Question
You and your business partner are working on forecasting demand and the lift that comes from promotional activities. Currently you are considering spending $7,000 each
You and your business partner are working on forecasting demand and the lift that comes from promotional activities. Currently you are considering spending $7,000 each on coupons and trade allowance and $14,000 on advertising. Baseline sales are $650,000. Below is a table with expected promotional lift.
| Additive | Multiplicative | |||||
| Promotion Spend | Advertising | Coupons | Trade Allowance | Advertising | Coupons | Trade Allowance |
| $0 | 0% | 0% | 0% | 1 | 1 | 1 |
| $7,000 | 8% | 11% | 3% | 1.03 | 1.13 | 1.01 |
| $14,000 | 11% | 12% | 5% | 1.23 | 1.19 | 1.07 |
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What are projected sales based on the additive method?
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What is the expected lift from the additive method?
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What is the cost of incremental sales based on the additive method?
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What are projected sales based on the multiplicative method?
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What is the expected lift from the multiplicative method?
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What is the cost of incremental sales based on the multiplicative method?
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Sound Investing, Chapter 23 - Internal Control
Authors: Kate Mooney
1st Edition
0071719458, 9780071719452
