Explanation:
Initially, this was a research program that was initiated in 1972 at the Marketing Science Institute, a non-profit organization associated with Harvard Business School to determine the profit impact of market strategies.
Basically, your figure is going to tell you how much impact the advertising campaign is going to have.
"PIMS stands for Profit Impact of Marketing Strategy. PIMS is a shared experience model that helps firms to make and support marketing strategy decisions. Shared experience means that the model uses experience of a variety of successful and unsuccessful businesses to provide insights into the profitability of a corporation's different business units.
PIMS helps marketing managers to:
Select the appropriate market to target.
Iidentify the marketing strategy that will maximize profits in a business unit.
Compare a firm's actual return on investment (ROI) and return on sales (ROS) with the ROI and ROS that are expected from firms in comparable businesses and circumstances.
A PIMS analysis can show a firm :
(1) how well it has met its profitability potential
(2) the reasons for its success or failure in achieving the expected profitability.
How PIMS works : PIMS uses information about the experiences of a variety of successful and unsuccessful businesses to provide insights into a firm's expected profitability. The PIMS database contains information about 3000 businesses owned by 450 firms. Based on this reference database, PIMS develops relationships between the profitability measures of a firm (ROI and ROS) and such independent variables as the rate of price inflation and vertical integration. Thus, if a firm provides PIMS with details about the nature of its business and its external and internal environments, PIMS will calculate the ROI and ROS that could be expected of such a firm.