Marketing 4th Edition by Dhruv Grewal,Michael Levy

Exercise 1

RETURN ON MARKETING EXPENDITURES
Suppose Jay Oliver (marketing manager of Transit sneaker store) is considering two search engine marketing (SEM) options to reach out to new customers to market Transit. In particular, he is using Google Ad- Words, a search engine marketing tool offered by Google that allows firms to show up in searches based on the keywords potential customers use. Transit is targeting young adults age 17-28. The sneaker market is about $500,000,000 sales annually, and the target market is about 35% of that. Their gross margins are 20%. Oliver estimates that Transit will capture a 2% market share of the target market with a $500,000 advertising and keyword budget (option 1) and a 3% market share with a $1,000,000 advertising and keyword budget (option 2). Which marketing plan produces the higher ROI for the year Please use the toolkit provided at www.mhhe.com\grewal4e to assess the ROI of the two options.