A-Level Edexcel Business Marketing Mix & Strategy: Using the data in the decision t

Using the data in the decision tree, calculate the net gain for the marketing campaign - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2

Question 1

Using the data in the decision tree, calculate the net gain for the marketing campaign. State your answer to two decimal places. You are advised to show your working... show full transcript

Worked Solution & Example Answer:Using the data in the decision tree, calculate the net gain for the marketing campaign - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2

Step 1

Marketing campaign revenue calculation

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Answer

The revenue generated from the marketing campaign can be calculated as follows. If the probability of success is 0.6 and the value of the campaign is £3 million, the expected revenue is given by:

$ext{Revenue} = 0.6 \times £3,000,000 = £1,800,000$

Step 2

Cost of campaign

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Answer

The cost incurred for the marketing campaign is 40% of £50,000:

$ext{Cost} = 0.4 \times £50,000 = £20,000$

Step 3

Expected value calculation

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Answer

Based on the calculations, the expected value from the campaign is:

$\text{Expected Value} = £1,800,000 - £20,000 = £1,780,000$

Step 4

Net gain calculation

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Answer

The net gain is then calculated by revisiting the expected value minus the initial cost:

$\text{Net Gain} = £1,780,000 - £360,000 = £1,420,000$

Therefore, the final net gain for the campaign is £1.42 million.

Using the data in the decision tree, calculate the net gain for the marketing campaign - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2

Worked Solution & Example Answer:Using the data in the decision tree, calculate the net gain for the marketing campaign - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2

Marketing campaign revenue calculation

Cost of campaign

Expected value calculation

Net gain calculation

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