MKT 3110 Final

Price

Assignment of value Price takes many names. No matter what the name, it is what a customer is willing to exchange for a good or service. ___________________________________ When you think of price, you probably think of the amount of money you have to pay to purchase a product, or enjoy a service. Price certainly includes the cost of an item, but it also includes other things that must be exchanged as part of a transaction as well. For example, some international business transactions are characterized by various forms of barter or countertrade that don't involve an exchange of money at all. The purchase of a car may include trade-in of your existing vehicle along with a cash payment.

Artificial Intelligence

Artificial Intelligence: The broad concept of machines being able to carry out tasks in a way that humans would consider "smart." Machine Learning: The application of AI based on the idea that machines can and should have access to data and engage in learning for themselves. AI allows salespeople to prioritize customers for each day's activities and increases productivity.

What Is Customer Relationship Management (CRM)?

- It is a comprehensive business model for increasing revenues and profits by focusing on customers - It's an overarching business philosophy and process tool to facilitate a customer-driven enterprise - Any application or initiative designed to help your company optimize interactions with customers, suppliers, or prospects via one or more touchpoints

Inelastic vs Elastic

# < 1 --> Inelastic # > 1 --> Elastic

Price Elasticity of Demand Formula

(Q2-Q1)/Q1 (P2-P1)/P1 = % change in quantity demanded % change in price

Measuring Marketing Success

**Specific measures that help marketers watch the performance of their marketing campaigns, initiatives, and channels, and when appropriate, serve as a control mechanism ___________________________________ Metrics are measurements or scorecards used to identify the effectiveness of various strategies or tactics. Marketing control means the ability to identify deviations in expected performance—both positive and negative—as soon as they occur. LECTURE NOTES: In a data rich and data-driven world, organizations have the ability to gain a more detailed understanding than ever before of what's going on both inside and outside their operations. For marketers, this means having the ability to show more clearly a return on their various investments and to use this knowledge to develop and execute marketing plans and strategies.

Reality Check for Marketers: Ethical Considerations in Using Big Data

- Cyber security - Cyberattack - Hackers - Data breach

Objectives of a Customer Centric Strategy

- To drive repeat business - To create customer loyalty - To generate profits

Break-Even Quantity Fomula

= (Fixed Cost/Price - VC per Unit)

Contribution Margin

= Price - Variable Cost Per Unit

Profit

= Quantity above break-even point * contribution per unit

Tax Cuts and jobs Act of 2017 (TCJA of 2017)

A major overhaul of personal and corporate taxes enacted by Congress in 2017.

Break-Even Analysis

A method for determining the number of units that a firm must produce and sell at a given price to cover all its costs. Break-even analysis tells marketers how many units must be sold in order to cover all costs. Knowing the break-even point will tell you at what point the firm will start (or stop) making a profit. If the firm sells one fewer units than the break-even quantity, they will lose money. If they sell one more unit than the break-even quantity, they will make a profit. Break-even analysis is important because it helps marketers understand the relationship between costs and price. ___________________________________ LECTURE NOTES: The break-even point is the point at which the total revenue and total costs are equal and beyond which the company makes a profit; below that point, the company will suffer a loss. Contribution per unit is the difference between the price the firm charges for a product and the variable costs.

A/B Test

A method to test the effectiveness of altering one characteristic of a marketing asset (e.g., a web page, a banner advertisement, or an email). Essentially, this involves sending out two variations of the same message to determine if one version "pulls higher" than the other. The test is conducted by randomly exposing some users to the original version and other users to an altered version.

Shifts in Demand

A shift is a change in direction or position. Marketers can stimulate shifts through effective marketing. An upward shift is when a greater demand for a product occurs. A downward shift is when demand suddenly drops.

Landing Page

A single page on a website that is built for a particular direct marketing opportunity. Landing pages are usually designed to include specific information that is logically connected to the content of the marketing communication that led the user to the page. It typically features one or more interactive elements that let the user engage in one or more actions the marketer desires (e.g., responding to an invitation to attend an online webinar). Marketing analytics then associate each visitor to the landing page with the related direct mail campaign. Then, the company can determine how effective the specific campaign was at encouraging people to (a) RSVP for the event and (b) actually show up for the event.

Emotion Anlaysis

A sophisticated process for identifying and categorizing the emotions a follower possesses in relation to a product or brand by assessing the content of that communication.

Search Engine Optimization (SEO)

A systematic process to ensure that your firm comes up at or near the top of lists of typical search phrases related to your business. As a result, you've hired an SEO specialist to help ensure that your website ranks highly on search engines such as Google and Bing when people type in search phrases such as "high-quality headphones" and "best way to listen to music."

Automation Example

A thermostat that automatically adjusts temperature settings based on predetermined criteria. AI systems that augment human decision making and continuously learn from their interactions with humans and the environment. Example: Software that informs a bank loan officer about a high credit risk for an individual with a previous bankruptcy

Blockchain

A time-stamped series of immutable records of data that is managed by a cluster of computers not owned by any single entity. ___________________________________ Is a type of database that exists on multiple computers simultaneously, containing "blocks" of data that are linked together as "chains" of immutable data. Blockchain offers a level of unmatched data security because no single entity owns the data, which is cryptographically stored, making it almost impossible to tamper with the data even if it gets stolen. On top of all that security, the blockchain is transparent so the data can be traced back to its origin point by anyone who wants to see it. What all of this means is that blockchain offers the potential to help data scientists ensure data integrity, prevent malicious activities, make predictions, analyze data in real time, and manage data sharing. Blockchain could help consumers protect their own data and privacy by allowing them to choose which data to share with businesses and advertisers in exchange for discounts or loyalty rewards. With so many apparent benefits, why isn't blockchain more widely utilized? In short, blockchain is still relatively immature and its lack of scalability—the ability to handle a lot of transactions all at once—is a major issue, which also means that it is more expensive than traditional data storage. One additional limitation of blockchain is that a very large network is vital to its success because data that only exists on a few computers is vulnerable to attack. It may not be the holy grail of data security, but blockchain has the potential to greatly impact the data security world.

Q: But how much does the firm lose or add profit? The selling price of the product or less.

A: They will make or gain profit in the amount of the difference between the selling price of the product and the variable costs per unit (which will not be spent if the product is not offered for sale). This is referred to as the contribution per unit (the amount that the sale of each unit of the product has to contribute to fixed costs).

Data Scientist

An individual who uses skills in mathematics, computer science, and trend analysis to explore multiple, disparate data sources to discover hidden insights that will provide a competitive advantage.

Touchpoint

Any point of direct interface between customers and a company (online, by phone, or in person)

Payment

Anything that has value to the other party: money, goods, services, favors, votes, and so on.

Assisted Intelligence

Automation of manual and cognitive tasks that are either routine or nonroutine. This does not involve new ways of doing things—it automates existing tasks.

Break-Even in Dollars Example

BE$ = 20,000 * 30 = $600,000

Figure 5.2 Sources of Big Data for Marketers

Big Data comes from many sources, both those within and outside of the organization and created and compiled from different groups. You know how much they sold, when they sold, gives an idea to replenish the product without walmart asking cause you see the system. Understand who the customer is and what does not sell. Retail - spending less money if everything is automated and being replenished. Customers can go in and always find the product.

Big Data: Potential to Provide Competitive Advantages

Big Data: A popular term to describe the exponential growth of data - both structured and unstructured - in massive amounts that are hard or impossible to process using traditional database techniques. "Big Data refers to the ever-increasing volume, velocity, variety, variability and complexity of information. Big data have the ability to give an organization a competitive advantage in three main areas: - Identifying new opportunities for greater ROMI - Turning insights gained into better products - Delivering timely information more efficiently and effectively LECTURE NOTES: Marketers can create competitive advantages based upon their use and analysis of Big Data through three main mechanisms: 1. Identifying new opportunities through analytics that yield greater return on investment (ROI) on marketing efforts. 2. Transforming insights gained into products and services that are better aligned with desires of consumers. 3. Delivering communications on goods and services to the marketplace more efficiently and effectively. These insights can not only enhance firm profits, but may also benefit society as a whole.

Figure 10.9 Break-Even Analysis Assuming a Price of $100

Break-even analysis is a critical technique used by marketers to determine the number of units which must be sold at a given price to cover total costs. As Figure 10.9 demonstrates, total revenue and total cost are equal at the break-even point. Assuming a price of $100, the manufacturer will reach the break-even point (in units) at 4,000, which, when multiplied by the $100 unit price, indicates a break-even point (in dollars) of $400,000. Sales of more than 4,000 units will yield profits, but sales below the break-even point will lead to financial losses.

Costs, Demand, Revenue, and the Pricing Environment

To set the right price, marketers must understand a variety of quantitative and qualitative factors.

Customer Equity

CRM firms view customers differently - as assets. Customer equity is defined as the financial (net) value of a customer throughout the lifetime of the relationship. The final characteristic that makes CRM unique is the fact that organizations focus on high-value customers. This means the firm prioritizes its customers and customizes communications accordingly.

At Its Core, CRM Is about Two-Way Communication

CRM means getting "up close and personal" with customers. CRM captures information at each customer touchpoint CRM systems allow customers to check the status of a delivery, receive an appointment reminder text message from a dentist, or receive an email from a car dealership asking the consumer to complete a satisfaction survey.

Cross-Elasticity of Demand

Changes in the prices of other products may affect a product's demand. - If products are substitutes, an increase in the price of one will increase demand for the other (Beef versus chicken). - If one product is essential for use of a second product, an increase in the price of one decreases demand for the other (Cars and gasoline). LECTURE NOTES: The essence of cross-elasticity of demand is that when products are substitutes for one another, a price increase in one will be reflected as an increase in price for the other. However, when products are complements, meaning that one product is essential to the use of the first, an increase in the price of one will decrease demand for another.

Customer Churn Rate or Rate of Attrition

Churn Rate: % of a company's customers (within a given span of time) who by the end of that time span have defected. (customers who have left you) (# of customers lost in a time period / # of customers at beginning of time period) x 100 Started with 100 customers and ended with 20 CCR = [80/100] x 100 = 80%

Cyberattack and Data Breach

Companies need to exhibit full transparency with customers about how, when, and why data are being collected from them as well as the intended uses of those data. Failure to do so can result in a massive loss of trust by customers that Target, Facebook, and multiple other companies have experienced. Cybersecurity: A strong commitment by firms to protect digital data, such as those in an electronic database, from destructive forces and from the unwanted actions of unauthorized users. Cybersecurity implies a strong commitment by firms to protect digital data, such as those in an electronic database, from destructive forces and from the unwanted actions of unauthorized users. A cyberattack is an attempt to gain illegal access to a computer or computer system for the purpose of causing damage or harm. Cyberattacks are most often perpetrated by a hacker, which is a person who illegally gains access and sometimes tampers with information in a computer system. Another possibility is some other type of data breach, which is the intentional or unintentional release of secure or private/confidential information to an untrusted environment, Marketers and their organizations have an obligation to protect customer data from unauthorized users, but customers must also be wary of how organizations use all of this data and the potential that exists to intentionally mislead customers.

The Pricing Environment: Non-Economic Influences

Competition: The type of industry structure (oligopoly, monopolistic competition, or pure competition) can influence pricing. Government regulation: Laws and government agencies impact pricing decisions. Consumer trends: Culture and demographics influence pricing. The International environment: Companies may vary their pricing depending upon the country in which their product is sold.

Lecture Notes Non-Economic Influences (2)

Consumer cultural and demographic trends can strongly influence prices. One example is that even consumers who are well-off see nothing wrong with bargain-hunting, particularly in tough economic times. Sharing Economy: Consumers share goods and services with each other (facilitated by an online platform). Uber and Airbnb: Examples of how consumers are sharing their assets while making some extra money from the service. Shopping for Control: Consumers, facing a world of terrorism and political unrest, value products and services that provide some degree of control, such as smart home technology or gated communities. ___________________________________ A special economic consideration in international price setting is the exchange rate and exchange rate volatility. Changes in the exchange rate can substantially influence the profitability of a brand sold in a foreign market. Furthermore, the marketing environment varies widely between countries. Very often unique environmental factors force marketers to adapt their pricing strategies. For example, in developing countries, consumers often cannot afford the cost of a bottle of detergent or shampoo. Instead, marketers create one-use packages called sachets that sell for just a few cents, and make the product affordable to consumers of that country. The competitive environment and government regulation also impact international prices.

Customer Equity and Lifetime Value

Customer Lifetime Value (CLV) is how much profit a firm will make on a customer. Customer equity is the financial value of a customer relationship. - Takes into account monetary investments to acquire and maintain relationship Difference - customer equity takes into account any money you spend getting the customer in and keeping them. Accounts some risk and acquisition.

Customer Orientation

Customer drives the marketing strategy, which is driven by the marketing mix. Customer is the center of all marketing activities, and CRM software and touchpoints help ensure that the customer is accurately captured and monitored.

Customer Relationship Management (CRM): A Key Decision Tool for Marketers

Customer relationship management (CRM): a systematic tracking of consumer preferences and behaviors to tailor the value proposition to each individual's unique wants and needs. The big data revolution and enhanced analytical capabilities allow firms to enhance the customer experience. MarTech: Short for "marketing Technology", this term is the blending/fusion of marketing and technology. A particular focus is placed on the application of marketing through digital technologies. Has affected roles in the C-suite with the addition of the chief customer officer (CCO). C-Suite: A popular term for a firm's top executive team, so-called because of the "chief" titles of each officer, such as chief executive officer (CEO) Chief Customer Officer (CCO): An increasingly popular C-Suite role, the COO is positioned as a firm's leading force of all things customer related.

Customer Satisfaction Objectives

Customer satisfaction objectives focus on keeping customers for the long term. Quality-focused firms believe that profit stems from customer satisfaction, hence, pricing their products in a manner that satisfies customers.

Demand Curves for Normal and Prestige Products

Demand curves illustrate the effect of price on quantity demanded. For normal products, the demand curve isn't a curve at all, but rather is just a straight line, as shown here for normal products. In this situation, the law of demand dictates that as price goes up, quantity demanded declines. The vertical axis of demand curves shows the various prices that a firm might be willing to charge for a product. Demand is portrayed as the number of units that consumers are willing to purchase at a given price. Thus when price is set at $30 (P1), the quantity demanded is forecast to be 100 units (Q1) while a price increase to $50 (P2) results in a drop of demand to 60 unit (Q2). However, the law of demand does not always accurately reflect how price and demand interact. For example, brands that are marketed on the basis of prestige, status, or simple snob appeal are characterized by a very different sort of demand curve, as shown on the right-hand side of Figure 10.4. In this situation, low prices makes the product undesirable as consumers simply can't reconcile a low cost with a prestigious product. They may suspect the brand is a counterfeit, for example. As price increases, so does demand, to a certain point. Some consumers feel that a product becomes more desirable as the price increases simply because not everyone can afford to buy it. However, as price continues to increase, some buyers will drop out of the market. The combination of these factors creates the backward-bending demand curve shown for Prestige Products in Figure 10.4.

