Index
Symbols
# (count), 7
$ (Dollar Terms), 6
% (percentage), 6
A
A.C. Nielsen, 207
Aaker, David, 137
AAU (Awareness, Attitudes, and Usage), 51
attitude, 53
awareness and knowledge, 52
calculating, 52
cautions, 54–55
data sources, 54
purpose, 51
usage, 54
abandoned purchases, 331
abandonment, 328
abandonment rate, 331
accepters, 45
accountability, 2
acquisition versus retention, 176–178
ACV (all commodity volume), 184, 202–205
ad awareness, 53
adjusting for periodic changes, 54
advertising. See also impressions
as percentage of sales, 101
price versus cost, 314
advertising effectiveness, 307, 309
advertising exposure, 307
Ailawadi, Kusum, 137
all commodity volume (ACV), 184, 202–205
allowances, slotting, 101
apparel retailers, customers, 161
asset turnover, 369
assumptions
infinite horizon assumption (customer lifetime value), 172
test markets, 120–121
attitudes/liking/image, 53
attrition, 159
availability of data, 3
AVC on display, 209
AVC on promotion, 209
average acquisition cost, 176–177
average deal depth, 264
average frequency, 295, 298, 302
average margin, 82–84
average price charged, 224
average price displayed, 224
average price paid, 223
average price per unit, 86–87
calculating, 87–90
complications, 90
purpose, 86–87
average prices, 85
average retention cost, 176–177
averaging estimates, 374–375, 382–383
awareness, 52
customer awareness, 361
trial rate, 114
Awareness, Attitudes, and Usage. See AAU
B
balancing sales force territories, 187–188
banks, counting customers, 160
calculating, 268–273
complications, 273
profitability, 273
purpose, 267
BCG (Boston Consulting Group) matrix, 36
BDI (Brand Development Index), 40–42
Big Tobacco Company, 364–365
bonuses. See sales force compensation
Boom
customer awareness, 361
customer profit, 360
financial statements, 357–358
marketing metrics, 360
Borden, Neil Sr., 376
Boston Consulting Group (BCG) matrix, 36
Brand Asset Valuator, 137, 139–141
Brand Development Index (BDI), 40–42
brand equity, 135
purpose, 136–137
Brand Equity Index, 138–139
Brand Equity Ten, 137
brand identity, 141
brand image, 141
brand penetration, 42–43
brand position, 141
brand strategy, 141
Brand Valuation Model, 141
brand/product knowledge, 53
brands, number purchased, 48
breadth of distribution, 208
break-even analysis, 101–102
break-even on incremental investment, 105
classifying costs, 105
purpose, 102
break-even number of employees, 195, 197
break-even on incremental investment, 105
break-even point, calculating, 102–104
break-even sales level, 68
breakage, 277
Brita water filters, 86
budgeting risk, assessing, 97–98
budgets, 2
buying power, 188
C
CAGR (Compound Annual Growth Rates), 109, 111, 129
cannibalization rate, 111, 130–135
cash flows, internal rate of return, 349
category development index (CDI), 40–42
category performance ratio, 202, 207
cautions (AAU), 54–55
CDI (category development index), 40–42
chaining margins, 75
channel metrics, Prestige Luggage, 363
choosing metrics, 3
churn, 159
classification of variable costs, 96
clickstream, 329–330
clickthrough rates, 320–322
cluster analysis, 148
CLV. See customer lifetime value
cohort and incubate (customer lifetime value), 168–169
cold leads, 200
commissioned sales costs, 99
commissions. See sales force compensation
company profit from new products, 125
comparing sales force territories, 188
compensation. See sales force compensation
compensatory decisions versus noncompensatory consumer decisions, 144–146
competitor price elasticity, 254
competitor reaction elasticity, 252
complications
average price per unit, 90
channel margins, 81
Compound Annual Growth Rates (CAGR), 109, 111, 129
compounding growth, 126, 128–129
Concentration Ratio, 38
conjoint analysis, 137, 141–144, 228
conjoint utilities, 112, 142, 147–151
constant elasticity, 236–238
constructing frequency response functions, 307–308
consumer off-take, 214
consumer preference, 142–146
