In the example (Table 4), the profit reaches a maximum in trial 3 . The crucial insight is the observation that the elasticity of promotional efficiency moves from a value between 0 and -1 as the profits are increasing due to anincreased marketing effort. The profit reaches a maximum when the MROI elasticity approaches -1 in trial 3 (Table 4). As greater and greater promotional effort is spent and the point of maximum profit is passed, then the MROI elasticity becomes more and more negative. The MROI elasticity is a sound diagnostic metric from a theoretical perspective. It indicates when an increase in promotional expenditure will increase or decrease the amount of profit being generated by the promotion.Assumptions Impact Accurate MeasurementThere are assumptions about the elasticity of MROI that, like the elasticity of demand, that make it difficult to measure. For example, a key assumption is to have a minimal interaction between promotion and other elements of the marketing mix such as price and product quality. An accurate measure of MROI elasticity requires the researcher to control for changes in market demand caused by forces other than changes in promotion expenditure.However, the challenges of accurately measuring MROI exist regardless of how the metric is interpreted. The point of this paper is that changes in MROI should be interpreted correctly
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