Elastic Demand

Demand in which changes in price have large effects on the amount demanded.

Inelastic Demand

Demand in which changes in price have little or no effect on the amount demanded.

Step 2: Estimate Demand

Demand refers to customers' desire for a product. - How much are customers willing to pay as the price of the product goes up or down? Economists use demand curves to illustrate the effect of price on quantity of a product demanded. The law of demand: As price goes up, quantity demanded goes down.

Demand

Demand refers to the quantity of a good or service that consumers and business customers are willing and able to buy at a given price in a given time period Demand normally changes with changes in price, meaning that marketers must know how much consumers are willing to buy at different prices. Therefore, one of the earliest steps marketers take in price planning is to estimate demand for their products.

4. Market Basket Analysis

Develops focused promotional strategies based on the records of which customers have bought certain products. Hewlett-Packard, for example, carefully analyzes which of its customers recently bought new printers and targets them to receive emails about specials on ink cartridges and tips to get the most out of their machines. - Shopping and get the message "people who bought this item also bought that item" - Buying a printer and ink cartridges

Business Models for Digital Marketing

Digital marketing investments tied to actions users take. Cost-per-click basis: only when a consumer clicks on the ad. Cost-per-impression basis: each time an ad shows up on a page the user views. LECTURE NOTES: For marketers, investments in digital marketing are especially attractive because their cost is often directly tied to specific actions users take. For instance, Google's paid search ads can be purchased or bid on based on a cost-per-click in which the cost of the advertisement is charged only each time an individual clicks on the advertisement and is directed to the Web page that the marketer placed within the advertisement. This method of charging for advertisements is common for online vendors of advertisement space. Other methods of purchasing advertisements digitally include cost per impression, in which the cost of the advertisement is charged each time the advertisement shows up on a page that the user views. Companies that sell online advertising space commonly use both of these methods of charging for advertisements. Cost-per-click purchases of advertisements are typically more expensive, as they demand a higher level of interaction from the user. Cost-per-impression ad purchases can provide a good value. However, the cost-per-impression structure requires a greater leap of faith because it's not so easy to measure the value of an impression (or view of an advertisement). Search engine optimization (SEO) It's the job of marketing analytics to determine the average cost per customer transaction

Figure 10.7 Price-Elastic and Price-Inelastic Demand

Elasticity of demand is defined as the percentage change in unit sales that results from a percentage change in price. When changes in price have large effects on the amount demanded, demand is elastic and the demand curve is more horizontal. Thus an increase in price can negatively impact revenues when the percentage increase in price cannot compensate for the revenue lost through lower unit sales. When changes in price have little or no effect on the amount demanded, demand is inelastic and the demand curve is more vertical. Such situations make it much easier for marketers to change price without negatively impacting the volume of sales. Both graphs show the price in dollars on the vertical axis and quantity demanded on the horizontal axis. The Elastic Demand graph shows Quantity demanded, Q 1, for Price P 1, and when price decreases to P 2, the quantity demanded, Q 2, increases substantially. The demand line is downward sloping but closer to horizontal than vertical. Text states, Price change causes great change in demand. The Inelastic Demand graph shows Quantity demanded, Q 1, for Price P 1, and when price decreases to P 2, the quantity demanded, Q 2, increases only slightly. The demand line is downward sloping but closer to vertical than horizontal. Text states, Price change causes little change in demand.

Step 4: Examine the Pricing Environment

Firms must also consider external influences upon pricing decisions. - Broad economic trends - The business cycle - Economic growth - Inflation - Consumer confidence LECTURE NOTES: A number of different factors in the economy influence pricing. Broad economic trends such as the business cycle, economic growth, inflation, and consumer confidence may help a firm determine which pricing strategy is most appropriate. During a recession, consumers' tend to become very price sensitive. They switch brands to get a better price and patronize discount stores. Inflation, on the other hand, often allows marketers to increase prices because consumers have become accustomed to price increases. During inflationary periods, consumers may also grow fearful about the future and cut back on purchases. Consumer confidence is a measure of consumer optimism about the overall state of the economy and their personal financial situation. Normally, consumers will spend more if consumer confidence is high and save rather than spend when consumer confidence declines.

Table 10.1 Estimating Demand for Pizza

Estimating demand accurately is critical as demand estimates influence production scheduling, marketing planning, budgeting and more. Table 10.1 illustrates the demand estimation process in the context of how a new business such as a pizza restaurant might estimate demand for the market it expects to serve. The process begins by identifying the number of potential buyers of the product, and multiplying that number by the average number of purchases each is likely to make over a particular time period. In this example, the geographic area being served by the pizza firm contained 180,000 pizza eating households who on average ordered out or dined in at pizza restaurants six times a year. Multiplying these two factors yielded a total annual market demand of 1,080,000 pizzas. The next step to estimating company demand is to multiply the total annual demand by the firm or brand's forecast market share. Thus 3% of the total market yields an estimated annual company demand of 32,400 pizzas, which divided by 12 and 52, yields monthly and weekly pizza demands of 2,700 and 675, respectively. While this process may sound simple, marketers must be realistic at each phase of the demand estimation process. For example, using census data to project the number of families in the market would overestimate demand, as not all families eat pizza. Similarly, failing to take into account current economic conditions could cause inaccurate projections. When the economy is in a recession, fewer families may go out for pizza, instead choosing to buy a grocery store pizza. Or, families may eat out less frequently. Furthermore, the level of competition and consumer trends can also influence the accuracy of demand estimates.

Autonomous Intelligence

Example: Self-driving cars

Bartering

Exchanging with something other than money: services, goods, raw mat. Bartering in which parties exchange products with each other is more frequently seen in business to business exchanges.

Why Is CRM So Effective? CRM Facilitates One-to-One Marketing

Facilitated by CRM, one-to-one marketing allows the organization to customize some aspects of the goods or services it offers to each customer. Steps in one-to-one marketing 1. Identify and get to know customers in detail 2. Differentiate customers in terms of their needs and their value to the company. 3. Interact with customers to improve cost efficiency and effectiveness 4. Customize some aspect of goods or services

Elements of Price Planning

Firms undertake price planning in six steps, as shown in Figure 10.1. The process begins by setting objectives. This is followed by estimating demand and determining relevant costs. Examination of the pricing environment precedes the choice of a pricing strategy and the implementation of pricing tactics. Each of these steps will be discussed in more detail as we work through the chapter.

Break-Even Quantity Example

Fixed Cost = $200,000 Price = $30 VC Unit = $20 BEQ = 200,000/(30-20) = 20,000 units

Costs

Fixed: Maintenance/Utilities Mortgage Insurance Salary Variable: Material Labor (Wages)

Demand Curves for Normal and Prestige Products (2)

For prestige products, a price increase may actually increase the quantity demanded. Both graphs show the price in dollars on the vertical axis and quantity demanded on the horizontal axis. The Normal Products graph depicts P 1 at $30, which will cause a quantity demanded of Q 1 at 100. At the point P 2 of $50, Q 2 will be at 60. The demand curve is thus a downward sloping linear line, showing that Demand increases as price decreases. The Prestige Products graph depicts P 1 at 700 and Q 1 at 60, P 2 at 500 and Q 2 at 80, text states, Demand increases as price decreases, and P 3 at 300 and demand to be the same, as Q 1 at 60, text states, Demand decreases as price decreases. The demand curve is thus end-parenthesis shaped or backward-bending.

