Marketing Metrics – MRKT 355 – Flashcards
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Metric
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Measurement system; quantifies a trend, dynamic, or characteristic
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How do metrics help?
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Explain Phenomenon Diagnose Causes Share findings Project results for future events
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Reasons metrics are needed in marketing
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Shift toward more quantitative; Business is becoming more competitive
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Trends as a result/cause of quantitative marketing
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Direct marketing, Social media, and Web marketing
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Stage 1 of Marketing Accountability
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Denial: Marketing is more Art than Science
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Stage 2 of Marketing Accountability
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Fear: Will I loose my job?
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Stage 3 of Marketing Accountability
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Confusion: What do I measure?
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Stage 4 of Marketing Accountability
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Self-Promotion: Look at these charts
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Stage 5 of Marketing Accountability
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Accountability: Revenue results from Marketing
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Kinds of Metrics
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Dashboard and Triangulated
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Dashboard
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combination of many types of metrics; data is approximate for some metrics while some may be highly specialized
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Primary demand
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performance as growth with the market
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Selective demand
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performance as a captured share from competition
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Unit Market Share Formula
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Unit Sales (#) / Total Market Unit Sales (#)
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Revenue Market Share Formula
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Sales Revenue ($) / Total Market Sales Revenue ($)
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Relative Market Share
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Brand's Market Share ($,#) / Largest Competitor's Market Share ($,#)
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What is Relative Market Share used for?
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Benchmark against largest competitor
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Brand Development Index Formula
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[Brand Sales to Group (#) / Households in the Group (#)] / [Total Brand Sales (#) / Total Households (#)]
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What does Brand Development Index measure?
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How well the brand is performing among a segment of customers relative to all customers per-capita consumption in a segment versus per capita in the market
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Category Development Index Formula
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[Category sales in group (#) / Households in the group (#)] / [Total Category sales (#) / Total Households (#)]
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Why do we measure Category Development Index?
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Useful for understanding a specific customer segment -- strong vs weak demographic or geographic
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Market Penetration Formula
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Customers who have purchased a product in the category (#) / Total Population (#)
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Brand Penetration Formula
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Customers who have purchased the brand (#) / Total Population (#)
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Penetration Share formula
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Brand Penetration / Market Penetration
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Full Penetration Share Formula
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Customers who have purchased the brand / Customers who have purchased a product in the category
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Share of Requirements is equivalent to:
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Loyalty
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Unit Share of Requirements Formula
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Brand Purchases (#) / Total Category Purchases by Brand Buyers (#)
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Revenue Share of Requirements Formula
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Brand Purchases ($) / Total Category Purchases by Brand Buyers ($)
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Measurements of Loyalty
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Share of Requirements Sole Usage Repeat Rate Repurchases Rate
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Sole Usage measures:
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Die hard customers
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Repeat Rate measures:
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Customers in a given period who are also customers in the following period
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Repurchase Rate measures:
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Customers of a brand who repurchase that brand on their next purchase occasion
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Heavy Usage Index Formula Full
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Avg. Total Purchases in Category by Brand Customers (#,$) / Average Total Purchases in Category by all Customers for that Category (#,$)
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Heavy Usage Index Formula condensed
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Market Share (%) / [Penetration Share (%) * Share of Requirements (%)]
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Net Promoter Formula
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Percentage of Promoters (%) - Percentage of Detractors (%)
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Willingness to Search measures:
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Percentage of customers willing to delay purchases, change stores or reduce purchase quantity to avoid switching brands
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Unit Margin formula
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Selling Price per Unit ($) - Cost per Unit ($)
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Margin (%) formula
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[Total sales revenue ($) - Total cost ($)] / Total Sales Revenue ($)
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Single Product Margin formula
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Unit Margin ($) / Selling Price per Unit ($)
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Multiple Product Margin formula
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Weighted average margin of each product
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Supplier Selling Price formula
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Customer Selling Price ($) - Customer Margin ($)
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Customer Selling Price formula
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Supplier Selling Price ($) / [1 - Customer Margin (%)]
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Average Price per Unit formula
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Revenue ($) / Units Sold (#)
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Expanded Average Price per Unit formula
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[(Avg. Price of SKU1 x SKU1 percentage of sales) + (Avg. Price of SKUn x SKUn percentage of sales)...
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Statistical Unit
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Standard size mix; not actual mix of sizes
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Statistical Unit example
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Same product packaged in various sizes; think pop in cans, bottles, and liters
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Total Costs formula
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Fixed Costs ($) + Variable Costs ($)
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Total Variable Costs formula
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Unit Volume (#) * Variable Costs per Unit ($)
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Total Selling (Marketing) Costs Formula
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Total Fixed Selling Costs ($) + Total Variable Selling Costs ($)
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Total Variable Selling Costs formula
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Revenue ($) * Variable Selling Cost (%)
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Contribution per Unit formula
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Selling Price per Unit ($) - Variable Cost per unit
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Contribution Margin (%) formula
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Contribution per Unit ($) / Selling Price per Unit ($)
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What is break-even?
