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Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, Third Edition

Name: Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, Third Edition
ISBN: 9780134086040

by Paul Farris, Neil Bendle, Phillip E. Pfeifer, David J. Reibstein

August 2015

Intermediate to advanced

476 pages

11h 51m

English

Pearson

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About This eBook
Title Page
Copyright Page
Dedication Page
Contents
Acknowledgments
About the Authors
Foreword
Foreword to The Third Edition
1. Introduction
1.1 What Is a Metric?1.2 Why Do You Need Metrics?1.3 Marketing Metrics: Opportunities, Performance, and Accountability1.4 Choosing the Right NumbersData Availability and Globalization of Metrics1.5 What Are We Measuring?1.6 Value of Information1.7 Mastering Metrics1.8 Where are the “Top Ten” Metrics?1.9 What’s New in the Third Edition?Organization of the TextComponents of Each ChapteraReference MaterialsReferences and Suggested Further Reading

2. Share of Hearts, Minds, and Markets
Introduction2.1 Market SharePurpose: Key indicator of market competitivenessConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts2.2 Relative Market Share and Market ConcentrationPurpose: To assess a firm’s or a brand’s success and its position in the marketConstructionRelated Metrics and ConceptsData Sources, Complications, and CautionsRelated Metrics and Concepts2.3 Brand Development Index and Category Development IndexPurpose: To understand the relative performance of a brand or category within specified customer groupsConstructionData Sources and ComplicationsRelated Metrics and Concepts2.4 PenetrationConstructionData Sources, Complications, and Cautions2.5 Share of RequirementsPurpose: To understand the source of market share in terms of breadth and depth of consumer franchise, as well as the extent of relative category usage (heavy users/larger customers versus light users/smaller customers)ConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts2.6 Usage IndexPurpose: To define and measure whether a firm’s consumers are “heavy users.”ConstructionData Sources, Complications, and CautionsUnderstanding Double Jeopardy and Usage IndexRelated Metrics and Concepts2.7 Awareness, Attitudes, and Usage (AAU): Metrics of the Hierarchy of EffectsPurpose: To track trends in customer attitudes and behaviorsConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts2.8 Customer Satisfaction and Willingness to RecommendPurpose: Customer satisfaction provides a leading indicator of consumer purchase intentions and loyaltyConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts2.9 Net PromoterPurpose: To measure how well the brand or company is succeeding in creating satisfied, loyal customersConstructionData Sources, Complications and Cautions2.10 Willingness to SearchPurpose: To assess the commitment of a firm’s or a brand’s customer baseConstructionData Sources, Complications, and Cautions2.11 Neuroscience Measures (with Dr. Manuel Garcia-Garcia and Pasha Davoudian)Purpose: Using Technology to Understand Consumer BehaviorConstructionWhy Use These Techniques?Data Sources, Complications and CautionsFurther Reading
3. Margins and Profits
Introduction3.1 MarginsPurpose: To determine the value of incremental sales, and to guide pricing and promotion decisionsConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts3.2 Prices and Channel MarginsPurpose: To calculate selling prices at each level in the distribution channelConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts3.3 Average Price per Unit and Price per Statistical UnitPurpose: To calculate meaningful average selling prices within a product line that includes items of different sizesConstructionPrice per Statistical UnitData Sources, Complications, and Cautions3.4 Variable Costs and Fixed CostsPurpose: To understand how costs change with volumeConstructionData Sources, Complications, and Cautions3.5 Marketing Spending—Total, Fixed, and VariablePurpose: To forecast marketing spending and assess budgeting riskConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts3.6 Break-Even Analysis and Contribution AnalysisPurpose: To provide a rough indicator of the earnings impact of a marketing activityConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts3.7 Profit-Based Sales TargetsPurpose: To ensure that marketing and sales objectives mesh with profit targetsConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts
4. Product and Portfolio Management
Introduction4.1 Trial, Repeat, Penetration, and Volume ProjectionsPurpose: To understand volume projectionsConstructionSimulated Test Market Results and Volume ProjectionsData Sources, Complications, and CautionsRelated Metrics and Concepts4.2 Growth: Percentage and CAGRPurpose: To measure growthConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts4.3 Cannibalization Rates and Fair Share DrawData Sources, Complications, and Cautions4.4 Brand Equity MetricsPurpose: To measure the value of a brandConstructionData Sources, Complications, and CautionsRelated Metrics and ConceptsAdditional Citation4.5 Conjoint Utilities and Consumer PreferencePurpose: To understand what customers wantConstructionData Sources, Complications, and Cautions4.6 Segmentation Using Conjoint UtilitiesPurpose: To identify segments based on conjoint utilitiesConstructionData Sources, Complications, and Cautions4.7 Conjoint Utilities and Volume ProjectionPurpose: To use conjoint analysis to project the market share and the sales volume that will be achieved by a product or serviceData Sources, Complications, and CautionsReferences and Suggested Further Reading
