BUS 468 Quiz 1

which set of advertising mediums has a lower CPM (typically)?: 1. radio and outdoor advertising or 2. television, newspaper, magazine, online advertising

1

there tends to be an inverse relationship between company size and what?

CUSAT

the convergence of what three trends has resulted in greater emphasis on measurement tactics for marketing performance?

1. e-commerce 2. increased emphasis on business analytics 3. tighter partnership between the marketing and finance disciplines

one best practice in goal setting is the use of multiple levels of targets. what are the three levels called?

1. external 2. internal 3. stretch

a high CUSAT is associated with what two positive outcomes?

1. higher customer retention 2. higher share of wallet

beyond damaging a company's brand through negative word of mouth, detractors in terms of NPS do what two things?

1. increase service costs 2. negatively impact morale of front-line employees

when building a set of metrics, managers should try to select at least one metric from several of the four quadrants. what are the four quadrants?

1. internal immediate 2. internal end-result 3. external immediate 4. external end-result

payback period is an informative metric when what two things are of concern?

1. liquidity 2. cash flow

provide two examples of industries where CLV is closely monitored

1. mobile phones 2. credit cards

a smaller group of researchers have identified "side effects" of over-relying on too many aggressive goals. provide two

1. narrows employees' focus that results in neglecting non-goal areas 2. increased risk appetite

what are the two issues of using market share as a primary goal?

1. organizations tend to emphasize sales at the expense of margins/profitability 2. taking too narrow a view of the market when assessing market share may lead to a failure to recognize future threats coming from outside this narrow scope

what are the two ways in which brand awareness can be measured?

1. recall (unaided awareness) 2. recognition (aided awareness)

unique site visitors

a basic measure of impressions generated

provide an example of how ROMI can be used

a company uses ESPN radio as a promotional tool. to track their performance of a promotion during a certain show, listeners are told to use a specific online coupon code

net promoter score (NPS)

a more recently designed metric used to quickly measure customer loyalty by asking only one question of customers: "on a scale of 1 to 10, how likely is it that you would recommend our company to a friend or colleague?". customers are grouped into three categories based on their responses: promoters (9 to 10), passively satisfied (7 to 8), and detractors (0 to 6). the NPS is the percentage of promoters minus the percentage of detractors

market share

a particular company's percentage of sales of the entire market as the company sees it. typically calculated as percentage of total market revenue (dollar share) or as a percentage of total market units (unit share)

promotional tactics

advertising, public relations, and sponsorship; intended to increase brand awareness and positive associations, ultimately to increase sales

share of voice, similar to cost per impression, measures _____ activity rather than _____

advertising; accomplishment

top-of-mind awareness

asking a consumer what the most salient (important) brand is in a category

intermediate metrics; provide an example

assess aspects of performance prior to the transaction and may provide an earlier glimpse at the success (or lack thereof) of a marketing tactic. may also be helpful in pinpointing exactly where an unsuccessful tactic needs improvement; awareness

customer lifetime value (CLV)

attempts to predict the value of the future profit flows associated with an individual customer over the length of time the firm can retain the customer

how are the three levels of goals set? provide an example

based on historical variability and the impact of either missing an external target or reaching a stretch target; where there is no benefit to the organization from substantially exceeding the internal target, the stretch target should be set close to the internal target

traditionally, what have marketers been criticized for?

being far better at finding ways to spend their budget than they have been at measuring the effectiveness of their marketing spending

what is the first step in building customer associations about a brand?

brand awareness

hierarchy of effects

brand awareness, brand preference, and purchase intentions sequentially influence the likelihood of a customer's purchase

how are purchase intentions measured?

by asking potential customers how likely they are to purchase the product in a given time frame

gross margin percentage

can be calculated as dollar markup (selling price less cost) as a percentage of selling price. can be thought of as how many cents on the dollar the company keeps to pay overhead costs and turn a profit

minimum advertised price (MAP)

closely related to AUR; the lowest price that retailers are allowed to advertise a brand while receiving incentives from the manufacturer (such as promotional funds)

provide an example of a statistical tool that can be used to measure brand preference

conjoint analysis

utilizing the concept of brevity when developing a set of metrics supports the notion of what?

consistency

the set of goals for each tactic should be what? explain what is meant by this

consistent; they can all be achieved simultaneously and shouldn't contradict each other

while cost per impression was once commonly used for online advertising, measuring what has become much more common?