consumer ratings, 53
contractual situations, 156–157
contribution analysis, 101
contribution margin, 66, 68, 104
contribution per unit, 68, 101–103
converting markups to margins, 80
cookies, 331
cost effectiveness of Internet marketing, 323
cost of incremental sales, 267
cost per click, 323–326
cost per customer acquired, 327
cost per friend, 335
cost per impression, 323–325
cost per order, 323–325
cost per point (CPP), 300
cost per thousand impressions rates. See CPM
cost-plus pricing, 248
costs
assigning to customers, 165
average acquisition cost, 176–177
average retention cost, 176–177
classifying for break-even analysis, 105
commissioned sales costs, 99
fixed costs. See fixed costs
overhead costs, 341
total cost per unit, 94
total selling costs, 98
total variable selling costs, 98
variable costs. See variable costs
count (#), 7
counting customers, 156–161
contractual situations, 157
non-contractual situations, 157–158
recency, 156–158
retention, 158
coupons, 275
evaulating, 278
percentage sales with coupons, 275
profitability, 276
redemption rate, 275–277
CP. See customer profit
CPM (cost per thousand impressions), 289, 299–300
CPP (cost per point), 300
cross elasticity, 251
cross price elasticity, 252, 254
Cruise
customer awareness, 361
customer profit, 360
financial statements, 357–358
marketing metrics, 360
customer awareness, Boom and Cruise, 361
customer lifetime value (CLV), 153, 166–167, 174
calculating, 169–170
cohort and incubate, 168–169
discount rate, 171
finite-horizon, 172
infinite horizon assumption, 172
purpose, 167–168
retention rate, 170
versus prospect lifetime value, 174–176
customer lifetime value with initial margin, 171
customer profit, 153, 161–162, 165
Boom, 360
calculating, 162–164
Cruise, 360
purpose, 161–162
quantifying, 167
whale curve, 167
customer responses, separating from non-customer responses, 54
customer satisfaction, 56–57
measuring, 57–58
purpose, 56–57
sample selection, 59
surveys, 59
customer selling price, 75–78
customer service, 194
customer survey data, triangulating, 55
customer time, 159
abandoning, 166
accepters, 45
acquisition versus retention, 176–178
assessing value of, 167–168
assigning cost to, 165
brand penetration, 42–43
counting, 156–161
deciding who to serve, 166
defining, 159–160
ever-tried customers, 45
impressions. See impressions
market penetration, 42–43
purpose, 156
second tier customers, 162
surveys. See surveys
third tier customers, 162
top tier customers, 162
total number of active customers, 45
unprofitable customers, 166
D
dashboards. See marketing dashboards
data, availability of, 3
data parameters, market share, 34
data sources
AAU, 54
heavy usage index, 50
decline (life cycle), 129
decomposing
for diagnostic purposes, 373–374
indirect metric estimates, 376
law of large numbers, 374–375, 382–383
market share, 44
reasons for using, 372–373
sales, 371–372
demand
linear demand
optimal price, 240–246
price elasticity, 233–236
reservation prices, 228–231
price tailoring, 285
demand curves, constant elasticity, 236–238
diagnostic purposes, decomposing for, 373–374
differentiation
brand equity, 139
product differentiation, 142
direct product costs, 216
direct product profitability. See DPP
discounted trial, 124
discounts, 283
distribution, trial rates, 115
distribution chains, 75
distribution channels, calculating selling prices at each level, 76
distribution metrics, 202
ACV, calculating, 204–205
data sources, 207–208
numeric distribution, calculating, 203–204
PCV, calculating, 206–207
purpose, 203
districts, 190
diverted goods, 214
diverted merchandise, 214
Dollar Terms ($), 6
double jeopardy, 47
downloads, 335–336
DPP (direct product profitability), 182, 186, 215–218
Drucker, Peter, 65
DuPont Model, 369–370, 372. See also identities
durability, 138
E
eBay, active users, 158
EBITDA (earning before interest taxes, depreciation, and amortization), 341
Economic value added (EVA), 337, 343
EDLP (everyday low prices), 284
effective frequency, 290, 310–312
effective market share, 138
effective reach, 310–312
effectiveness. See sales force effectiveness
elasticity. See price elasticity
empirical relationships, 373–374
marketing mix models, 378, 380–381
esteem, brand equity, 139
estimates
for indirect metrics, 376
EVA (economic value added), 337, 343
evaluating
coupon programs, 278
inventories, 213
multi-period investments, 345–346
sales goals, 191
temporary price promotions, 264
workload distribution, 198
everyday low prices (EDLP), 284
evoked set, 125
expenses, sales force effectiveness, 194
exposures, 293
F
facings, 208
features in store, 208
Federal Trade Commission, 285
FIFO (First In, First Out), 213
financial statements, Boom and Cruise, 357–358
finite-horizon (customer lifetime value), 172
first channel member’s selling price, 78–79
First In, First Out (FIFO), 213
first-time triers in period, 113
calculating, 91–95
classification of, 96
purpose, 91
calculating, 334
cautions, 334
cost per friend, 335
outcomes per friend, 335
purpose, 334
forced trial, 124
forecasting
marketing spending, 97–98
trial volume, 116
upcoming sales, 198
Fortune, 159
frequency, 301
average frequency, 302
effective frequency, 290, 310–312
frequency response functions, 289, 305, 309–310
construction, 307–308
learning curve response model, 305–306
linear response model, 305–306
purpose, 306–307
threshold response model, 306
calculating, 334
cautions, 334
cost per friend, 335
outcomes per friend, 335
purpose, 334
G
geo-clustering, 55
globalization, 3
GM, retail sales, 65
GMROII (gross margin return on inventory investment), 182, 186, 215–217
goals, sales, 189–191
goodwill, 136
gross rating points (GRPs), 288, 294–297, 302
growth, 125
CAGR, calculating, 129
compounding growth, 126–129
life cycle, 129
same stores growth, 126–128
value of future period, 128–129
year-on-year growth, 125
GRPs (gross rating points), 288, 294–297, 302
H—I
Herfindahl index, 38–39
HI-LO (high-low), 284
hierarchy of effects, 55
hits, 314–315
hybrid channel margins, 81
I (Index) notation, 7
identifying profitability of individual customers, 161–162
identities
decomposing sales, 371
defined, 369
for diagnostic purposes, 373–374
for estimates of indirect metrics, 376
marketing mix models, 376–381
reasons for using, 372–373
impressions, advertising, 293
calculating, 295
clickthrough rates, 320–322
complications, 298
cost per click, 323–326
cost per impression, 323–325
cost per order, 323–325
CPM. See CPM
data sources, 297–298
frequency response functions. See frequency response functions
GRPs, 294–297
net reach. See net reach
pageviews, 314–316
purpose, 294
share of voice. See share of voice
incentive plans, 197–198
income statement, Prestige Luggage, 362
incremental sales, 267–268
indexes
Brand Development Index, 40–41
CDI (category development index), 40–42
heavy usage index. See heavy usage index
Herfindahl index, 38–39
indicators, separating leading from lagging, 55
indirect metrics, estimates for, 376
infinite horizon assumption (customer lifetime value), 172
inflation, estimating, 90
intangibles, goodwill, 136
intention to purchase, 53
intentions, 53
interactive media. See rich media
interest creation, 200
Internal Rate of Return (IRR), 338–339, 345–349
Internet, 288. See also web pages
assessing cost effectiveness, 323
effective reach, 312
search engines, 325–327
introductory life cycle, 129
inventory, 208
evaluating, 213
inventory days, 211–212
inventory tracking, 211
investments, multi-period, evaluating, 345–346
invoice price, 281–282
IRR (Internal Rate of Return), 338–339, 345–349
J—K—L
Kaplan, Robert, 163
Kelvin, Lord, 2
knowledge
brand equity, 139
brand/product knowledge, 53
Last In, First Out (LIFO), 213
law of large numbers, 374–375
numerical example, 382–383
leading national advertisers (LNA), 313
learning curve, 289
learning curve response model, frequency response functions, 305–306
life cycle, 129
LIFO (Last In, First Out), 213
likeability, 55
linear cost model, 96
linear demand
optimal price, 240–246
price elasticity, 233–236
reservation prices, 228–231
linear response model, frequency response functions, 305–306
list price, 281
LNA (leading national advertisers), 313
double jeopardy, 47
number of brands purchased, 48
willingness to search, 62–63
M
mail-in rebates, 277
make-goods on promotions, 214
margin on new products, 125
average margin, 82–84
chaining, 75
channel margins. See channel margins
contribution margins, 66–68
converting from markups, 80
costs, including or excluding, 75
customer lifetime value with initial margin, 171
as percentage of costs, 72
purpose, 69
selling prices, defining, 72
unit margin, 69–71
versus markup, 73–75
weighted contribution margins, cannibalization, 132
markdowns, 214–216
market penetration, 42–43
bias in reported shares, 35
data parameters, 34
decomposing, 44
measuring over time, 35
purpose of, 33
quantifying, 34–35
relative market share. See relative market share
revenue market share, calculating, 33
served market, 34
unit market share, 33
market share rank, 39
marketing as a percentage of sales, 101
marketing budgets, developing, 100
marketing dashboards, 365–367
marketing metrics, 359–363, 367, 383
marketing mix models, 376, 378, 380–381
marketing spending, 97
calculating, 99–100
fixed costs, 100
purpose, 97–98
slotting allowances, 101
markups
converting to margins, 80
versus margins, 73–75
Marlboro Friday, 365
mastering metrics, 4
mature life cycle, 129
maximum reservation price (MRP), 229, 240, 246
maximum willing to buy (MWB), 229–230, 246
measuring
brand equity, 137–141
customer satisfaction, 57–58
market share over time, 35
media exposure return on marketing investment, 354–355
media plans, net reach, 302
metric usage survey, 385–390
metrics
defined, 1
reasons for having, 2
survey
cautions about, 10–11
rankings, 21–24
sampling size, 11–12
middlemen, 278
misshipments, 214
Moran, Bill, 137–138
MRP (maximum reservation price), 229, 240, 246
multi-period investments, evaluating, 345–346
MWB (maximum willing to buy), 229–230, 246
N
net operating profit after tax (NOPAT), 342
Net Present Value (NPV), 338–339, 345–350
net price, 281–282
net promoter, 60–62
Net Promoter Score (NPS), 60–62
complications, 305
overlap effects, 304–305
purpose, 301–304
noise, 54
non-compensatory consumer decisions versus compensatory decisions, 144–146
non-contractual situations, 156–158
NOPAT (net operating profit after tax), 342
NPS (Net Promoter Score), 60–62
NPV (Net Present Value), 338–339, 345–350
number of complaints, 59
number of new products, 125
numeric distribution, 184, 202–204
O
obsolescence, 214
opportunities-to-see (OTS), 293
optimal price, 239
calculating, 246–248
complications, 248
purpose, 240–246
relative to gross margin, 247
slope, 244
optimality condition, 247
OTS (opportunities-to-see), 293
outcomes per friend, 335
over-servicing, 187
overhead costs, 341
overlap, assessing, 305
overlap effects, 304–305
own price elasticity, 252–254
P
payback, 346
payback period, 106
PCV (product category volume), 184, 202
calculating, 206–207
net out-of-stocks, 210
brand penetration, 42–43
cautions, 45
market penetration, 42–43
share, 42
penetration rate, 43
penetration share, 43–44
Peppers, Don, 167
perceived quality/esteem, 53
perceived value for money, 53
percent good value, 226
percentage (%), 6
percentage of unit sales, 82
percentage sales on deal, 278–279
percentage sales with coupons, 275
performance reviews. See sales force effectiveness
periodic changes, adjusting for, 54
pipeline analysis, 198
construction, 199–201
purpose, 198–199
sales funnel, 201–202
pipeline sales, 214
PLV. See prospect lifetime value
post-purchases, 200
pre-purchase, 200
Prestige Luggage, 362–363
