marketing information management
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Marketing Information Management. E-Portfolio Assignment By: Sean Bindra 100170563. Agenda. Descriptive Statistics Marketing and Finance Market Share Metrics Margins Breakeven Analysis Profit Dynamics Customer Lifetime Value Distribution Sales Force Management Linear Demand - PowerPoint PPT PresentationTRANSCRIPT
MARKETING INFORMATION MANAGEMENTE-Portfolio Assignment
By: Sean Bindra100170563
Agenda Descriptive Statistics Marketing and Finance Market Share Metrics Margins Breakeven Analysis Profit Dynamics Customer Lifetime Value Distribution Sales Force Management Linear Demand Promotion Profitability Advertising Metrics Web Metrics
Descriptive Statistics Quantitatively describing main features
of a collection of data.
Examples include: mean, median, and mode.
Mean: arithmetic mean/average of a set of data. Ex.) data set: 2,1,2,1,4
Mean = 2+1+2+1+4/5 = 2
Descriptive Statistics cont’d.
Median: numerical value that separates higher half of sample from lower half. Ex.) data set: 2,4,6,8,10
Median = 6 Mode: value that occurs most often.
Ex.) data set: 2,2,3,1,5,2 Mode = 2
Marketing and Finance Provides insight into the overall financial
condition of a firm and analyzes potential investments.
Net Profit = sales – costs Ex.) If Tom made revenue of $5,000 and his costs
totaled $2,000, what is his net profit? Net Profit = $5,000 - $2,000 = $3,000
Return on Investment = net profit/investment Ex.) If Tom’s net profit is $5,000 and he invests
$2,500 into his business, what is his ROI? ROI = $5,000/$2,500 = 2.0 %
Marketing and Finance cont’d.
Return on Sales = net profit/sales revenue Ex.) What is Tom’s ROS?
ROS = $3,000/$5,000 = 0.60 %
Earnings Before Interest and Taxes = net profit + interest payment + taxes Ex.) Tom paid interest of $400 and taxes of
$100. What is Tom’s EBIT? EBIT = $3,000 + $400 + $100 = $3,500
Market Share Metrics Measures the sales of a brand or product relative
to the overall size of a market. Unit market share = unit sales/ total market
unit sales. Ex.) If there are 100 widgets sold in the country and
company A sells 50 of them, then the unit market share is: 50/100 = 0.2%
Revenue market share = sales revenue/total market sales revenue. Ex.) If company A makes $100, while companies B, C,
D, & E make a combined $900 in revenue, then company A’s revenue market share is: 100/1000 = 0.10%
Market Share Metrics cont’d.
Brand Penetration = # of people who bought specific brand/defined population.
Category Penetration = # of people who bought any brand/defined population.
Share of Penetration = brand penetration /category penetration. Ex.) 500 households buy Nike shoes while 2,000
households buy at least one style of product from the Nike category. Therefore, the share of penetration for Nike shoes is: 500/2,000 = 0.25%
Margins Manufacturer Distributor Wholesaler Retailer
Customer.
Selling Price = cost to produce + margin Ex.) If selling price is $50 and the cost is $20, then the
margin is: $30 $50-$20 = $30
Other key formulas: %margin = $margin/selling price Selling Price = cost/(1- %margin) Cost = selling price(1 - %margin) Markup% = selling price – cost/margin Selling Price = cost(1 + markup%)
Breakeven Anaylsis Determines the point at which revenue received =
the costs associated with receiving that revenue.
Total Costs = total fixed costs + total variable costs.
Total Contribution = total revenue – total variable costs.
Profit = total contribution – total fixed costs.
Breakeven Analysis cont’d. Breakeven Formulas:
Unit Breakeven = fixed cost/unit contribution. Revenue Breakeven = fixed cost/contribution
margin %. Revenue Breakeven = breakeven units*unit
price. Breakeven Units = $breakeven/unit price. Target Profit Breakeven = (fixed costs + target
profit)/contribution margin %.
Profit Dynamics Financial benefit realized when the amount of revenue
gained exceeds the expenses, costs and taxes.
Target Volume in Units = (fixed cost + profit objective)/selling price – variable cost.
Target Volume in Dollars: computed by taking the solution from above formula and dividing it by the selling price.
Target Revenue = unit target volume*selling price
Profit Dynamics cont’d. Ex.)
A product sells for $20, costs $5 to make, and company has fixed costs of $30,000. How many products must be sold to reach target profit of $30,000? Target Volume = ($30,000 + $30,000)/($20 – $5) = 4000
A product sells for $40, costs $10 to make, and company has fixed costs of $30,000. How many dollars worth of the product must be sold to reach target profit of $60,000? Target Revenue = ($30,000 + $60,000)/($40 – $10)/$40
= 3000
Customer Lifetime Value (CLV) Discounted sum of all future customer
revenue streams (-) product, servicing, and remarketing costs.
Assume: $M: contribution $R: retention spending per period per active
customer r: retention rate d: discount rate
CLV cont’d. CLV = [$M –$R] x [(1 + d) / (1 + d -r)] Ex.)
An Internet service provider charges $20.00 per month. Variable costs are $1.00 per month. The attrition rate is 0.5% per month with marketing spending of $5 per year. With a monthly discount rate of 1%, what is the CLV for a customer we plan on acquiring?