cost per click; this shifts the emphasis from online advertisers paying for exposure to paying for results (clicks)

what is the inverse of customer retention?

customer churn

in certain industries, customer lifetime value (CLV) can be estimated using what?

customer profiles

internal metrics

draw only on data pertaining to the firm in question or its channel members (such as return on investment (ROI)

many managers new to marketing metrics rely primarily (or solely) on what kind of metrics?

end-result

what is the first step in the process of marketing performance evaluation?

establishing targets for performance

abandonment rate

evaluated at various stages in the customer's purchase process

a manager's best guess at ROI is often not the most accurate indicator, and is subject to all sorts of biases. provide an example of a potential bias

if the manager projects a low ROI, that project might be effective, but also a hassle to oversee

external metrics

include data from the market (e.g., brand awareness or preferences) or combine both internal and external data (for instance market share, which includes both the firm's sales, as well as the market's size)

return on investment (ROI)

incremental project profit as a ratio of incremental project expenditure. often the focus of decision-making and is quickly comparable across all units of an organization

end-result metrics; provide two examples

indicators only available once a transaction occurs; 1. sales 2. profit

marketing metrics can be thought of as a way to link what with what?

individual marketing tactics; overall strategy

while purchase intentions correlate significantly with actual purchase behavior, intentions are not a perfect predictor of sales, especially for what kind of products?

innovative new ones

what is the use of ROI complicated by as a marketing metric? provide examples and explain what can be used to remedy these issues

length of time under consideration; a one-year ROI target could cause managers to pursue tactics that would grow revenue in the short-term while decreasing the value of the brand. it also is difficult to meaningfully track ROI early in campaigns, particularly for products with long sales cycles; intermediate metrics

what is one concern when measuring brand preference?

make sure preference is measured within the group of target customers

share of voice has been shown to be associated with what other metric? particularly when?

market share; during economic downturns when it is easier to increase share of voice due to competitors' declined advertising spending

what is one way to measure online performance that captures efforts both in generating and assisting with purchases?

measure customers' social media investments in the brand (liking the brand, engaging with an online promotion, video or game mentioning the brand online)

customer acquisition cost

measures the cost to acquire one additional customer through a given promotional tactic. focuses on the results of the promotion instead of merely generating impressions. make sure to identify specific outcomes associated with each tactic

clickthrough rate

measures the percentage of all viewers that opt to click on an ad

effectiveness of outdoor advertisements

not often fully processed by potential customers

what is meant when it is said that metrics chosen for all tactics must have alignment with strategic objectives?

that goals must consistently cascade from the business unit's overall strategic objective down to the metrics used for goal setting and evaluation of individual marketing tactics

what does it mean when a brand's AUR is close to its MSRP?

that promotion and channel tactics are working effectively

internal target

the actual/middle target

customer satisfaction (CUSAT)

often used and increasingly criticized. ACSI (American Customer Satisfaction Index)'s approach involves asking customers to rate three aspects of their experience with the company: 1. level of overall satisfaction, 2. the company's performance when compared to customer expectations, 3. performance compared to the customer's ideal product or service in the category

examining the AUR in context of the MSRP and MAP gives a quick indication of what?

the profit potential for the product

MAP policies are a response to what?

online retailing and the ease with which consumers can conduct online and mobile price comparisons

what is a risk involved with online metrics?

only online tactics that directly lead to purchases (clicked immediately before purchase) will be credited with driving performance

which should be established first: overall metrics or metrics of the four P's?

overall metrics

overall metrics

overarching targets which are impacted by all areas of the marketing mix and should be supported by metrics from particular areas of the marketing mix

payback period

the projected length of time until the marketing initiative pays for itself. calculated using given estimates of costs to develop a new product and the projected profit flows over time

brand equity

the set of assets and liabilities associated with a brand that adds or subtracts to/from the value provided by a product or service to a firm and/or the firm's customers

explain what is meant when it is said that brevity is important in developing metrics

the success of a tactic needs to be easily deciphered from a small number of metrics, each of which should be informative with regard to the level of success of the underlying tactic

manufactured suggested retail price (MSRP)

the suggested (but not mandated) retail price for customers. set by manufacturers to allow for profitability while maintaining the brand's value proposition

true or false: brand awareness should be treated as an ultimate goal

false

true or false: the relationship between CUSAT and company financial performance is strong; explain

false (less than 1% of stock market returns can be explained by CUSAT); the cost of better satisfying customers can overrun the potential revenue gains associated with these satisfaction improvements

true or false: brand awareness and purchase intentions have a clear relationship; explain

false; although they have a generally positive relationship

true or false: ROI on its own as a guesstimate is a sound basis for organizational investment; explain

false; however, an ROI target supported by underlying targets, such as sales volume, margins, consumer preference and awareness, is an informative set of metrics supporting the overall project ROI

return on marketing investment (ROMI)

focuses only on the incremental profit and costs that can be attributed to a specific marketing campaign or tactic

caveat of using customer acquisition cost

for most businesses not all customers are equally valued

many of the caveats in projecting ROI are also caveats in projecting what other metric?

