Question

Using the information provided below. Calculate the Marketing Return on Sales (ROS) for Apple. (7.5 pts)  Marketing Return on Sales = Net Marketing Contribution / Net Sales

Calculate the ROS for Microsoft. (7.5 pts) Which company has the better ROS? (5 pts) What does the ROS tell us about the marketing efforts. (5 pts)

In 2014, Apple reported profits of more than $50 billion on sales of $182 billion. For that same period, Microsoft posted a profit of almost $30 billion on sales of $88 billion. So Apple is a better marketer, right? Sales and profits provide information to compare the profitability of these two competitors, but between these numbers is information regarding the efficiency of marketing efforts in creating those sales and profits. Appendix 2, Marketing by the Numbers, discusses other marketing profitability measures beyond the return on marketing investment (marketing ROI) measure described in this chapter. Review the Appendix to answer the questions using the following information from the two companies’ incomes statements (all numbers are in thousands):

	Apple	Microsoft
Sales	$182,795,000	$86,833,000
Gross Profit	$ 70,537,000	$59,899,000
Marketing Expenses	$    8,994,750	$15,474,000
Net Income (Profit)	$ 52,503,000	$27,759,000

Answer 1

	Apple	Microsoft
Gross Profit	$           70,537,000	$        59,899,000
Less: Marketing Expenses	$             8,994,750	$        15,474,000
Net Marketing Contribution	$           61,542,250	$        44,425,000
Divided by: Net Sales	$        182,795,000	$        86,833,000
Marketing Return on Sales (Marketing ROS)	33.67%	51.16%
Microsoft company has the better ROS than Apple.		Microsoft
Higher Marketing ROS is better.
ROS tell us about the marketing efforts.
Microsoft company has the better ROS than Apple. It means the Microsoft company has operated at effectively.
	Apple	Microsoft
Net Marketing Contribution	$           61,542,250	$        44,425,000
Divided by: Marketing Expenses	$             8,994,750	$        15,474,000
Marketing ROI	684.20%	287.09%
Apple company has the better marketing ROI than Microsoft.		Apple
As per marketing ROI, Apple company generates the great marketing ROI.