$M = $20.00 -$1.00 = $19, $R = $5/12 = $0.42, r = 0.995, d = 0.01 CLV = [$19 –$0.42] x [(1+.01)/(1+.01-0.995)] CLV = $1,251
Distribution Purpose: - To understand sales dynamics in retail channel.
Helps in making right decisions where expansion and growth strategies are concerned.
Numeric Distribution = (# stores that stock a brand)/(total stores in relevant market)
All Commodity Volume = (total sales of stores carrying brand) / (total sales all stores)
Product Category Volume = (tortilla sales of stores carrying Madre’s) / (tortilla sales all stores)
Distribution cont’d.Outlet All Sales All Shoe
SalesBaley SKUs stocked
Finley SKUs stocked
Store 1 $100,000 $1,000 5ct, 23ct 10ct, 21ct
Store 2 $70,000 $400 12ct 24ct
Store 3 $40,000 $500 5ct, 23ct n/a
Store 4 $20,000 $200 n/a 10ct, 21ct
Distribution cont’d. Numeric Distribution of Baley is:
(3) / (4) = 75%
All Commodity Volume of Baley is: ($100k + $70k + $40k) / ($100k + $70k +
$40k + $20k) = 91.3%
Product Category Volume of Baley is: ($1000 + $400 + $500) / ($1000 + $400 +
$500 + $200) = 90.5%
Sales Force Management Workload = Current Accounts (#) * Average
time to service account + Prospects (#) * Time trying to convert prospect to sale.
Ex.) The sales territory of Magma has 20 current accounts requiring 10 days of support per year and 40 prospects. It is estimated to take 15 hours in the sales process for phone and on-site follow-up. The yearly workload is:
(20 * 10 ) + (40 * 15 / 8) = 150 + 75 = 275 days
Sales Force Management cont’d.
Sales Potential = Number of Possible Accounts * Buying Power ($)
Ex.) A company has determined that there are 200 doctors in 6 cities that could be a source of business. Of those, 100 are cardiologists, with an avg. potential account value of $45K, and 100 rheumatologists with an avg. potential account value of $30K. The sales potential is:
= (100 * $45,000) + (100 * $30,000) = $7,500,000
Sales Force Management cont’d.
Sales Goal formulas: Historical = Share of prior year sales (%) *
Overall objective ($) Sales Potential = Share of sales potential (%) *
Overall objective ($) Historical + Inc = Prior year + Share of sales
potential (%) * Overall increase objective ($) Weighted = Historical * Weight + Sales
Potential * (1 – Weight)
Linear Demand Relationship between quantity and price
is linear. Quantity = (Slope * Price) + MWB Maximum Willing to Buy = (Quantity –
Slope) * Price Maximum Reservation Price = MWB /
(- Slope Profit Maximizing Price = ½ (Unit Cost
+ MRP)
Linear Demand cont’d. Ex.) We observe that at a price of $6, a
quantity of 8 is sold and that at $5, 10 units of a product are sold. Compute the slope, quantity, MWB, MRP, and PMP. Slope = (8 - 10) / (6 - 5) = - 2 (Quantity) 10 = (slope) -2 *(price) 5 + MWB,
so MWB = 10 + 10 = 20 MRP: 0 = 20 – 5*price = $4 (solving for price
at which we sell 0 units) PMP = ½ (8 + 4) = $12 (assuming unit cost =
$8)
Promotion Profitability Lift (%): measures incremental sales
generated as percentage of baseline sales.
Cost of Incremental Sales = Marketing spend ($)/ incremental sales ($,#)
Return on Marketing Investment = (incremental sales*contribution margin-marketing spending)/marketing spending
Promotion Profitability cont’d.
Coupon Redemption Rate = coupons redeemed/coupons distributed
Cost per Redemption = coupon face amount + redemption charges
Percentage Sales on Deal = Sales with temporary discount/total sales
Advertising Metrics Impressions = Exposures =
Opportunities to See Rating Points: impressions as a % of
population. Ex.) If a TV ad is shown 2 times and that show
is watched by 7,000 people out of a population of 100,000, that advertisement would generate 35 rating points (5 x 7,000 / 100,000).
Gross Rating Points = impressions/total population
Advertising Metrics cont’d. Cost per Impression: monitored to
measure the cost efficiency of campaigns.
Calculated as follow: cost of advertising/impressions generated Ex.) If there are 10,000 impressions which are
generated from $500 of costs, then cost per impression is: $500/10,000 = $50.
Share of Voice = company impressions/total impressions in market
Web Metrics Hits: number of file requests received by
the server is counted. Page-views: amount of times a page is
requested by the server. Visitors: amount of different users to a
site. Click-through Rate = click through(#)
/impressions determines how effective internet advertising
is.
Web Metrics cont’d. Cost per Click = total cost/# of clicks
generated refers to amount paid for each click that is generated.
Cost per Order = total cost/# of orders placed refers to the cost that is paid for each order
Cost per Customer Acquired = total cost/# of customers acquired
Bounce Rate = visits that access only a single page/total Visits to the Website specifies how effective a company is at producing
relevant traffic
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