Part I: Magic numbers to understand a market.
* Aside from the definitions, this section will also explain the benefits and appropriate applications of these numbers used for understanding markets. The risks are in mis-defining the market. To be meaningful and relevant, the user needs to understand the context. An extreme example: in the late 1990s, high tech start-ups regularly estimated market potential that was far larger than the actual target market they would ultimately serve. “We’re in a $50 billion software market growing 30% per year and only need 1% to be successful” was a typical comment. In actuality, the $50 billion software market is really several dozen smaller markets (ERP, CRM, SFA and so forth), each of which had different levels of performance.
1. Market size.
2. Market growth.
3. Market coverage.
4. Market penetration.
5. Market loyalty.
Part II: Magic numbers to understand your performance.
* Performance measures generally have universal definitions, but situation-specific application. Therefore, this section will not only describe the generally recognized performance measures for marketing, but also the specific variations within each magic number. Per the approach of the book, I will highlight the benefits of each number and the risks associated with them, primarily via simple examples or mini-case illustrations. For example, while market share is often reported in the media as a measure of strength and success for a company, share of customer is a way for a company to understand whether it is being effective at the micro-sales/business development level.
1. Brand value: there are multiple measures of brand value that will be described, including:
a. Brand name premium.
b. Future earnings-based value.
c. Replacement value.
d. Integrated brand measurement.
e. Customer preference.
f. Price premium.
1. Brand culture.
a. Internal audit measurement to assess organizational alignment.
2. Brand loyalty:
1. Behavior measures.
2. Switching costs.
3. Satisfaction measures.
4. Brand emotion.
5. Word of mouth (viral measurement).
1. Brand awareness:
1. This pertains to general recognition measurement
2. Brand strength
1. This will define recall and usage measurement
3. Brand associations
1. Qualitative characteristics and personality measures
2. Brand extension measures
4. Share of customer
5. Customer perceptions of value
1. Pricing
6. Market share.
7. Purchase frequency measures.
8. Distribution coverage.
1. Direct.
i. In-house sales force.
ii. Contract sales force.
Agents.
Internet.
2. Indirect.
i. Independent distributors/intermediaries.
ii. Captive/wholly-owned distributors.
Part III: Magic Numbers to Understand Consumer Markets.
* Context-specific definitions and related examples/illustrations will be introduced to provide well-rounded descriptions of the most appropriate uses of these measures. Many of these measures are classic or traditional marketing, so I will endeavor to update these with insight into marketing activities of more recent years, including the internet-based methods.
1. Consumer marketing to sales ratio:
1. Total marketing as a percentage of sales vs. returns on incremental changes.
2. Impacts and Gross Rating Points:
1. Print.
2. Broadcast.
3. Web.
3. Cost per thousand.
4. Reach and frequency.
5. Advertising to Sales ratio:
1. Promotion.
2. General awareness.
3. Direct marketing methods.
6. Share of Voice Vs Share of Market.
7. Response / registration rate.
8. Trial and conversion rates.
9. Marketing ROI and marginal ROI.
10. Segmentation, targeting and positioning measures:
1. Psychographic definition and approaches.
2. Demographic.
3. Geographic.
4. Product/service use measures.
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