profit

the primary objective of most businesses is _____, which is a good starting point in setting an overall goal for a marketing initiative

profit

true or false: NPS has a limited relationship with profitability

true

percentage sales on deal

quickly shows the portion of sales that were made while the product was priced at a lower (promotional) price

what is the difference between recall and recognition

recall: "what online music services are yu aware of?" recognition: "have you heard of pandora.com?"

true or false: establishing a target when using a specific metric for the first time can be challenging

true

true or false: generally, customers perceive brands that they are aware of as being of higher quality

true

true or false: the setting of specific and challenging goals has long been shown to be associated with superior performance when compared to setting less ambitious goals or no goals at all; explain

true; it focuses employees' attention and effort, as well as increases persistence

what is the "grand daddy" of marketing metrics?

return on investment (ROI)

the payback period metric favors what kind of projects?

smaller, more incremental ones

effectiveness of radio in advertising

sometimes referred to as the "half-heard" medium since it is not always actively listened to

initial markup factor (IMU)

used by retailers to multiply by their product cost to arrive at their initial retail price

pricing metrics

used to evaluate a company's success at selling products at MSRP versus discounting

what is a situation in which the concept of brevity in developing metrics is particularly important

when these metrics are linked to marketing employees' evaluations and compensation

cost per impression ((CPM), M being the roman number for 1,000, as the cost per 1,000 impressions)

gives an indication of the cost efficiency of promotional tactics at exposing potential customers to brand messages

setting goals at product launch for average unit retail price (AUR) does what?

help to focus marketing efforts on ensuring healthy margins and consistency between the brand's positioning and the actual price that consumers are paying

scores above ____ indicate superior levels of customer loyalty in terms of NPS

75%

what two things does the payback period metric ignore?

1. any profit achieved after breakeven point 2. the time value of money

when setting a performance target with a new metric, managers are left with two guidelines. what are they?

1. assess other tactics' results on these metrics before setting targets with new metrics; for instance, before setting goals for web traffic generated from a social media promotion, consider examining this metric for previous similar promotions 2. try to set achievable but challenging goals

what factors are considered when evaluating brand equity? provide 5 examples

1. awareness, preference, and purchase intentions (brand strength) 2. economic performance 3.ability of the brand to ensure price premiums 4. the ability of the brand to attract customers into the future 5. the overall risk associated with the brand

within CLV, there are two distinct metrics, each of which can be used to set goals individually. what are they?

1. customer retention rate 2. margin per customer

what two things have led to an emphasis on metrics in online marketing?

1. the near instant availability of online data 2. the ability to associate specific promotional tactics with purchases online

what are three reasons as to why purchase intentions typically exceed actual sales?

1. unplanned events 2. financial concerns 3. an overestimation of the consumer's own likelihood of purchasing the product

while strategic objectives for the business unit might include comprehensive end-result metrics (such as profitability gains of 10 per cent over the fiscal year), individual tactics should each have relevant goals that allow for what? provide an example

the discrete measurement of the performance of each tactic. this should be done in a manner that demonstrates how each tactic supports the overarching strategic objective; consider a housewares manufacturer with an overall strategic goal of increasing revenue 25 per cent over the next five years. one tactic being used to drive revenue growth is a channel promotion to attract new retailers. a meaningful way to assess this channel promotion would be to track the number of new retailers carrying the manufacturer's products

brand preference

the likelihood of potential customers favoring a given product (for either rational or emotional reasons), typically from among a set of relevant competitors

stretch target

the most ambitious

external target

the most conservative. may be revealed to analysts and the business press

share of voice, in terms of online marketing, translates to what?

the portion of all advertising on a particular site devoted to a given product or brand

share of wallet

the portion of spending in the product category that an average customer spends on a particular brand or through a particular retailer

share of voice

the portion of total advertising activity within a product category conducted by a given brand