Sales effectiveness, measurement

No. 1 objective. In those cases where we cannot measure advertising in terms of its contribution to profit, we try to measure its contributions to sales. This too is a difficult operation because of the many elements contributing to sales effectiveness in addition to advertising. But here again, since we have been able to do it in several instances this remains our secondary goal. 

Aquatic Life. After Chernobyl, the consumption of freshwater fishes by Europeans declined, fish license sales dropped by 25%, and the sale of fish from radiocesium-contaminated lakes was prohibited (Brittain et al. 1991). Many remedial measures have been attempted to reduce radiocesium loadings in fishes, but none have been effective to date (Hakanson and Andersson 1992). 

Activity ratios are a measure of how effectively a firm manages its assets. There are two inventory/turnover ratios in common use today. The inventory/sales ratio is found by dividing the inventory by the sales. Another method is to divide the cost of sales by inventory. The average collection period measures the number of days that customers invoices remain unpaid. Fixed assets and total assets turnover indicate how well the fixed and total assets of the firm are being used. 

Finally, while total promotion expenditures over all types of promotional efforts approximately doubled between 1996 and 2001 (Table 9.1), so too did revenues, and thus total promotional intensity remained relatively constant. The total promotion-to-sales dollar ratio has hovered between 14% and 16% between 1996 and 2002, but it appears to have increased tol7.1% in 2003. This most recent increase may reflect the rising relative importance of free samples provided physicians, which in large part (Table 9.1), as noted above, are evaluated at their full retail prices rather than at marginal production costs. The apparent increases might also simply reflect the effects ofvarious measurement errors. 

This would be a breathtaking change even within a large country like country U. For the Asian Pacific countries, such as country T, consideration would need to be given both to health effects on own population (Hsieh et ah. Chapter 13) and to possible sales to or purchases from abroad. For products developed within its own country, the profits from foreign sales of new products should be added to the measure of benefits from improving own-population health. This would imply a very different role for cost-effectiveness analysis than the traditional public health model. It would need to take economic development goals into account as well, and it may prove difficult to help domestic and export markets separate. 

In Cumbria, after the Windscale accident, a ban on the sale of local milk was made effective within 3 d. If vg for1311 in the area of maximum fallout downwind of Windscale was 3 mm s-1, then the measured deposition of 1 x 106 Bq m-2 corresponds to an air dosage of 3 x 10s Bqs m-3. From Table 3.7, this would give a theoretical thyroid dose to a child of 40 mSv which corresponds to the lower end of the range given in the first row of Table 3.10. If there had been no ban, and if the transfer from fallout to milk had followed the theoretical curve A in Fig. 3.6, then from Table 3.8 a child drinking 0.92 1 of milk per day would have received a thyroid dose of 1.4 Sv. 

This is the ratio of income from ongoing operations plus interest expense to the average total sales. Therefore, it is a measure of the firm s abilify to effectively use ifs assefs to earn a profit. 

Activity ratios are measures of how effectively a company manages its assets. They are based on the assumption that there are proper relationships between a company s assets and the sales and income that the assets generate. Different methods are used to generate these ratios, and they depend on how a person wants to use the ratios. Most analysts compile average ratios from balance sheet data, which are end-of-year data. In this section and in the financial ratio example that follows, this method is used. 

Input-output analysis can be applied to a wide variety of problems, but its major contribution is that it reflects changes in final demand to be measured quantitatively for a great many industrial sectors. For example, the effect on CPI output of an increase in automobile sales can be determined by using input-output analysis. The techniques of input-output analysis can also be used to determine the effect on the CPI of increasing the amount of plastics in cars and decreasing the amount of steel. The effect of changes in the GNP on the CPI and on any other sector also can be estimated with input-output analysis. Also the... 

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