Apple, Inc. produced $10 billion in marketing profits in 2009. All general administration expenses, other expenses, interest and taxes must be deducted from the NMC to yield a net profit of $5.7 billion as shown below.
Apple , Inc. (2009)
NMC = $36.5 billion x 36% - $3.2 billion = $10 billionEach market served by Apple contributed to both overall company sales and net marketing contribution. For the computer market, Apple produced an estimated $2.42 billion in net marketing contribution.
Apple (2009) Computer Market
NMC = $13.8 billion x 25% - $1.03 billion = $2.42 billionWhile this clearly shows how Mac sales contributed to overall marketing profits, this level of measurement needs to be extended to make it much more strategic with respect to marketing performance and strategies. Apple’s computer market net marketing contribution can be broken down into the market variables such as market demand, market share and channel discounts, as shown above.
Apple (2009) Computer Market – Market Level Marketing Profits
NMC = Market x Market x Channel x Percent - Marketing & Demand Share Discounts Margin Sales Expenses = $365 billion x 4.2% x (1 – 10%) x 25% - $1.03 billion= $2.42 billion
This market-level measure of marketing profitability allows management to assess future marketing profits based on strategies that take into consideration growth in market demand, market share, channel strategies, profit margins and investments in marketing and sales expenses.
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(*) Note: This example is for educational purposes only. Many of the numbers had to be estimated, as Apple does not publish them separately.
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