing. You must demonstrate what would be the return on investment (ROI) data on direct marketing promotions. Below are data available for calculation: - Total Annual Profits: \$150,000 - Annual Profits attributed to Direct Mail Campaign: $25,000 - Annual Profits attributed to Web Site: $49,500 - Annual Direct Mail Investment: $5,700 (this would be what they pay for your services) - Monthly costs for operating and maintain website: $955 (Go to next page for questions) how it is applies to sale you are trying to make: 37. Why should ND be interested in determining whether its promotions are reaping the rewards desired? a. Because such data goes into tax preparation form 503 b. Because the information may support last year's personnel hiring decisions c. Because attendance at the company annual party is down d. Because it desires that company expenditures contribute to profits e. A and D Only 38. How is the ROI calculation result expressed? a. Number of units sold b. Contribution margin per unit c. A percentage d. Variable costs per percentage e. None of the above 39. In addition to scrutinizing the ROI for its direct marketing campaign what other aspects of its advertising could be reviewed to improve profits. a. Newspaper display ads b. Radio commercials c. Website catalog d. All the above 40. Based upon the available financial data, what is the ROI ND's direct mail campaign? a. 26.27 percent b. 14.09 percent c. 5.36 percent d. 536 percent e. None of the above 41. What would be your recommendation? a. There is no difference in the ROI, so keep everything to maintain the profits. b. Stops using the Website as it has a bad ROI. c. Consider increasing the investment on Direct Marketing to gain more profits. d. Quadruple the investment on Direct Marketing to guarantee a significant increase with the 4 new locations