Marketing Analytics: Strategic Models and Metrics

Author: Stephan Sorger

Revisions for Version 1.1

This paper documents the revisions made to the book. The new version incorporates minor corrections, such as typographical errors and confusing grammar. The minor changes do not qualify as a new edition, hence the use of the moniker “Version 1.1” aka “Revision 1.1.” Corrections are shown in underlined text in this document.

The revision maintains a page-for-page correspondence in layout with the originally released version (1.0) to permit both versions to be used simultaneously in classroom environments.

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Page XXX: Page number of corrected text, for reference. Kindle ebooks do not use page numbers, so location of corrected text can be identified by searching on Version 1.0 text.

Version 1.0: Original version of the book, released January 2013

Version 1.1: Revised version of the book, incorporating minor corrections, released November 2013

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All rights reserved. No part of this book may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without written permission from the author, except for the inclusion of brief quotations in a review. Credits and acknowledgements borrowed from other sources and reproduced, with permission, in this book appear on appropriate page within text. To obtain permission(s) to use material for this work, please submit a written request to the author via the contact page on the website stephansorger.com.

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All rights reserved. No part of this book may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without written permission from the author, except for the inclusion of brief quotations in a review. Credits and acknowledgements borrowed from other sources and reproduced, with permission, in this book appear on appropriate pages within the text. To obtain permission(s) to use material for this work, please submit a written request to the author via the contact page on the website stephansorger.com.

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(Not present in Version 1.0)

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Technologies: The book includes references to specific technology companies, their products/services, and websites to illustrate typical example resources for marketing analysts in industry. Company strategies, offerings, pricing, and website details can change over time and might not agree with the descriptions provided in this book.

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Edition: First Edition

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Edition: First Edition, Version 1.1, November 2013. Incorporates minor corrections and edits.

Retains same page layout as original release (First Edition, Version 1.0).

See StephanSorger.com for a complete record of all changes.

Preface

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Academic faculty may obtain access to several instructor supplements for adopting the book to their classroom environments. To access the supplements, please provide a request for access, along with proof of teacher status, via the Contact page on the author’s website, StephanSorger.com. Supplements include:

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Academic faculty and interested professionals may obtain access to instructor supplements. The supplements are ideal for adopting the book in classroom environments. Supplements are made available at the author’s website, StephanSorger.com, on the Marketing Analytics course webpage. The webpage shows a sample of the resources. To access the complete set of supplements, please provide a request for the access password via the Contact page on the author’s website, StephanSorger.com. Supplements include:

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Microsoft PowerPoint Presentations: PowerPoint slides for each chapter include outlines, key points, and figures from the text are available for download.

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Microsoft PowerPoint Presentations: PowerPoint slides for each chapter, including outlines, key points, and figures from the text, are available for download.

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Test Bank: Questions to test concepts and terminology, in multiple choice format, are available for download. Instructors are responsible for tailoring and testing the questions for their respective classes.

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Test Bank: Questions to test concepts and terminology, in multiple choice format are available. Instructors are responsible for tailoring and testing the questions for their respective classes. Due to the sensitive nature of exam questions, faculty members are asked to contact the author directly via the Contact page on StephanSorger.com, in lieu of downloading.

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(No previous listing for web resources)

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Web Resources: Links to various Internet-based articles and useful marketing analytics resources are provided on the webpage.

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Videos: The webpage includes links to videos that illustrate various topics discussed in the book. Students often find watching the videos enjoyable, relevant, and educational.

About the Author

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As an instructor, Mr. Sorger teaches marketing analytics courses to post-graduate students at the University of California, Berkeley Extension. He spearheaded the first dedicated marketing analytics course to be offered on the West Coast, and has been teaching the topic since 2008. He is also an Adjunct Faculty member at the University of San Francisco (USF) MBA program, teaching marketing analytics.

Chapter 1

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The purpose of this model would be to assess a particular campaign’s advertising effectiveness.

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Figure 1.10 shows a sample typical metrics dashboard. The dashboard shows metrics around a Google AdWords search engine marketing (SEM) campaign. On the left hand side, we see a speedometer style graph for total number of leads from Google AdWords, and a pie chart showing the contribution of five different campaigns to the total number of leads. In the middle, we see metrics of top performers, including top 10 keywords, top 10 ad headlines, and top 10 campaigns. On the right hand side, we see how leads from Google AdWords campaigns are being pursued within the sales pipeline. For example, the chart shows that salespeople are using nine leads from Google AdWords to conduct prospecting (following up with people who showed interest in the ads).

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Figure 1.10 shows a sample typical metrics dashboard. The dashboard shows metrics around a Google AdWords search engine marketing (SEM) campaign. On the left hand side, we see a speedometer style graph for total number of leads from Google AdWords, and a pie chart showing the contribution of five different campaigns to the total number of leads. In the middle, we see metrics of top performers, including top 10 keywords, top 10 ad headlines, and top 10 campaigns (the figure shows only the top four in each category). On the right hand side, we see how leads from Google AdWords campaigns are being pursued within the sales pipeline. For example, the chart shows that salespeople are using nine leads from Google AdWords to conduct prospecting (following up with people who showed interest in the ads).

Chapter 2:

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Channel partners are affected by market sizing because the size will impact the amount of product and service they will be expected to sell.

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Channel partners are affected by market sizing because the company sales forecasts (which are related to market size) will impact the amount of product they will be expected to sell.

