What is Marketing Contribution?
Total Marketing Contribution (TMC) is the key performance indicator in the Music2Go Marketing Simulation. This is a measure of how profitable your company is as a result of your marketing strategy.
Your annual Marketing Contribution is calculated using:
Wholesale Sales Revenue – (Cost of Goods Sold + Marketing Expenses)
Your TMC is then just the sum of your annual marketing contribution figures over the length of the simulation.
How do I increase Marketing Contribution?
There are essentially three methods:
- Increase Sales Revenue
- Reduce Cost of Goods Sold
- Reduce Marketing Expenses
How do I spend my marketing budget efficiently?
Make sure you are reaching your customers through the most effective methods and appealing to their desires/wants/needs. Check the market information report, check to see what the market segment you are marketing to has the highest sensitivity to (higher sensitivity means higher change in sales volume). Check the Media Viewing Habits of the market segments, and take into account the media reach of the different media types.
When you have sales promotion available to you (after the first rollover), check the how old your product is within the Distribution Cover and Sales promotion report and see how to target your sales promotion based on your product’s lifecycle within the Market Information report.
When evaluating your decisions from the previous period you can look to reports like:
- Some Product Details (or All Product Details)
- Product Awareness Increase By Media
- Distribution Cover and Sales Promotion (once Sales Promotion comes available to you)
How do I reduce Cost of Goods Sold?
The best method for reducing your Cost of Goods Sold is conducting product development to reduce the cost of your product you’re selling. Consider the following critical points:
- “Is the Research and Development cost worth the reduction in the production costs?”
- “This will reduce my production costs but I need to reduce my price to remain competitive, thus reducing my gross margin per unit. Is it worth it? If I reduce my price and the production costs to maintain my gross margin per unit, will this increase my Sales Revenue anyway? Is this market segment sensitive to changes in price?”
When evaluating your firm to see if you need to further reduce your firm’s production cost through product development, you can review the following reports:
- Product Contribution
- Pricing Overview