Strategy Dynamics Breifing 17: The problems with correlation

Posted by:

A devastating implication arises from this interdependency between resources from the previous briefing. Here is a simple story…

A company’s profits come from its revenues minus its costs, and its revenues reflect the number of customers. Amongst its costs, marketing spend mostly acts to win customers, rather than increase their purchase rate

  • The company raises marketing spend in order to grow sales and profits
  • But first, its profits fall because of the higher marketing cost
  • However, the marketing spend does win a few more ...
Continue Reading →