An Objective of a Direct-Mail Campaign Is to Solicit an Order

question 110

Multiple Choice

An objective of a direct-mail campaign is to solicit an order from the prospects. Your firm's latest direct-mail offer was mailed to 100 000-targeted consumers. To date, you have received 2000 orders to your offer. Based upon what the industry's historical order rate runs, has this campaign been successful?

• A) No, the 2000 orders do not cover the marginal costs of the mailing.
• B) Yes, a 2 percent rate is considered good.
• C) No, the 2 percent is below acceptable standards for a mailing.
• D) No, the level is below acceptable levels.
• E) Cannot tell without more information.

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Definitions:

Payback Periods

The length of time required to recover the original investment cost through the generated returns.

Profitable

A financial state where earnings exceed expenses, resulting in a positive net income.

Discount Rate

The discount rate applied in DCF analysis to calculate the current value of future cash flows.

Net Present Value

The discrepancy between the current worth of incoming cash and the current worth of outgoing cash over a certain timeframe, utilized in the process of capital budgeting to evaluate an investment's profitability.