5. Customer Profitability
Introduction5.1 Customers, Recency, and RetentionPurpose: To monitor firm performance in attracting and retaining customersConstructionData Sources, Complications, and Cautions5.2 Customer ProfitPurpose: To identify the profitability of individual customersConstructionData Sources, Complications, and Cautions5.3 Customer Lifetime ValuePurpose: To assess the value of each customerConstructionData Sources, Complications, and Cautions5.4 Prospect Lifetime Value Versus Customer ValuePurpose: To account for the lifetime value of a newly acquired customer (CLV) when making prospecting decisionsConstructionData Sources, Complications, and Cautions5.5 Acquisition Versus Retention CostPurpose: To determine the firm’s cost of acquisition and retentionConstructionData Sources, Complications, and CautionsReferences and Suggested Further Reading
6. Sales Force and Channel Management
Introduction6.1 Sales Force Coverage: TerritoriesPurpose: To create balanced sales territoriesConstructionData Sources, Complications, and Cautions6.2 Sales Force Objectives: Setting GoalsPurpose: To motivate sales personnel and establish benchmarks for evaluating and rewarding their performanceConstructionData Sources, Complications, and Cautions6.3 Sales Force Effectiveness: Measuring Effort, Potential, and ResultsPurpose: To measure the performance of a sales force and of individual salespeopleConstructionData Sources, Complications, and Cautions6.4 Sales Force Compensation: Salary/Reward MixPurpose: To determine the mix of salary, bonus, and commission that will maximize sales generated by the sales forceConstructionData Sources, Complications, and Cautions6.5 Sales Force Tracking: Pipeline AnalysisPurpose: To forecast upcoming sales and evaluate workload distributionConstructionData Sources, Complications, and Cautions6.6 Numeric, ACV and PCV Distribution, Facings/Share of ShelfPurpose: To measure a firm’s ability to convey a product to its customersConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts6.7 Supply Chain MetricsPurpose: To monitor the effectiveness of an organization in managing the distribution and logistics processConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts6.8 SKU Profitability: Markdowns, GMROII, and DPPPurpose: To assess the effectiveness and profitability of individual product and category salesConstructionData Sources, Complications, and CautionsRelated Metrics and ConceptsReferences and Suggested Further Reading
7. Pricing Strategy
Introduction7.1 Price PremiumPurpose: To evaluate product pricing in the context of market competitionConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts7.2 Reservation Price and Percent Good ValuePurposeConstructionData Sources, Complications, and CautionsLinear Demand7.3 Price Elasticity of DemandPurpose: To understand market responsiveness to changes in priceConstructionConstant Elasticity: Demand Curve with a Constantly Changing SlopeData Sources, Complications, and Cautions7.4 Optimal Prices and Linear and Constant Demand FunctionsPurpose: To determine the price that yields the greatest possible contributionConstructionData Sources, Complications, and CautionsRelated Metrics and ConceptsCaution: Regulation7.5 “Own,” “Cross,” and “Residual” Price ElasticityPurpose: To account for both customers’ price elasticity and potential competitive reactions when planning price changesConstructionData Sources, Complications, and CautionsPrisoner’s Dilemma PricingReferences and Suggested Further Reading
8. Promotion
Introduction8.1 Baseline Sales, Incremental Sales, and Promotional LiftPurpose: To select a baseline of sales against which the incremental sales and profits generated by marketing activity can be assessedConstructionData Sources, Complications, and Cautions8.2 Redemption Rates, Costs for Coupons and Rebates, Percent Sales with CouponPurpose: To track and evaluate coupon usageConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts8.3 Promotions and Pass-ThroughPurpose: To measure whether trade promotions are generating consumer promotionsConstructionData Sources, Complications, and Cautions8.4 Price WaterfallPurpose: To assess the actual price paid for a product, in comparison with the list priceConstructionData Sources, Complications, and CautionsRelated Metrics and ConceptsReferences and Suggested Further Reading
9. Advertising Metrics
Introduction9.1 Advertising: Impressions, Exposures, Opportunities-To-See (OTS), Gross Rating Points (GRPs), and Target Rating Points (TRPs)Purpose: To measure the audience for an advertisementConstructionData Sources, Complications, and Cautions9.2 Cost per Thousand Impressions (CPM) RatesPurpose: To compare the costs of advertising campaigns within and across different mediaConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts9.3 Reach, Net Reach, and FrequencyPurpose: To separate total impressions into the number of people reached and the average frequency with which those individuals are exposed to advertisingData Sources, Complications, and Cautions9.4 Frequency Response FunctionsPurpose: To establish assumptions about the effects of advertising frequencyConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts9.5 Effective Reach and Effective FrequencyPurpose: To assess the extent to which advertising audiences are being reached with sufficient frequencyConstructionData Sources, Complications, and Cautions9.6 Share of VoicePurpose: To evaluate the comparative level of advertising committed to a specific product or brandConstructionData Sources, Complications, and Cautions9.7 Advertising Elasticity of DemandPurpose: Understanding the Responsiveness of Demand to AdvertisingConstructionWhat Should You Spend On Advertising?What If Advertising Is An Investment?Data Sources, Complications and CautionsReferences and Suggested Further Reading
10. Online, Email, and Mobile Metrics
Introduction10.1 Impressions, Pageviews, and HitsPurpose: To assess Web site traffic and activityConstructionData Sources, Complications, and Cautions10.2 Rich Media Display Time and Interaction RatePurpose: To determine how an advertisement engages viewersConstructionData Sources, Complications, and CautionsRelated Metrics10.3 Clickthrough RatesPurpose: To capture customers’ initial response to Web sitesConstructionData Sources, Complications, and Cautions10.4 Cost per Impression, Cost per Click, and Cost per OrderPurpose: To assess the cost effectiveness of Internet marketingConstructionData Sources, Complications, and Cautions10.5 Visits, Visitors, and AbandonmentPurpose: To understand Web site user behaviorConstructionData Sources, Complications, and Cautions10.6 Bounce Rate (Web Site)Purpose: To determine the effectiveness of the Web site at generating the interest of visitorsConstructionData Sources, Complications, and CautionsGoogle Analytics10.7 Social Media Metrics: Friends/Followers/Supporters/LikesPurpose: To determine the effectiveness of a social networking presenceConstructionData Sources, Complications, and Cautions10.8 DownloadsPurpose: To determine effectiveness in getting applications out to usersConstructionData Sources, Complications, and Cautions10.9 Mobile MetricsConstructionData Sources, Complications, and Cautions10.10 Email MetricsPurpose: To determine effectiveness of email campaignsConstructionData Sources, Complications, and CautionsReferences and Suggested Further Reading
11. Marketing and Finance
Introduction11.1 Net Profit and Return on SalesPurpose: To measure levels and rates of profitabilityConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts11.2 Return on InvestmentPurpose: To measure per period rates of return on dollars invested in an economic entityConstructionData Sources, Complications, and CautionsRelated Metrics and Concepts11.3 Economic Profit—EVAPurpose: To measure dollar profits while accounting for required returns on capital investedConstructionData Sources, Complications, and Cautions11.4 Evaluating Multi-period InvestmentsPurpose: To evaluate investments with financial consequences spanning multiple periodsConstructionData Sources, Complications, and Cautions11.5 Marketing Return on InvestmentPurpose: To measure the rate at which spending on marketing contributes to profitsConstructionData Sources, Complications, and CautionsRelated MetricsReferences and Suggested Further Reading
12. The Marketing Metrics X-Ray AND TESTING
12.1 The Marketing Metrics X-RayPut Your Money Where Your Metrics AreHiding Problems in the Marketing Baggage?Smoking More But Enjoying It Less?Marketing DashboardsSummary: Marketing Metrics + Financial Metrics = Deeper Insight12.2 The Value of Information12.3 TestingThe Gross ModelShould You Test Another Advertisement?References and Suggested Further Reading
13. System of Metrics
Modeling Firm PerformanceThree Reasons for Using Systems of Identities in MarketingDecomposing for Diagnostic PurposesEliminating Error by Harnessing the Law of Large (and Not So Large) NumbersUsing Identities to Estimate Metrics that are Difficult to Measure DirectlyMarketing Mix Models—Monitoring Relationships between Marketing Decisions and ObjectivesRelated Metrics and ConceptsReferences and Suggested Further ReadingConclusion
Bibliography
Endnotes
Chapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10Chapter 11Chapter 12Chapter 13
Index

Content preview from Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, Third Edition

5. Customer Profitability

Introduction

Chapter 2, “Share of Hearts, Minds, and Markets,” presented metrics designed to measure how well the firm is doing with its customers as a whole. Previously discussed metrics were summaries of firm performance with respect to customers for entire markets or market segments. In this chapter, we cover metrics that measure the performance of individual customer relationships. We start with metrics designed to simply count how many customers the firm serves. As this chapter will illustrate, it is far easier to count the ...

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Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, Third Edition

by Paul Farris, Neil Bendle, Phillip E. Pfeifer, David J. Reibstein