SMART Goals

Goals that meet the criteria of being specific, measurable, achievable, relevant, and timely. They provide a sense of direction to increase the likelihood of goal achievement.

CRM Metrics and Key Performance Indicators (KPI)

How do you measure and track your goals? 1. User Adoption Metrics: Metrics focused on the extent to which employees are using the CRM system as intended, including various IT metrics, such as number of logins and data completeness. 2. Customer perception metrics: Metrics, such as satisfaction, that are concerned with the extent to which customer experiences are enhanced as a result of CRM. 3. Business Performance Metrics: Metrics that directly assesses outcomes related to the profitability of a company. Typically receive the most attention because they directly assess outcomes related to the profitability of a company. Key Performance Indicators (KPIs):The critical indicators of progress toward an intended result.

Image Enhancement Objectives

Image enhancement objectives attempt to get customers to relate a high price to better quality. Prestige products such as Rolls-Royce or Rolex have a high price tag, but appeal to customers' thoughts about "status." Prestige Products: Products that have a high price and that appeal to status-conscious consumers

Step 3: Determine Costs

In order to ensure that product price will cover costs, marketers must determine Variable Costs: Per-unit costs of production that will fluctuate depending on how many units a firm produces (such as the costs to make a pizza include the ingredients, labor costs of cooks, and boxes for the pizza). Fixed Costs: Costs that do not vary with the number of units produced (such as rent on the building, electricity, water, and insurance). Average fixed costs: fixed cost per unit. Total costs: Total of fixed and variable costs for a set number of units produced. ___________________________________ LECTURE NOTES: The third step of the pricing process requires that the marketer be certain that the products price will cover costs. For this to happen, marketers must estimate variable costs, fixed costs, average fixed costs and total costs.

Understanding Demand

In order to set price, marketers must have an understanding of product demand. This includes considerations, such as: - The law of demand - Shifts in demand - Price elasticity - Variable and fixed costs - Impact of external environment on pricing

Cost Per Order

Indicates the cost of gaining an order in terms of the marketing investment made to turn a visitor to a website into a customer who has chosen to make a transaction. Advertising costs $ / # of orders You invested $10,000 in advertising and generated 200 orders. CPO = $10,000/200 = $50 per order

IoT Continues to Grow Increasing the Size of Big Data

IoT: Is a term that increasingly appears in articles and stories on technology trends. It describes a system in which everyday objects are connected to the Internet and in turn are able to communicate information throughout an interconnected system. Contributes to the exponential growth of data Ordinary things are connected to the Internet and communicate information. What kinds of things? Medical devices, cars, toys, video games, a six-pack of beer in your fridge What can we gain? Insight into the extent and way people use everyday objects CONS: All things being tracked, life being tracked, ethical dilemma - what if the info is being used to abuse us, information is out there. LECTURE NOTES: We are already seeing these things allowing companies to automate processes previously done by hand. Alexa: turn on my lights, turn the heat to 72, etc. Tesla has made significant changes in how it communicates with customers based on IoT information. The automaker uses the car as a relationship manager, monitoring to identify necessary repairs, record user habits and preferences, and upgrade performance with constant software downloads. The approach is creating a new normal for the automotive industry—that is, a "persistently connected product." And all the data collected based on this capability makes Tesla much smarter when it comes to selling aftermarket features. The company also can predict when the time is right to begin messaging the Tesla user about new models in advance of his or her next purchase.

Lead Nurturing

Is the automated process of sending personalized and relevant content to the prospect to build their trust, making it more likely that they will eventually make a purchase.

Share of Customer (2)

It's easier and less expensive to keep a current customer than it is to acquire a new one. - Many firms look to increase the share of customers instead of share of the market. Share of customer is the percentage of a given customer's purchases in a category over time. - Enables companies to grow sales and profits at a lower cost, relative to new customer acquisition. (How much a customer purchases from me vs the competitors. Customers buy 20% from you and 80% elsewhere. What is it that will take the customer to buy more from my brand vs where you take your money elsewhere. Maximize the share of customers.) LECTURE NOTES: Because it is always easier and less expensive to keep an existing customer than to get a new one, CRM firms try to increase their share of customers, not share of market; this is the percentage of an individual customer's purchase of a product over time that is the same brand. For example, if Amazon's database records indicate that a given patron has purchased three books by a certain author, the CRM aspect of this system would try to increase share of customer by automatically sending an email to that individual offering him or her the opportunity to preorder a new book which has been written by the author, but not yet released. If the firm can get the consumer to buy additional books from favored authors, it has increased its share of customers. This is where CRM's ability to customize and personalize marketing promotions to individual consumers can be helpful.

Figure 10.10 Markups through the Channel

LECTURE NOTE: This figure illustrates channel pricing. It shows how the each facet of the channel (manufacturer, wholesaler, and retailer) must price the good in order to make a profit for that particular organization.

LECTURE NOTES CRM

LECTURE NOTES: CRM facilitates one-to-one marketing, a process which is composed of four interrelated steps: Step 1: Identify customers and get to know them in as much detail as possible. Step 2: Differentiate customers by their needs and value to the company. Step 3: Interact with customers; find ways to improve cost efficiency and the effectiveness of the interaction. Step 4: Customize some aspect of the products you offer each customer. Remember, successful one-to-one marketing depends on CRM, which allows a company to identify its best customers, stay on top of their needs, and increase their satisfaction.

LECTURE NOTES CRM (2)

LECTURE NOTES: CRM is about communicating with customers and customers being able to communicate with a company "up close and personal." CRM systems are applications that use computers, specialized computer software, databases, and often the Internet to capture information at each touchpoint, which is any point of direct interface between customers and a company (online, by phone, or in person). These systems include everything from websites that let you check on the status of a bill or package to call centers that solicit your business. It is through CRM that companies act on and manage the information they gather from their customers.

Customer relationship management (CRM)

LECTURE NOTES: Customer relationship management strategies are used by many successful firms. Customer relationship management (CRM), is defined on this slide. Marketers know that one way to more-finely segment consumers is to allow them to personalize products. The big data revolution was fueled in part by the success of sports teams using data analytics to enhance their on-field performance. However, Josh Barbieri and the Phillies quickly recognized the potential to leverage customer data using CRM as a means to enhance the overall customer experience. CRM systems serve as a central hub of customer data for most successful firms, integrating various data sources that can be used to develop powerful analytical capabilities oriented toward enhancing an organization's relationship with its customers. For example, Josh and his marketing team use this type of data to predict ticket renewals and in-game attendance, which allows them to anticipate potential demand for concessions and merchandise and to maximize points of contact with fans. Vast amounts of data have enabled marketers to understand and interact with customers in ways that would never have been possible in the past. Chief marketing officers (CMOs) now spend more on technology than do chief information officers (CIOs)? There are over 5,000 vendors that sell technology specifically for marketing analytics! This explosion has created a new category of technology called MarTech which is a blending of marketing and technology, especially digital technologies.