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Sales amount (either Unit or Revenue) that is required to cover total costs
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Break-Even Volume (#) formula
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Fixed Costs ($) / Contribution per Unit ($)
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Break-Even Revenue ($) formula
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Break-even Volume (#) * Price per Unit ($)
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Alternative Break-Even Revenue formula
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Fixed Costs ($) / Contribution Margin (%)
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Target Volume (#) formula
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[Fixed Costs ($) + Target Profits ($)] / Contribution per Unit ($)
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Target Revenue ($) formula
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Target Volume (#) * Selling Price per Unit ($)
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Target Revenue ($) formula 2
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[Fixed Costs ($) + Target Profits ($)] / Contribution Margin (%)
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Measurements for new products
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Trial, Repeat, Penetration
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Trial Rate (%) formula
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First time triers in Period t (#) / Total Population (#)
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First time Triers in Period t (#) formula
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Total Population (#) * Trial Rate (%)
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Penetration t (#) formula
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[Penetration in t-1 (#) * Repeat Rate Period t (%)] + First Time Triers in Period t (#)
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Projection of Sales t (# --Volume Projection) formula
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Penetration t (#) x Average Frequency of Purchase (#) x Average Units of Purchase (#)
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Adjusted Trial Rate (%) formula
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Trial Rate (%) x Awareness (%) x ACV (%) [[AVC = Distribution penetration]]
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Trial Population (#) formula
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Target population (#) * Adjusted Trial Rate (%)
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Trial Volume (#) formula
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Trial Population (#) * Units per Purchase (#)
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Industry average expectations for "Definitely Buy & Will Buy" and "Probably buy"
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80% and 30%
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Trial Volume formula expanded
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Target Population (#) x [(.80xDefinitely Buy (#) + .30xProbably Buy (#)) x Awareness (%) x ACV (%)] x Units per Purchase (#)
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Repeat Buyers (#) formula
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Trial Population (#) * Repeat Rate (%)
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Repeat Volume (#) formula
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Repeat Buyers (#) x Repeat Unit Volume per customer (#) x Repeat Occasions (#)
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Total Volume (#) formula
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Trial Volume (#) + Repeat Volume (#)
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Measurements of Growth
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Percentage year-on-year growth; Compound Annual Growth Rate
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Year on Year Growth formula
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[Difference between Year 2 and Year 1] divided by Year 1; new-old over old
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CAGR formula
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{[Ending Value/Starting Value]^(1/number of years)} - 1
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Cannibalization Rate formula
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Sales lost from existing products / Sales of New Product
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What does Fair Share Draw mean?
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The new product will capture sales from existing products in direct proportion to the market shares held
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Metrics for Brand Equity
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Brand Equity Ten (Aaker) Brand Asset Valuator (Young & Rubicam) Brand Equity Index (Moran) Brand Valuation Model (Interbrand)->Used in class
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Aaker model for Brand Equity
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Evaluation and analysis of 11 measurements and characteristics
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Moran Brand Equity Index formula
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Effective Market Share (%) x Relative Price (I) x Durability (%)
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Brand Asset Valuator - Y & R components
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Differentiation, Relevance, Esteem, Knowledge
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Interbrand Brand Valuation Model
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Uses financial data on revenues and earnings to project value contributed by the brand; discount the future earnings basis the brand strengths and risks
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Purpose of Conjoint Utilities
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Measure consumer preference for an attribute then combine the valuation of multiple attributes to measure the overall choice
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Cluster Analysis
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Technique that calculates difference between customers and forms segmentation groups by minimizing differences within each group and maximizing the differences between groups
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Customer Counts
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# of customers
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Recency
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Length of time since the customer' last purchase
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Retention rate
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Ratio of number of customers retained ***Define the customer properly
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Customer Profit formula
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Revenues Earned - Cost of Maintaining Customer
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CLV
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Customer Lifetime Value
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Customer Lifetime Value measures:
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Present value of future cash flows attributed to the customer relationship
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Customer Lifetime Value formula
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Margin ($) * [Retention Rate (%) / (1 + Discount rate (%) - Retention Rate (%))]
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IMPORTANT TO KNOW ABOUT CLV:
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Per customer calculation, NOT entire population
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Prospect Lifetime Value ($) formula
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Acquisition Rate (%) x [Initial Margin ($) + CLV ($)] - Acquisition Spending ($) -Initial Margin = Margin from first time people purchased
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Average Acquisition Cost ($) formula
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Acquisition Spending ($) / Number of Customers Acquired (#)* *Not total customers; ONLY those who are acquired for specific promotion
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Average Retention Costs ($) formula
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Retention Spending ($) / Number of Customers Retained (#)
