Alicia is the owner-operator of Cool Beans, a local coffee shop. For the past year, Cool Beans
Question:
Alicia is the owner-operator of Cool Beans, a local coffee shop. For the past year, Cool Beans sold 242,000 drinks at an average price of $3.16 per serving. Her average variable cost per serving was $1.27.
Currently, she has been using local TV and newspapers to generate interest and awareness at a cost of $163,000 per year. She recently contacted Brushfire Social Media and they estimated they could reach the same number of people in her community with a social media budget at half the cost, though it would require an additional one-time investment of $11,000 in their website and social platforms.
As an additional option, Brushfire suggested a separate promotional campaign that would offer a $1 discount to any person who likes their social media page. Brushfire estimates that Cool Beans would sell an additional 7,700 cups with this discount and this new campaign would cost $2,500. If it turned out that 30% of the coupon redemptions were used by people who would have purchased coffee at the usual price, what would be the Marketing ROI under these conditions? _____ %
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield