Question

In: Operations Management

Please calculate the advertising budget for a start-up that expects annual $300,000 sales in the industry...

Please calculate the advertising budget for a start-up that expects annual $300,000 sales in the industry that dedicates on average 9 % of the revenues to promotion.

Given the projected conversion rate (% site visitors who makes a purchase) of 8% and average sale price of $500, how many sites visits do they need to achieve their sales goal?

Use conversion and The strategic objective is to acquire 60% of site visits from Facebook ads and 40% from Youtube (TrueView ads). Please re-calculate the advertising budget given the average cost per click (CPC) in your industry is $2 on Facebook and $5 on Youtube.

Solutions

Expert Solution

a. $27000

Advertising Budget = 9% of the revenue = 0.09*300000 = $27000

b. 7500

Expected No. of purchase= Expected Sale / Average Sale Price = 300000/500 = 600

Conversion rate = 8%

No. of site visits need to achieve = 600/0.08 = 7500

c. $24000

No. of visits from Facebook = % visit from Facebook * No. of site visits

No. of visits from YouTube= % visit from YouTube* No. of site visits

Advertising Budget allocation to Facebook = No. of visits from Facebook*CPC for Facebook = 4500*2 = $9000

Advertising Budget allocation to YouTube= No. of visits from Facebook*CPC for YouTube= 3000*5 = $ 15000

Total Advertising Budget = 9000 + 15000 = $24000

% of Revenue = Total Advertising Budget/Expected Sale = 24000 / 300000 = 0.08 = 8%

keosha answered 4 months ago
Next > < Previous

Related Solutions

A ) An entrepreneur invests $40,454.00 into a start-up business today. He expects the business will...
A ) An entrepreneur invests $40,454.00 into a start-up business today. He expects the business will generate $60,003.00 per year for 14.00 years, and then it will generate $137,194.00 per year for the following 16.00 years. Suppose he wants a 9.00% annual return to run the business. What is the value of this business today if his forecasts are accurate? (HINT: Discount all cash flows to today and subtract start-up investment.) B) A young graduate is planning on saving $600.00...
Village industries expects total sales for Jan, Feb, and Mar to be $300,000, $350,000, and $400,000...
Village industries expects total sales for Jan, Feb, and Mar to be $300,000, $350,000, and $400,000 respectively. All sales are on credit. It expects to collect 60% of the sales in the month of sale and 35% in the following month. a) Compute the cash collections from customers for Feb and Mar. February: $   March: $ b) Compute the accounts receivable for : March: $   April: $
The chart below lists the sales in thousands of dollars based on the advertising budget for...
The chart below lists the sales in thousands of dollars based on the advertising budget for that quarter. The regression equation is Y' = 4.073 + 0.8351X. What is the correlation coefficient? Advertising ($hunderds) Sales ($thousands) 0 5 3 5.5 4 7 5 7.8 6 9 7 11 Multiple Choice 0.775 0.844 0.926 1.00
how to calculate sales budget/cash collection budget for a master budget case?
how to calculate sales budget/cash collection budget for a master budget case?
COMPSYS is a start-up computer company. This year, the first year of operations, the company expects...
COMPSYS is a start-up computer company. This year, the first year of operations, the company expects to reach a Sales Revenue of $750,000. The company expects its sales to grow at a rate of 15% per year. Its Cost of Goods Sold (COGS) is running at 34% of Sales Revenue, and is expected to remain at that rate. Its Selling Costs are 12% of Sales in the first year and are expected to increase by an additional 3% per year...
Calculate the NPV of a 20-year project with a cost of $300,000 and annual cash flows...
Calculate the NPV of a 20-year project with a cost of $300,000 and annual cash flows of $25,000 in years 1-10 and $50,000 in years 11-20. The company's required rate of return is 10%
4. Suppose that fixed cost for a firm in the automobile industry (start up costs of...
4. Suppose that fixed cost for a firm in the automobile industry (start up costs of factories, capital equipment, and so on) is $5 Billion and that the variable cost is $17,000 for each automobile produced. Because more firms increase competition in the market, the market price falls as more firms enter an automobile industry, or specifically, P = 17,000 + (150/n), where n represent the number of firms in the industry. Assume that the initial size of the automobile...
Consider the following sample data for the relationship between advertising budget and sales for Product A:...
Consider the following sample data for the relationship between advertising budget and sales for Product A: Observation 1 2 3 4 5 6 7 8 9 10 Advertising ($) 50,000 60,000 60,000 70,000 70,000 80,000 90,000 90,000 100,000 110,000 Sales ($) 299,001 371,000 364,000 430,000 440,000 485,000 535,000 546,000 595,000 675,000 What is the predicted sales quantity for an advertising budget of $76,000? Please round your answer to the nearest integer.
Consider the following sample data for the relationship between advertising budget and sales for Product A:...
Consider the following sample data for the relationship between advertising budget and sales for Product A: Observation 1 2 3 4 5 6 7 8 9 10 Advertising ($) 50,000 60,000 60,000 70,000 70,000 80,000 90,000 90,000 100,000 110,000 Sales ($) 299,001 371,000 364,000 430,000 440,000 485,000 535,000 546,000 595,000 675,000 What is the correlation value for the relationship between advertising and sales? Please round your answer to the nearest hundredth.
Consider the following sample data for the relationship between advertising budget and sales for Product A:...
Consider the following sample data for the relationship between advertising budget and sales for Product A: Observation 1 2 3 4 5 6 7 8 9 10 Advertising ($) 50,000 60,000 60,000 70,000 70,000 80,000 90,000 90,000 100,000 110,000 Sales ($) 299,001 371,000 364,000 430,000 440,000 485,000 535,000 546,000 595,000 675,000 What is the predicted sales quantity for an advertising budget of $76,000? Please round your answer to the nearest integer. Note that the correct answer will be evaluated based...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT