16.1 Return on Investment (ROI)

\[ ROI = \frac{\text{Net Profit}}{\text{Investment}} \]

Similarly, return on marketing investment

\[ ROIM = \frac{IRAM - CM}{MS} \]

where

• IRAM = Incremental Revenue Attributable to Marketing
• CM = Cost of the Marketing Investment
• MS = Marketing Spending

If ROMI is positive, then firm is on doing well.