Primary Data: Types of Data for Data Mining

LECTURE NOTES: Data derived from data mining efforts can be broadly classified as structured and unstructured data. Structured data are data that (1) are typically numeric or categorical; (2) can be organized and formatted in a way that is easy for computers to read, organize, and understand; and (3) can be inserted into a database in a seamless fashion. Conversely, unstructured data are often qualitative in nature and do not possess all three of these characteristics. This makes it easy for humans to understand but difficult for computers.

Figure 5.4 Uses of Data Mining

LECTURE NOTES: Data mining has four important applications for marketers:

LECTURE NOTES - Direct Mail, Landing Page

LECTURE NOTES: Direct mail, which will be discussed as a promotion tool in Chapter 13, is one type of non digital marketing channel that can be set up so that its effectiveness can be measured using marketing analytics. As a marketer you are trying to determine whether a direct mail marketing campaign led to a sale (or some other desired action). Landing pages are usually designed to include specific information that is logically connected to the content of the marketing communication that led the user to the page. Landing pages typically feature one or more interactive elements that let the user engage in one or more actions the marketer desires (e.g., responding to an invitation to attend an online webinar). Marketing analytics then associates each visitor to the landing page with the related direct mail campaign.

Figure 5.1 C R M-Enabled Customer Metrics

LECTURE NOTES: Firms that successfully make use of CRM have a different mind-set, different goals, different measures of success, and generally look at customers in a different way when compared to firms that don't use CRM. Four critical characteristics of CRM are shown in Figure 5.1.

Figure 10.8 Variable Costs for Bookcases at Different Levels of Production

LECTURE NOTES: Here is an example of how costs might change with different levels of production of bookcases. Variable costs are those production costs that are tied to the number of units produced and thus vary depending on volume. As the example shown here illustrates, materials such as wood, nails, and paint that are used to produce a product are considered variable costs, as are the hourly labor costs associated with the production process. Figure 10.8 shows how the average variable costs per unit may change as the number of products produced changes. The higher the production level, the more likely it is that the manufacturer will be able to negotiate a better deal for materials due to the larger quantities being purchased. Fixed costs don't change with the number of units produced, whether it's 100 or 10,000. Thus the average fixed cost per unit will always decrease as the number of units produced increases. Fixed costs include the costs of renting or owning production facilities, the cost of utilities to heat or cool the factor, the cost of equipment used in the production process, etc. Other fixed costs include salaries of administrative personnel (basically anyone who is not directly involved in manufacturing the product). Advertising and marketing expenses are also considered to be fixed costs as well, at least during the period of time the firm has contracted for. Total costs are simply the combined fixed and variable costs at a given production level.

Break-Even Calculation

LECTURE NOTES: In this formula, the numerator is the total fixed costs (utilities, salaries, advertising, etc.) and the denominator is the contribution per unit to fixed costs (amount the firm charges for one unit of the product less the variable costs of making that one unit).

Lecture Notes Non-Economic Influences

LECTURE NOTES: Marketers try to anticipate how the competition will react to pricing changes. Pricing wars can be disastrous, so it's not always smart to continually lower prices. During price wars, consumers' perceptions of a "fair price" may change, leaving a target market who is unwilling to pay "normal" prices once the war is over. The industry structure also influences pricing. Oligopolies, such as the airline industry, typically attempt to avoid price competition and are more likely to price similarly in order to remain profitable. Restaurants and other industries characterized as monopolistic competition, vary their prices, and focus on non price competition as each sells at least a somewhat different product. And of course, there is little opportunity to alter price in a market characterized as pure competition found with most agricultural products and commodities. Government regulation impacts pricing in three ways: First the various regulations regarding employee health and the environment at the federal and state levels increase the costs of production. Other regulations effect specific industries only. Some laws such as those dealing with credit cards and the Affordable Care Act have a direct influence on consumers' spending ability. In some cases the President and government have the ability to freeze or regulate prices. Credit Card Responsibility and Disclosure Act: Limits credit card rates and other fees Affordable Care Act: Provides access to health are for all Americans

Figure 5.7 Major Digital Marketing Channels

LECTURE NOTES: The options for investment in digital marketing channels are diverse with consumers spending large amounts of time on traditional websites, social networking sites, and search engines, to name a few options. Digital marketing channels are typically broken up into six major groupings. Within these, there are multiple types of marketing efforts and campaigns that marketers can develop and track. Artificial intelligence plays an important role in many of these channels as chatbots are expected to account for 85 percent of customer service and voice search to account for more than 50 percent of searches in 2020.

Length of Sales Cycle

Length of Sales Cycle: The series of events that takes place from the moment a salesperson first engages with a prospect up until the moment when the sale is made.

Lifetime Value of the Customer

Lifetime value of the customer: Lifetime value is the potential profit a single customer's purchase of a firm's products generates over the customer's lifetime. Estimating LVC requires that the firm first estimate future sales across all products for the next 20 or 30 years, and then that the firm attempts to figure out what profit the company could make from this customer in the future.

Markup on MSRP (Selling Price)

Manufacturer --> Retailer --> Customer MSRP = $80 Maximum cost to make 60% mu on msrp Max to be paid by the retailer = 80 - (80 - .6) = $32 Max cost to manufacturer = 32 - (32 - .2) = $25.60

Markup on Cost

Manufacturer --> Retailer --> Customer Tcost to produce a shirt = $16 + (16 * .2) = $19.20 20% mu (markup) customer price with a 40% mu --> 19.20 * (19.20 * .4) = $26.88 Price = Total Cost + (Total Cost * Markup Percentage)

Commercial Entity Sources

Many companies today collect data in large quantities to sell to organizations that can derive value from them. For some provider firms, this activity is their primary source of revenue; for others, it is a nice additional source of revenue over and above their principal business activities. For example (and this may or may not come as a surprise to you), many credit card companies, such as American Express and MasterCard, sell your purchase data to advertisers so that they can better target their ads. And supermarkets like Safeway for years have sold scanner data—data derived from all those items you scan at the cash register when you check out with your customer rewards number (which just happens to have your demographic profile information in its record!). Supermarkets sell the data in aggregated form so that it's not possible to identify the actions of a specific customer, but scanner data still provide extremely useful information to both manufacturers and retailers about how much shoppers buy in different categories and which brands they choose. Scanner Data - Data derived from items that are scanned at the cash register when you check out with your loyalty card.

1. Customer Acquisition

Many firms include demographic and other information about customers in their database. For example, a number of supermarkets offer weekly special price discounts for store "members." These stores' membership application forms require that customers indicate their age, family size, address, and so on. With this information, the supermarket determines which of its current customers respond best to specific offers and then sends the same offers to noncustomers who share the same demographic characteristics.

Connecting with Customers

Many firms prosper by using CRM to generate customer satisfaction, sales, and business efficiency. Amazon: customizes product recommendations Adidas: creates new products Disney's MyMagic+: collects data allowing Disney to communicate with each customer and manage each relationship effectively

Partner Database Sources

Many firms today have adopted a channel partner model in which there is a two-way exchange of information between purchasing organizations and their vendors through shared or integrated IT systems. If you're the producer of a product that is sold by a large retailer such as Walmart, think about the information and insights you could gain from access to the consumer information that Walmart gathers from its interactions with shoppers in its stores, on its website, and within the Walmart app. Channel Partner Model: A relationship between channel partners in which a two-way exchange of information between purchasing organizations and their respective vendors is facilitated through shared or integrated IT systems.

Connect Digital Marketing Channels to Marketing Analytics

Marketers have long faced challenges in determining campaign and channel effectiveness. Digital marketing has become an increasingly important element of the marketer's toolbox. Why? More people are spending increasing time online Much easier to track consumer behavior in response to digital marketing actions LECTURE NOTES: Digital marketing channels are those specific means of distribution through which digital marketing communications can be delivered to current and potential customers. The distribution of communications through digital marketing channels often requires the use of one or more technology platforms that serve as intermediaries. The RPRC Clothing example in the text provides an easy-to-follow step-by-step description of how marketing analytics captures the customer's actions. RPRC Clothing may also choose to conduct a simple A/B test by altering one characteristic of a marketing program, e.g., a web page or an email.

Figure 10.6 Price Elasticity of Demand

Marketers know that price elasticity of demand is an important pricing metric. LECTURE NOTES: As was mentioned earlier, marketers need to know if demand for their product is elastic or inelastic at any given price and any level of price increase or decrease. This slide presents the formula for calculation of price elasticity. It also shows examples of the calculations of elastic and inelastic demand. If the price elasticity calculated is greater than 1.0, demand is elastic. If the price elasticity of demand is less than 1.0, demand is inelastic.

Marketers Adjusting Demand

Marketers may need to adjust monthly or weekly demand levels when certain factors have a direct or indirect influence on demand levels. Some factors to consider include the impact of special events (e.g., "back to school"; "Black Friday", the day after Thanksgiving; January inventory clearance sales), and holidays (Christmas, Fourth of July). But many other factors can complicate demand calculations, including seasonal influences, whether the product in question is a durable good (such as a lawn mower), or a non-durable consumer (such as pizza), and the region of the country for which the forecast is being made.

Marketing Automation

Marketing Automation: A group of systems and technologies that can be used to establish a set of rules for handling different marketing-related processes without human intervention. Lead: An individual or firm with a potential interest in buying something you sell. Sales Funnel: The process through which a company finds, qualifies, and sells products to buyers Lead Nurturing: The automated process of sending personalized and relevant content to the prospect to build their trust, making it more likely that they will eventually make a purchase.

A Primer on Analytics

Marketing analytics: a group of technologies and processes that enable marketers to collect, measure, analyze, and assess the effectiveness of marketing efforts including advertising. Analytics makes sense of Big Data for use in marketing decision making. LECTURE NOTES: Increased emphasis on marketing analytics enables marketers to increase accountability and justify investments into marketing activities. Marketing analytics solutions allow marketers to look at the performance of different marketing initiatives as a whole. Analytics are capable of providing a level of analysis and a degree of accuracy and speed that is crucial in our data-driven world. Marketing analytics takes Big Data and makes sense of it for use in marketing decision making! Marketing analytics technology can move through massive datasets that provide useful information that can power decisions and help marketers better understand the value of their investments. The need to be able to tie specific actions in advertising to measurable results (such as sales) has been a long-standing challenge for marketers. For those who spend money on TV advertising, billboards, and other forms of traditional advertising, the challenge is to quantify the value of these efforts. You may have seen a TV advertisement for McDonald's featuring a Big Mac and the next day purchased one because of the advertisement, but how would anyone else know that it was that commercial that pushed you over the fast-food edge, as opposed to any of the other marketing investments that McDonald's has made? Digital marketing offers an attractive solution due to the easy application of marketing analytics it brings. It enables marketers to get a better sense of the specific ROMI they receive when they use a specific channel as opposed to just guesswork.

Marketing Automation LECTURE NOTES

Marketing automation example in text: A potential customer has subscribed to receive an email notification whenever someone posts on your company's blog. A few weeks later, he or she reads and comments on a blog post that discusses the value obtained from one of your company's products. A few days later he or she downloads a document that outlines the technical features of the product. It's increasingly clear that the potential customer has an interest in one of your products. Everyone's busy so no one noticed. In this example, an organization could use a marketing automation system that could instruct the system to send an email to the potential customer inviting her to speak to a sales representative, attend a webinar, or pursue other follow-up options. The system can also direct the customer to a personalized landing page on the company website that is updated in real time based on the previous viewing behaviors associated with their unique IP address. Such customized responses greatly increase the likelihood of customer follow-through

Marketing Metrics and Predictive Analytics

Marketing metrics help marketers understand current performance. Predictive analytics is a "crystal ball" through which marketers can use large quantities of data to predict the success of future initiatives. Anticipatory shipping: a data-driven algorithm using A I that provides the capability to make highly accurate shipping decisions based on past behavior, even before a customer's next purchase decisions are fully finalized. LECTURE NOTES: Up to this point, we've examined how marketing analytics can be leveraged to better understand how current marketing channels and initiatives are performing. Another intriguing area for any marketer is the ability to actually predict the future and thus better understand the value of their marketing campaigns even before they implement them. Predictive analytics techniques use large quantities of data and variables that the analysts know relate to one another to more accurately predict specific future outcomes.

% of Marketing Originated Customers

Marketing-Generated Lead: A inbound lead in which a potential customer contacts a company with an interest in your goods or services, resulting from your marketing efforts. Derived from: # of new customers from marketing leads divided by # of new customers and multiply by 100 Example: 500 new customers from marketing And 2000 new customers % of Mktg. Originated leads = [500/2000] x 100 = 25%

Markup Calculations

Markup can be calculated as a percentage of the final selling price, or as a percentage of the price paid for the product. For simplicity sake, let's assume 30 percent markup is calculated on the basis of final price. $10 - final price to consumer. Retailer margin = 30%. 1 - 0.3 = 0.7 $10 x 0.7 = $7 price to retailer if manufacturer sells directly to them. Note: this means the manufacturer must be able to manufacture the product and cover his or her fixed and variable costs plus make a profit when selling at the $7 price Assuming that a wholesaler is also in the picture, and that the wholesaler's margin is 20%, 1 - 0.2 = 0.8 $7 x 0.8 = $5.40. Thus the manufacturer must be able to manufacture the product and cover his own fixed and variable costs plus make a profit when selling the item to the wholesaler at $5.40. The wholesaler would then sell to the retailer for $7 who would sell the product to the consumer for $10.

Markups and Margins: Pricing through the Channel

Markup is an amount added to the cost of the product to create a price at which the channel member will sell the product. The markup is referred to as a margin. - Gross margin - Retailer margin - Wholesaler margin - List price or manufacturer's suggested retail price (MSRP): The price that the manufacturer sets as the appropriate price for the end consumer to pay.

Data Warehouse

Massive data warehouses—also sometimes called "server farms"—yield important information for marketers.

Markup Lecture Notes

Most products are not sold directly from the manufacturer to the consumer; thus channel pricing considerations are often part of the marketer's job. Marketers must make certain that they price the product in a way that will allow each member of the distribution channel to cover their fixed costs and earn a profit before selling the product in turn to the next member of the distribution channel, or to the ultimate consumer. Of course, the final price to the ultimate consumer cannot be so high that consumers will refuse to purchase the product. The markup amount is often called the gross margin, which includes the profit expected by the channel member (wholesaler or retailer) and the fixed costs of the retailer or wholesaler. Retailer margin and wholesaler margin are just two different names for gross margin, but specific, as the names imply, to either retailers or wholesalers. The markup should never exceed the list price, or manufacturer's suggested retail price (MSRP), as this is the price the manufacturer has estimated that the end customer should be willing to pay. This means that even if the customer is willing to pay $10 for a product, the manufacturer must be able to sell the product for less than this amount to the retailer. If a distributor or wholesaler is also in the channel of distribution, the price charged by the manufacturer will be lower still to ensure that both the distributor and retailer can add adequate markups to make handling the product viable.

