Hi! Can someone help me solve and explain these Return on Marketing Investment questions. The answers are also provided below.

Question 1:

Dickson Hardware BBQ Centre is running a promotion for Weber BBQs. The promotion includes a $200 coupon against a purchase, and $5000 in advertising to create awareness of the special deal. Dickson e-mailed 5000 customers on its mailing list and expected 10% to purchase one of the special edition barbecues, on which Dickson has a $500 contribution margin. If this is successful, what is the ROMI to the nearest percent on this promotion?

Question 2:

Summerlicious is a restaurant promotion that happens every July in Toronto. To be part of the promotion, each restaurant has to pay $5000 and spend about $500 to create and develop a special menu. The average meal is $35 on which the restaurant makes about a 70% contribution margin. The average restaurant seats 100 diners and without Summerlicious runs at 80% capacity in an average month (30 days). During Summerlicious (30 days in July), it expects to run at 95% capacity. Is it worth it to participate?

Question 3:

Mini-Cooper wants to change its positioning and has embarked on a major product placement program in high revenue movies. While it has to pay $500,000 to participate, it expects that as a result of this exposure, it can raise its prices by 15%. The average price of a Mini-Cooper is $30,000 and this year, 5806 were sold in Canada. Next year, it expects to sell about the same number, but at a higher price. The contribution margin is 10% per unit. What is the ROMI to the nearest percent?

Question 4:

Leon's has launched its "Don't pay a cent event", which costs them about $50,000 in advertising and forgiven loan costs. If the average purchase at Leon's is $2000 with a contribution margin of 20%, and if Leon's wants a ROMI of 100%, how many extra purchases does it need to reach that goal?

ANS:

1. 138%
2. Worth It
3. 423%
4. 250