The Economics of Marketing: In a Poor Economy, Marketing Should Be a Finely Tuned Resource Allocation Tool. (Marketing)

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I'D LIKE TO SPIN A BRIEF "What if" marketing scenario for you: You're charged with the marketing effort behind the recruitment of next year's class. The economy is dreadful, and money is tight. But you need to buy 150,000 four-panel search pieces.

One vendor prices the pieces at $.22, for a total of $33,000. Another vendor, using the same specs, prices them at $.19, or $28,500. You go with the second vendor because you believe you saved $4,500. End of discussion, right? If your job was to buy the least expensive search pieces, perhaps. But we know that your job is really to recruit the class.

Now, suppose a third vendor shows up and uses a different kind of math: She determines that last year, your 150,000 search pieces generated a response rate of 9 percent, with a cost-per-inquiry of $2.11. (150,000 search pieces generated 13,500 responses; $28,500 divided by 13,500 = $2.11). However, only 180 of your inquiring students matriculated. The result? While you saved your budget, you missed your class. The final search cost per matriculant is $158. This third vendor now proposes a slightly different strategy: Using basic prospect profiling analysis, she cuts your search list in half, to 75,000. This 75,000 represents the …