Step 1: Develop Pricing Objectives

Must support the broader objectives of the firm as well as overall marketing objectives.

Customer Prioritization

Not all customers are equal ... at least, not in terms of profitability! CRM systems enable marketers to identify priority customers and customize communications and special offers accordingly. The 80/20 rule - if you know the 20% you can reach them with promotions specific to them. That 20% is where your money is, prioritize them and pay special attention to them since they are keeping you business running. For example, a firm may emphasize personal selling for contacting high-volume customers, while using direct mail or telemarketing to communicate to low-volume customers. LECTURE NOTES: Using a CRM approach, the organization prioritizes its customers and customizes its communications to them accordingly. For example, some bank customers generate a lot of revenue because they pay interest on loans or credit cards, while others simply use the bank as a convenient place to store a small amount of money and take out a little bit each week to buy beer. Banks use CRM systems to generate a profile of each customer based on factors such as value, risk, attrition, and interest in buying new financial products. This automated approach helps marketers decide which current or potential customers it will target with certain communications or how much effort it will expend to retain an account—all the while cutting its costs by as much as a third. For example, customers who patronize casinos frequently will receive more direct mail offers from the casino, and higher value perks or incentives in an attempt to entice them to stay, compared to that which would be sent to casual or infrequent gamblers. Remember that the 80/20 rule . . . in a CRM world, 80% of the profits often come from 20% of the customers.

Sales Objectives

Often the objective of a pricing strategy is to maximize sales (either in dollars or in units) or to increase market share, the percentage of a market in terms of sales units or revenue accounted for by a specific firm, product line, or brand. Market Share: The percentage of a market (defined in terms of either sales units or revenue) accounted for by a specific firm, product line(s), or brand(s) Sales objectives focus on the dollar or units sold while market share objectives attempt to increase market share.

Opportunity Cost

Opportunity costs refer to something that we have to give up in order to obtain something else. For example, think about your college education. In addition to tuition, you pay the opportunity price of having a full-time job.

Pricing Example (Elasticity)

P1 = $60, Q1 = 600 pairs P2 = $70, Q2 = 560 pairs (560 - 600)/600 (70 - 60)/60 = .375 --> Inelastic

Good examples of Big Data and CRM usage

Phillies usage of CRM to: - Predict ticket sales - Predict in-game attendance - Assess potential demand - Demand for concessions and merchandise - Maximize points of contact

Putting Your Customer First

Place the customer at the core of all business activities to create a great experience and to build a long-term relationship.

Price Elasticity of Demand

Price elasticity of demand is the percentage change in unit sales that results from a percentage change in price. Elastic demand is when changes in price have large effects on the amount demanded. Inelastic demand is when changes in price have little or no effect on the amount demanded. LECTURE NOTE: Price elasticity is important because marketers need to know how customers are likely to react to a price change. Elastic demand means that customers are sensitive to changes in price, while inelastic demand indicates that likely customers are not sensitive to changes in price.

Competitive Effect Objectives (Competitive-Effect Pricing, or Market-Based Pricing)

Pricing a product based on (above, below, or the same as) the competition's pricing ___________________________________ Competitive effect objectives attempt to dilute the competition's marketing efforts. Sometimes the firm consciously prices its products in a way that negatively impacts competitors marketing efforts. Established brands often react to new market entrants by cutting prices (sometimes even below the cost of the product or service) in an attempt to drive the newcomer out of business or out of the geographic market. Small business marketers often do the same thing.

Profit for 30,000 units

Profit = 10,000 units * 10 = $100,000 CM * Additional Units

Profit Formula

Profit = Total Revenue - Total Costs 0 => TR = TC TR = Q * P TC = Total Fixed Cost + Total Variable Cost Q * P = TFC + (Q * VC Per Unit)

Profit Objectives

Profit objectives focus on a level of profit growth or a target net profit margin. Profit objectives are often used in the pricing of B2B goods. For consumer goods firms, profit objectives may focus on a product line or portfolio of products.

Deep Learning and Misinformation

Recent advances in A I and deep learning, a subset of machine learning, make deep fake videos a real and potentially dangerous phenomenon Deep Fake Videos: A realistic-looking photo or video of people doing or saying things they did not actually do or say Deep Learning: A subset of machine learning that allows machines to solve complex problems even when using a dataset that is very diverse, unstructured and interconnected.

Customer Lifetime Value (CLV)

Represents how much profit a firm expects to make from a particular customer, including each and every purchase he or she will make from them now and in the future. To calculate CLV, you need four pieces of information: Average purchase value, which is the average purchase amount each time a customer buys from you Average purchase frequency rate, which is how many times per year the average customer buys from you Average customer value, which is how much money the average customer spends with you per year Average customer lifespan, which is how long the average customer continues to buy from you Avg. Cust. Value x Avg. Cust. Lifespan = CLV Avg. Cust Value = Avg. Purchase Value x Avg. Purchase Frequency Rate Avg. Purchase Value = Total Revenue from Cust./ # of Purchase in a year CLV Example: CLV = Avg. Cust. Value x Avg. Cust. Lifespan Customer averages $300 per purchase in a year Customers averages 6 purchases in a year Avg. Cust. Value = $300 x 6 = $1800 per year Suppose the average customer lifespan is 6 years CLV = $1800 x 6 = $10,800

Marketing Accountability within Digital Marketing Channels

Search engine optimization (SEO): your site ranks highly on search engines Marketing analytics: ability to analyze the performance of all these channels. Compare average cost per customer transaction to the average value of each transaction per channel. LECTURE NOTES: For marketers, investments in digital marketing are especially attractive because their cost is often directly tied to specific actions users take. Search engine optimization is a systematic process to ensure that your firm comes up at or near the top of lists of typical search phrases related to your business (i.e., Google). Marketers first calculate the value of each channel, that is, which channels provide the greatest value per customer transaction from each digital channel including SEO Next, you can compare the average cost per customer transaction (see next slide for examples). By comparing the average cost per transaction with the average value of the customer transaction from each channel, you can see which you should invest more in and which you should drop.

Margin on Sales

Selling price per unit ($) - cost per unit ($) A box of chocolate sells for $26.00 Our variable cost per box is $6.00 Margin on sales = $26 - $6 = $20.00

Share of Wallet/Share of Customer

Share of Wallet: The percentage of an individual customer's purchase of a product that is a single brand. SOW = Amt. Spent on 1 brand [your products] / Total Amt. Spent on Category Customer spent $312 on Cheerios and $1000 on cereal SOW = [$312/$1000] x 100 = 31.2%

Share of Customer

Share of customer: Because it is always easier and less expensive to keep an existing customer than to get a new one, CRM firms try to increase their share of customer, not share of market; this is the percentage of an individual customer's purchase of a product over time that is the same brand. For this reason, CRM focuses on increasing a brand's share of customers.

3. Customer Abandonment

Strange as it may sound, sometimes a firm wants customers to take their business elsewhere (referred to as "firing a customer," because servicing them actually costs the firm too much. For example, a department store may use data mining to identify unprofitable customers—those who don't spend enough or who return most of what they buy. For example, data mining has allowed Sprint to famously identify its customers as "the good, the bad, and the ugly."

