SIX Ways to Conceptualize and Present Marketing As a Machine

Ted Mitchell

There are Five Ways to Present

• The Single Performance of a Two-Factor Marketing Machine

• 1) As a Picture (or verbal description)• 2) As a Slope-Origin Equation• 3) In a Table• 4) As a Factor-Focused Graph on Cartesian

System of Coordinates• 5) As a Slope-Origin Graph on Cartesian System

of Coordinates

1) As a Picture

The Marketing Machine

Inputs to The Marketing Machine

Price TagsProduct Quality

Promotion

Place

Outputs from The Marketing Machine

RevenuesQuantity of Goods Sold

ProfitsDemand

Now I am the

manager of this

machine

1) A Picture of A Two-Factor Machine with One Type of Input and One Type of Output

The conversion rate of the machine

Input to The Marketing Machine

Number of ServersNumber of Servers

Number of Servers

Number of Servers

Outputs as Quantity Customers demanded from The Marketing Machine

Quantity of Goods Sold

Now I am the

manager of this

machine

Quantity of Goods Sold Quantity of

Goods Sold

2) As an (Slope-Intercept) Equation

• With Marketing Output being the result of multiplying an Input by a Conversion rate Output = Conversion Factor x Input Factor

• Output, O = (Conversion rate, r) x (Input, I)• where

Conversion rate or efficiency, r, is calculated as r = Output/Input

• Output, O = (Conversion rate, O/I) x (Input, I)

The Equation of a Two-Factor ModelOutput, O = (O/I) x Input, I

• The equation is a Mathematical Identity• It is a Tautology or it is True by definition• It converts One Type of Marketing Input

into One Type of Marketing Output

#3 The Tabular Format for Presentation

Ted Mitchell

3) The machine’s equation in the first column

Input Factor: Advertising Expense, A = W/r

Conversion Factor: rate of converting Advertising into Awareness, r=W/A

Output: Customer Awareness level, W = r x A

3) A Recorded Performancethat is fully calibratedFirst Performance

Input Factor: Advertising Expense, A

A1 = $1,500

Conversion Factor: rate of converting Advertising into Awareness, r=W/A

r1 = 600/$1,500= 0.4 pts per dollar

Output: Customer Awareness level, W = r x A

Gained 600 points

#4 Presentation as a Factor Focused graph in a Cartesian System

Remember the Factors in a Two-Factor Model of a Marketing Machine are

• 1) The Amount of the Input, I• 2) The conversion rate, r• Together they determine the output of the

machine

The Factor-Focused Presentation Using Cartesian System

Input Factor on the X-axis

Conversion Rate Factor on the Y-Axis

0, 0Amount of Input, I

conversion rate, r

o

Observed point (I, r)

Area is the Machine’s Output = I x O

The Factor-Focused Presentation Using Cartesian System

Input Factor on the X-axis

Conversion Rate Factor on the Y-Axis

0, 020 Servers,

150 cups sold per server

X

Observed point (20, 250)

Area is the Observed Output = 150 x 20 =

3,000 cups sold

#5 Presentation as a Slope-Origin Graph in a Cartesian System of

Coordinates

Ted Mitchell

5) Presentation as a Slope-Origin Graph

X-axis0, 0 X

Y-axis

oObserved point

P = (x, y)Y

Slope of LineY/X

Origin 0, 0

5) Presentation as a Slope-Origin Graph

Input on the X-axis

0, 0Input, I

Y-axis

o

Observed Point, P = (I, O)

Output, O

Slope of Line, r = O/Iis the conversion rate

#5 The Input-Output as A Slope-Origin Equation

Input Factor

Output

0, 020 Servers

3,000 cups sold

X

Observed point P = (20, 3,000)

Conversion rate sloper = 3,000/20 = 150

cups per server

Slope-Point Equation for Two-Factor machine

3,000 cups = r x 20 cups

Two graphical presentations of a single performance can of be confusing!

• The area in a slope-origin presentation calculated by multiplying the Input by the Output to get the area has no interpretive value

• But the line connecting the origin to the observed point is important description

• In the Two-Factor Presentation the area calculated by multiplying the Input, I by the conversion rate, r, is the output and

• the line connecting the origin to the observation has no interpretive value

# 6: The presentation of Inverse Relationships

• The sixth presentation is to deal with inverse relationships such as the Selling price

• The verbal and mathematical conversion of the Price tag, P, into a metric of Value = 1/P

• Provides us with a slope-origin presentation and equation for explaining and predicting how a decrease in price is an increase in value to the customer

6) Presentation of Value as a Slope-Origin Graph

Input on the X-axis

0, 0 Input is Value = 1/Price

Y-axis

o

Observed Point, P = (Value, Sales)

Output is the Sales Volume

Slope of Line, r = Sales/(1/P)is the conversion rate

Any Questions?

• What are the Five Basic Ways of presenting a single performance of a Two-Factor marketing Machine?

• A single calibrated performance is recorded with an Output, an Input Factor and a conversion rate, r = O/I

• Each Presentation has advantages and disadvantages