Session 6 MG 220 MBA - 2 Sep 10

MG 220 Marketing ManagementMBA 10

Fall 2010

Muhammad Talha Salam, Asst. [email protected]

Access it online: www.slideshare.net/talhasalam

Part 2: Capturing Market Insights

> Measuring Marketing Productivity> Forecasting and Demand Measurement

Class Presentation | Session 6 | 2 Sep 2010

MG 220 Marketing Management 2Access it online: www.slideshare.net/talhasalam

Measuring Marketing ProductivityConcept

• Accountability of Marketing programs & Marketing Management

• Marketers should:– Be able to justify the marketing expenditures– understand and analyze “financials” of their

activities– Review and analyze all kind of financial data

particularly related to their activities


Measuring Marketing ProductivityApproaches

• 2 Key Approaches:

–Marketing Metrics–Marketing-Mix Modeling


Measuring Marketing ProductivityMarketing Metrics

• Marketing Metrics is the set of measures that helps firms to quantify, compare and interpret their marketing performance

• Used by marketers to design programs• Used by top management to decide on

allocations


Measuring Marketing ProductivityMeasuring Marketing Plan Performance

• Four key tools used:1.Sales Analysis2.Market Share Analysis3.Marketing Expense-to-sales Analysis4.Financial Analysis



1. SALES ANALYSIS– Consists of measuring and evaluating actual

sales in relation to goals– Sales Variance Analysis measures relative

contribution of different factors to a gap in sales performance

– Microsales Analysis looks at specific products, territories that failed to produce results



2. MARKET SHARE ANALYSIS– How well company is performing compared to

competitors– Overall Market Share is the company’s sales

expressed as a percentage of total market sales

– Served Market Share is the company’s sales expressed as a percentage of total sales in served market

– Served Market: All buyers and who are able and willing to buy its product (generally a part of total market, because this is only for company’s product)

– Served Market Share is always greater than Overall



2. MARKET SHARE ANALYSIS (…contd)– Relative Market Share is the company’s

market share compared to its largest competitor• If <100: company is follower• If 100: tie as market leader• If >100: company is market leader

– Limitations in Market Share Analysis• Outside factors affect everyone equally?• Company’s performance against overall average of its competitors• New firm entering => dec. in market share (its not bad

performance)• If market share is engineered to focus away from unprofitable

segments• anomalies



3. MARKETING EXPENSE-TO-SALES ANALYSIS– Key ratio to be analyzed

– Very important to see its variance, cause and effect etc.



4. Financial Analysis– Financial ratios should be reviewed to

understand where the performance is coming from


Measuring Marketing ProductivityMarketing-Mix Modeling

See the 4Ps Financially– Review all data related to 4Ps and understand

effects of different marketing activities

– Non-financial activity to be done primarily by marketing team


Forecasting and Demand Measurement

• One of the major objectives of Marketing research

• Marketing’s tasks to identify opportunities and also give measured forecasts


Forecasting and Demand MeasurementThe Measures of Market Demand• 90 types of Demand


Forecasting and Demand MeasurementThe Measures of Market Demand• Different ways of looking at “market”

• Potential MarketSet of consumers who profess a sufficient level of interest in a market offer (able to buy?)

• Available MarketSet of consumers who have interest, income and access to a particular offer. (Qualified Available Market => Eligible or allowed)

• Target MarketPart of Qualified Available market, the company decides to pursue (most attractive segment)

• Penetrated MarketSet of consumers who are buying the company’s products


Forecasting and Demand MeasurementVocabulary for Demand Measurement• Market Demand:

For a product is the total volume that would be bought:- by a defined customer group- in a defined geographical area- in a defined time period- in a defined marketing environment- under a defined marketing program

• It is not a number but a function (correlation) of stated conditions


Forecasting and Demand MeasurementVocabulary for Demand Measurement• Market Demand:– Market Minimum– Market Potential– Marketing Sensitivity of Demand (Demand’s

reaction to marketing effort)• Expansible market (demand reacts highly to marketing)

• Non-expansible market (demand reacts less to marketing)

– Market Penetration Index (current level of market demand to potential demand)

– Share Penetration Index (current level of market to its potential market share)


Forecasting and Demand MeasurementVocabulary for Demand Measurement• Market Forecast:– Only one level of expenditure is possible

(or practically done)

–Market demand corresponding to that level is Market Forecast


Forecasting and Demand MeasurementVocabulary for Demand Measurement• Market Potential:–Market forecast shows demand at a

limited level only

–Market Potential is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment.

– Market Demand with maximum possible marketing expenditure


Forecasting and Demand MeasurementVocabulary for Demand Measurement• Company Demand:– Company’s estimated share of market

demand at alternative levels of company marketing effort in a given time period

– Relating demand to competitors, company’s image etc.


Forecasting and Demand MeasurementVocabulary for Demand Measurement• Company Sales Forecast:

– After understanding company demand,– Choose a level of marketing effort

– Company sales forecast is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.

– Based on this:– Sales Quota is the sales goal set for a product line, company

division. Assigned to: stimulate sales effortsGenerally higher than Sales Forecast

– Sales Budget is conservative estimate of expected volume of sales and is used for internal decisions like purchasing, cash flow etc.Generally lower than Sales Forecast


Forecasting and Demand MeasurementVocabulary for Demand Measurement• Company Sales Potential:– Company sales potential is the sales

limit approached by company demand as company marketing effort increases relative to that of competitors


Forecasting and Demand MeasurementEstimating Current Demand• Total Market Potential– Estimate: Potential number of buyers X average

quantity purchase by a buyer X price

• Area Market Potential– Problem of selecting best territories and

allocating marketing budgets

• Industry Sales and Market Shares– Identifying industry and competitors’ sales

figures


Forecasting and Demand MeasurementEstimating Future Demand• Three-stage procedure

1. Macroeconomic forecast2. Industry forecast (based on Sr. 1)3. Company sales forecast (based on Sr. 2)

• How to? And information Bases– What People Say

• Survey Consumers• Salesforce opinions• Experts’ (distributors, retailers, consultants) opinions

– What People Have Done• Past-Sales Analysis

– What People Do• Test-Marketing


QUIZ # 1 | 30 Aug 2010

• RESULTS


Fall 2010


Access it online: www.slideshare.net/talhasalamClass Presentation | Session 7 | 6 Sep 2010

Part 3: Connecting with Customers

> Intro to Part 3


Part 3: Connecting with CustomersAn intro and overview

Chap 5: Creating Customer Value, Satisfaction, and Loyalty

Chap 6: Analyzing Consumer Markets

Chap 7: Analyzing Business Markets

Chap 8: Identifying Market Segments and Targets


Fall 2010


Access it online: www.slideshare.net/talhasalamClass Presentation | Session 7 | 6 Sep 2010

Part 3: Connecting with Customers

> Building Customer Value, Satisfaction and Loyalty

> Maximizing Customer Lifetime Value> Cultivating Customer Relationships> Customer Databases and Database

Marketing

Session 6 MG 220 MBA - 2 Sep 10

Business

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