QuestionBMW bought billboard advertising at the Jays' games for $\$ 80,000$ . It is estimated that they sold an additional 50 cars during the campaign. The contribution margin they made on each car during this promotional campaign was $\$ 2,000$ . What is the ROMI for the billboard advertising? 25\% 125\% 80\% 50\%

Studdy Solution

STEP 1

1. BMW spent \$80,000 on billboard advertising.
2. The campaign resulted in the sale of an additional 50 cars.
3. The contribution margin per car is \$2,000.
4. We need to calculate the Return on Marketing Investment (ROMI) and compare it to the given options: 25\%, 125\%, 80\%, 50\%.

STEP 2

1. Calculate the total contribution margin from the additional car sales.
2. Calculate the ROMI using the formula.
3. Compare the calculated ROMI to the provided options.

STEP 3

Calculate the total contribution margin from the additional car sales.
The contribution margin per car is \$2,000, and 50 additional cars were sold. Therefore, the total contribution margin is:
$\text{Total Contribution Margin} = 50 \times 2,000 = \$100,000$

STEP 4

Calculate the ROMI using the formula.
ROMI is calculated using the formula:
$\text{ROMI} = \left( \frac{\text{Total Contribution Margin} - \text{Marketing Investment}}{\text{Marketing Investment}} \right) \times 100\%$
Substitute the known values into the formula:
$\text{ROMI} = \left( \frac{100,000 - 80,000}{80,000} \right) \times 100\%$
$\text{ROMI} = \left( \frac{20,000}{80,000} \right) \times 100\%$
$\text{ROMI} = 0.25 \times 100\%$
$\text{ROMI} = 25\%$

STEP 5

Compare the calculated ROMI to the provided options.
The calculated ROMI is 25\%, which matches the first option.
The ROMI for the billboard advertising is:
$\boxed{25\%}$

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