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Sales Forecasts: Companies can also apply market sizing for assessing sales forecasts. Sales forecasts estimate the amount of sales the company expects to achieve in the coming period, usually one quarter or one year. If forecasts are a high percentage of the total market, then the forecasts are not likely to be realized.

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Sales Forecasts: Companies can also apply market sizing for assessing sales forecasts. Sales forecasts estimate the amount of sales the company expects to achieve in the coming period, usually one quarter or one year. If forecasts are an excessively high percentage of the total market, then the forecasts are not likely to be realized.

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Sales Force Sizing: Business to business organizations need to decide how many salespeople to assign to a given market. Larger markets generally require more salespeople than smaller ones.

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Sales Force Sizing: Business to business organizations need to decide how many salespeople to assign to a given market. Companies in large and quickly growing markets may need to add salespeople to keep up with increasing demand.

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The figure also shows the number of total employees by state, which we can apply for the Number of Employees approach. We can thus determine the number of employee-related services that state requires, such as insurance policies. 2-35

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The figure also shows the number of total employees by state, which we can apply for the Number of Employees approach. For example, if we decided to focus our efforts on sales of insurance policies to employees of tax preparation services, the data shown would provide us with the relevant market size (number of employees). 2-35

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Economic Trends: As the poor economic conditions of 2007-2012 demonstrated, the economy can have a lasting impact on virtually every market. Economic forces are categorized as macroeconomic factors and microeconomic factors.

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Economic Trends: As the poor economic conditions of 2007-2012 demonstrated, the state of the economy can have a lasting impact on virtually every market. Economic forces are categorized as macroeconomic factors and microeconomic factors.

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Environmental Trends: Environmental forces arise from society’s concern for the environment in which we live. This concern often manifests itself as specific regulations within certain industries, such as limits on sulfur emissions on coal production in the energy industry.

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Environmental Trends: Environmental forces arise from society’s concern for the physical environment in which we live. This concern often manifests itself as specific regulations within certain industries, such as limits on sulfur emissions on coal production in the energy industry.

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· Product Differentiation: Product differentiation is the introduction of new features to emphasize the difference in products and services from those of other providers. Our dog walking service could differentiate its service by offering new features, such as kennel services to accommodate pets when their owners were out of town.

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· Product Differentiation: In product differentiation, companies introduce new features to emphasize the difference in products and services from those of other providers. Our dog walking service could differentiate its service by offering new features, such as kennel services to accommodate pets when their owners were out of town.

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· High Switching Costs: Buyers with high switching costs are less likely to bargain. For example, buyers might have long-term contracts with suppliers, which can be costly to terminate. Our dog walking service can use long term contracts to increase switching costs for pet owners. However, we recommend against taking advantage of buyers once locked into long-term contracts. For example, pre-paid cell phone service plans are growing, due to the public’s reluctance to enter multi-year contracts.

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· High Switching Costs: Buyers with high switching costs are less likely to bargain. For example, buyers might have long-term contracts with suppliers, which can be costly to terminate. Our dog walking service can use long term contracts to increase switching costs for pet owners. However, we recommend against taking advantage of buyers once locked into long-term contracts. For example, the popularity of pre-paid cell phone service plans is growing, due to the public’s reluctance to enter multi-year contracts.

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Potential Market: (also known as Total Market) All customers in the population who have interest in acquiring the product or service.

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Potential Market: (also known as Total Market) All customers in the population who have interest in acquiring the product or service.

Chapter 3:

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Efficiency through concentration of force: With segmentation and targeting, we can apply a “concentration of force.” In the “concentration of force,” we focus the core competencies of the organization on relevant market segments, rather than diffusing our energies over a broad market. The term “concentration of force” comes to us from military strategy, which seeks victory by focusing resources on specific targets. For example, smaller second-run movie theaters focus on price-conscious customers. They do not diffuse their energy by attempting to cater to people demanding newly-released movies.

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Efficiency through concentration of force: With segmentation and targeting, we can apply a “concentration of force.” In “concentration of force,” we focus the core competencies of the organization on relevant market segments, rather than diffusing our energies over a broad market. The term “concentration of force” comes to us from military strategy, which seeks victory by focusing resources on specific targets. For example, smaller second-run movie theaters focus on price-conscious customers. They do not diffuse their energy by attempting to cater to people demanding newly-released movies.

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· Quality-Oriented Segment: Rolex (rolex.com) targets quality-oriented people with their fine Swiss watches:

o Product: Finely machined stainless steel and precious metals

o Price: High prices, to signal high quality

o Place (Distribution): Sold only through carefully selected retail stores

o Promotion: Advertisements emphasize quality,often set in luxurious surroundings

(continue with other segments)

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Quality-Oriented Segment: Rolex (rolex.com) targets quality-oriented people with their fine Swiss watches:

· Product: Finely machined stainless steel and precious metals

· Price: High prices, to signal high quality

· Place (Distribution): Sold only through carefully selected retail stores

· Promotion: Advertisements emphasize quality,often set in luxurious surroundings

(continue with other segments)

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Alternatively, we can simply count the number of respondents dining out four times per month that make $10,000 - $49,000 per year, $50,000 - $99,999 per year, and over $100,000 per year, and divide by the total to get the percentages. As typical of a priori segmentation, we apply existing knowledge to decide on the income brackets to use.