Marketing - What is Return on Investment

The video tutorial explains the concept of Return on Investment (ROI) and its significance in business growth. It covers the steps to calculate ROI, including determining the initial investment, understanding profit margins, and estimating sales volume. By analyzing these factors, businesses can make informed decisions on which ideas to pursue for optimal growth and success.

What does ROI stand for in business terms?

• Rate of Interest

• Return on Investment

• Revenue on Income

• Ratio of Income

Which of the following is NOT typically considered an initial investment for a new product?

• Supplies

• Research and development

• Marketing expenses

• New machinery

Why is it important to know the profit margin when calculating ROI?

• To calculate the total production cost

• To determine the selling price

• To estimate the total sales volume

• To understand how much of the initial investment can be recovered per unit sold

What role does sales volume play in estimating ROI?

• It helps in setting the product's price

• It is used to calculate the profit margin

• It determines the total revenue generated

• It helps in recovering the initial investment

Once ROI is calculated, what decision can be made?

• The best supplier for raw materials

• The best location for production

• The best way to move forward with a business idea

• The best marketing strategy