[MUSIC] Hi. We are in the expected results part of the marketing plan, and now we're going to talk about how to measure your financial objectives. So, we're going to talk about metrics for financial objectives. As you know in the marketing strategy part of the marketing plan we define financial objectives, okay, that's usually a sales objective. So usually it's going to be like this is a number of units that we plan to sell, or this is the amount of money or the revenue that we plan to generate with this marketing plan. So if there's one single objective that is always in the marketing plan. So if there's single measurement, a metric that is always in the marketing plan is this one. The financial objective. Okay so basically we need to define the sales that we are going to generate and also the profits. So sales and profits are going to be always in the expected results of the marketing plan. So the idea is basically we're saying if you give me these resources that I'm demanding in this marketing plan I'm going to deliver this result. And the results are going to come in the form of a certain number of sales and also a figure for the profit. Remember the financial objective many times comes defined by the top management. So the marketing plan basically must demonstrate that this marketing strategy that we're proposing Is the most optimal way to achieve those objectives. Okay, so how do we, what is the most common metric to be used for the financial objectives. Well, a very simple profit and loss account. As you know the profit and loss account is the summary of the results of the company or the brand in a certain time period usually one year. Okay and it's the most important expected result measurement tool that we have in the marketing plan. So how do we build the profit and loss account, very simple. As we see here, we basically need to figure sales okay so we define a sales objective. Many times in units and also in value and money okay? So we say, sales minus production cost, sometimes called, also called cost of goods sold. Okay. The production cost of the cost of producing our product or service. What is left, after taking out the production cost, is a gross profit, or a gross contribution. Ok, what is next? I need to take out the marketing money, the marketing budget that I'm using. And what is left is the net profit. Ok, so we defined sales and we defined net profit. Simple, ok, don't complicate yourself. Just go for a very simple profit and loss account. And actually just go for this because that's what is relevant for us. For the marketing and sales people because those are the things that we can't control. As you can see here this is a very simple example of profit and lose account, where we can see units sold, you see units, you see value, you see cost of goods sold COGS which is cost of goods sold And then we see contribution before marketing then we take out advertising and sales force. Okay, we tell the cost of after commercializing or selling the product. We also take out the market research studies which are part of a marketing budget usually and what is left again is the net contribution. So very simple profit on those account this is something again I insist that should be included in your expected results of your marketing plan. In many times of the profit and loss Account or the (P&L) Account is presented in different scenarios. Okay, so you say, I can figure out optimistic situation, neutral, or pessimistic. Well, why is this on web basically because you need to define cells objectives that are challenging but achievable at the same time. So many times you need to try and forecast different situations. Remember the profit and loss account means basically a commitment. So your committing yourself to delivering these results. So be careful when defining the objective, be careful when defining the expected results because like I was saying, you're committing yourself and you'll be probably evaluated by these sales figure that you're proposing here. Okay, another typical objective, financial objective, And measurement to that we used in marketing plan is return on investment. A very well known ratio which is usually called ROI. So what is return on investment. It's basically a ratio that compares the return that you're generating on investment that you're actually doing to generate the sales. So basically Is going to be an equation where you put here the return. So the net contribution or the new profit that will generate and in the numerator, we put the investment. What type of investment, the marketing investment. Okay. Here is a very simple example of a profit and loss account. So the ROI calculation, okay, with this basically just taking the net contribution and dividing it with the marketing investment that we have done and basically we will get a figure. That is going to be the return on investment. What is the way of reading return investment? For example if return investment is four, ROI four, means that for every dollar, for every euro, for every monetary unit that we invest in this plan we're getting $4 net contribution, net profit. Let me introduce you to another very common metric that we use for financial objectives, which is market share. Very well known. What is market share? It's a percentage of funding or market total sales that is earned by me, by a specific company. Okay, remember market share is always a percentage. Okay, and can be calculated considering sales in money or in units over a period of time. And once again a very simple example that we can see here. We can see that the market share with the same profit and loss account that we were seeing before. We take, basically, sale market share in units, and market share in value. We conclude that the market share is 14.57% and in value is 10.13, okay. So just to summarize quickly, financial objective is always there. Profit loss should be there in your marketing plan otherwise interesting ratio to use on market share always also part of or many times part of your marketing plan. Thank you very much. [MUSIC]