Brand Association Map

Strong Bond when anything is close to the brand Based on people's perceptions. Close competitors towards the center Using big data and extracting information based on your own brand. Gives much more insight on the brand itself.

Click-Through Rate

The % of viewers of the advertisement or the page that the link is on who have decided to click on the advertisement in order to visit the website or web page associated with the advertisement. [Click-through # / Impression #] x 100 [40/200] x 100 = 20%

Conversion Rate

The % of visitors to a website who complete the desired activity in comparison to the total number of visitors. Represents the number of leads we turn into customers from various channels such as search marketing, personal selling, email marketing, and mobile marketing. [# of goal achievements / Total # of website visitors] x 100 = Total # of Conversions/Total # of Leads If the # of conversions is 20 The total visitors are 100 CR = [20/100] x 100 = 20%

Identify Strategies and Tactics to Price the Product Step 5: Choose a Pricing Strategy

The fifth step of the pricing process requires choosing a pricing strategy. When is it best for the firm to undercut the competition and when best to just meet the competition's prices? When is the best pricing strategy one that considers costs only? When is it best to use a strategy based on demand? In today's marketplace, there seldom is any one-and-only, now-and-forever, best pricing strategy. ___________________________________ LECTURE NOTES: It's not easy to choose a pricing strategy. Some strategies work for some products, with certain customer groups, and in certain competitive markets while others do not. Fortunately, marketers have a wide array of price strategies (and tactics) to choose from. Alternatively, they can create and test their own.

Augmented Intelligence

The application of AI to help people make better decisions. AI systems that can adapt to different situations and can act autonomously without assistance. ___________________________________ Echo: relies on artificial intelligence (A I) and machine learning AI: Your smartphone recognizes you Primary value of A I is helping deliver a better customer experience Augmented intelligence: goal to create systems that operate without humans; systems that make humans better, smarter, and happier by being more efficient with automatization.

Data Mining

The biggest data challenge for many firms is determining what to do with it all! Data Mining: A process in which analysts sift through Big Data (often measured in zettabytes - much larger than gigabytes or even terabytes) to identify unique patterns of behavior among different customer groups. Data Warehouse: A system to store and process data that result from data mining. Information Overload: A state in which the market is buried in so much data that it becomes nearly paralyzing to decide which of it provides useful information and which does not. Edge Computing: The practice of processing data near the edge of network where the data is being generated, instead of in a centralized data processing warehouse. Edge computing allows data to be processed and stored faster, which means real-time applications such as Tesla's self-driving capability, become more efficient. If Tesla's Autopilot feature were to rely on remote servers hundreds of miles away, a small data delay could result in a tragic accident.

Customer Acquisition Cost

The cost of convincing a potential customer to buy a product or service. Sales and Marketing Costs / # of New Customers __________________________ Example: You spent $1000, and acquired 40 customers $1000/$40 = $25 per customer

2. Customer Retention and Loyalty

The firm identifies big-spending customers and then targets them for special offers and inducements other customers won't receive. Keeping the most profitable customers coming back is a great way to build business success because keeping good customers is less expensive than constantly finding new ones.

Government and Nongovernmental Organization Sources

The government provides many types of data, from extracted U.S. Census results (quickly check out www.census.gov to begin to be overwhelmed with census data) to data on the economic conditions in developing countries that allow marketers to better understand the demographics of consumers at home and the opportunities for global expansion. Ever-increasing types and amounts of accessible and machine-readable government-generated data will continue to provide new opportunities for enterprising marketers who can figure out how to navigate the numerous datasets that are available free of charge.

Digital Marketing Channel

The paths of distribution through which a company's digital marketing communications can be delivered to reach their respective audiences.

LECTURE NOTES - Estimating Demand

The second step in price planning is to estimate demand. A key question is how much does this desire fluctuate with changes in pricing levels, a concept known as a demand curve. The demand curve, which can be a curved or straight line, shows the quantity of a product that customers will buy in a market during a period of time at various prices if all other factors remain the same.

Corporate IT Sources

These are the sources of data within the organization that might include CRM databases, web analytic databases (e.g., Google Analytics), enterprise resource planning (ERP) databases, and even accounting-related databases. Each of these sources can contain a treasure trove of information on an organization's customers, but unfortunately these databases often exist in "silos" such that one group in the company may not share this information with others in the firm. Thus, each group gets only an incomplete picture of its customers. Fortunately, marketing is in a great position to cut across these groups to mine these databases and connect the dots!

Connect with Consumers across Digital Marketing Channels

Today's consumer is an omnichannel media user. More people across the globe use the Internet for a wider array of purposes. Digital must reinvent their strategies to keep up. Greater pressure to demonstrate the R O I (return on investments) and R O X (return on experience) of their efforts.

Markup on Selling Price

Total Cost/1 - MU%

LECTURE NOTES - Shifts in Demand

Typical demand curves assume that only price changes, but in reality, other factors can change and shift demand upward or downward. For example, changes in marketing strategy such as the addition of new, highly desired product features or the launch of a fantastic new advertising campaign can shift the demand curve upward (to the right), meaning that more units are now demanded at a given price compared to before the change in marketing strategy was implemented. Correspondingly, a variety of things can cause a downward shift in demand. Product recalls can stifle demand, development of new technologies can make a product's existing technology obsolete and thus less desirable, a scandal in the parent company may stir up negative sentiment against the firm and brand, etc. Weather can even influence demand for everything from umbrellas and sweatshirts to hotel accommodations and movie tickets.

Discussion: Marketing Metrics and Predictive Analytics

What types of purchase patterns and behaviours (available to banks and credit card issuers) are likely to be associated with whether or not a student goes away for spring break? Are there indicators of preferred locations? How could marketers use this information to come up with targeted offers and customized services?

Marketing Accountability within Non-digital Marketing Channels

We can use marketing analytics to generate insights related to non-digital marketing channels—such as direct mail. Use a specific U R L within a direct mail campaign that isn't displayed elsewhere. The U R L could link to a landing page. Other identifiers of different tactics; unique promotional codes, Q R codes, or phone numbers for customer follow-up.

Social Media Sources

Web scraping - The process of using computer software to extract large amounts of data from websites. Uses computer software known as crawlers to extract data from websites Sentiment analysis - The process of identifying a follower's attitude (e.g. positive, negative, or neutral) toward a product or brand by assessing the context or emotion of his or her comments. Measuring brand attitude by assessing the context or emotion of online comments Brand mapping ___________________________________ LECTURE NOTES: A wealth of information about products and just about everything else in our lives is produced from the increasing number of social media sites where a large number of consumers interact with each other, with brands, and with other entities. It is not uncommon today for consumers to either praise or condemn a product online. Mapping consumers' posts on social media platforms allows marketers to track what people say about their experiences with products. Analysts may also depict the words people use visually so managers can see what words are used most frequently in their posts about the product. Hint: If your brand's name appears a lot of times with terms like "awful" or "sucks," you probably have a problem.

Luxury Items Demand Curve

You might think something is wrong if you raise or lower the prices too much.

Cost-Plus Pricing

n which a marketer figures all costs for the product and then adds an amount to cover profit and, in some cases, any costs of doing business that are not assigned to specific products. The most frequently used type of cost-plus pricing is straight markup pricing. The price is calculated by adding a predetermined percentage to the cost. Most retailers and wholesalers use markup pricing exclusively because of its simplicity; users need only obtain the unit cost and add the designated markup.