Development and Finance from issue 2010/1

Arnold Tóth

Corporate Profitability and Marketing

- Abstract -

JEL M-31

The return on marketing investments, i.e. calculating the ROI (return on investment) indicator, is particularly important when evaluating marketing programmes. This takes into account the limited resources available and displays the priorities that should be followed in allocating the budget. Maximising this indicator is not synonymous with maximising profits, but it does facilitate the adoption of correct decisions to this end. The ROI indicator comprises all the information required to make the decision as well as factors impacting on incomes/costs, while applying the discount rate balances out short and long-term profit. It is also suitable for determining the monetary value of strategic decisions. It can be used efficiently at all levels of corporate business operations when making strategic decisions. At company level it simplifies the allocation of the budget, while at department level the various marketing programme indicators help the individual departments become more profitable. When planning communication for various campaigns and during market testing, the indicator contributes to developing strategies and tactics.

Arnold Tóth, PhD student (Corvinus University of Budapest, Decision-Support Systems Doctoral School)

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