price discrimination, 248, 250–251, 284–285
price elasticity, 220, 232–233, 239. See also residual price elasticity
calculating, 233–236
constant elasticity, 236–238
cross elasticity, 251
linear demand, 233–236
purpose, 233
price increases, evaluating, 90
price of a specified competitor, 222
price per statistical unit, 67, 86, 88–89
price premiums, 222–225
price promotions. See promotions
price tailoring, 248, 250–251, 284–285
price waterfalls, 264, 266, 280–283
prices
average price charged, 224
average price displayed, 224
average price paid, 223
average price per unit, 86–87
calculating, 87–90
complications, 90
purpose, 86–87
average prices, 85
competitor price elasticity, 254
cost-plus pricing, 248
cross elasticity, 251
cross price elasticity, 254
customer selling price, 75, 77–78
first channel member’s selling price, 78–79
invoice prices, 281–282
list price, 281
net price, 281–282
optimal price. See optimal price
own price elasticity, 254
percent good value, 226
price discrimination, 284
price elasticity. See price elasticity
price of a specified competitor, 222
price per statistical unit, 86, 88–89
price premiums, 222–225
price tailoring, 248, 250–251, 284–285
price waterfalls, 264, 266, 280–283
prisoner’s dilemma pricing, 256–262
reservation prices. See reservation prices
residual price elasticity. See residual price elasticity
supplier selling price, 75–77, 85
theoretical price premiums, 226
primary line competitive injury, 251
prisoner’s dilemma pricing, 256–262
Prizm, geo-clustering, 55
product category volume. See PCV
product differentiation, 142
Professional Pricing Society, 283
profit margin, 369
profit-based sales targets, 106–107
profitability
baseline sales, 273
coupons, 276
price tailoring, 284
of promotions, 271
redemption rates, 276
profitability metrics, 214
complications, 217–218
DPP, 215–217
GMROII, 215–216
markdowns, 215–216
purpose, 215
projected volume, repeat volume, 117–118
promotional discount, 279
promotions, 263
baseline sales. See baseline sales
complications, 279–280
coupons. See coupons
evaluating temporary price promotions, 264
long-term effects of, 274–275
profitability, 271
rebates, 275–277
redemption rates. See redemption rates
short-term promotional objectives, 263
prospect lifetime value (PLV), 173
calculating, 173–174
complications, 174–176
purpose, 173
versus customer lifetime value, 174–176
prospects, 200
pull marketing, 203
purchase intentions, 53
purchases, 200
push marketing, 203
Q—R
quantifying
customer profit, 167
market share, 34–35
R (Rating), 7
rain checks, 214
Ramsellar, Leon, 140
rankings in marketing metrics survey, 21–24
Rating (R), 7
rating point, 293
reach, 301–303. See also net reach
rebates, 275–277
redemption rates, 275–277
regulations, price discrimination, 251, 285
relative market share, 35–37
relative perceived quality, 53
relative price, 138. See also price premiums
relevance, brand equity, 139
repeat, 124
repeat volume, 117–118
repurchase rate, 48
resellers, 279
reservation prices, 226
finding, 228
purpose, 226
residual price elasticity, 251
calculating, 254–255
complications, 255–256
purpose, 252–254
response bias, 59
responses, customer survey, 116
results of marketing metrics survey, 13
retail margins, 362
retail profit, Prestige Luggage, 363
retailers, apparel, 161
versus acquisition, 176–178
return, 337
return on assets (ROA), 342, 369–370, 372. See also DuPont Model
return on capital (ROC), 342
return on incremental marketing investment (ROIMI), 352
return on invested capital (ROIC), 342
Return on Investment (ROI), 338, 342–343, 357
return on marketing investment (ROMI), 338–339, 350–351
budgeting, 354
calculating, 351–352
complications, 354
media exposure return on marketing investment, 354–355
purpose, 351
return on net assets (RONA), 342
return on Sales (ROS), 338, 340–342, 357, 369
returns and target, 108
revenue attributable to marketing, 352
revenue from new products, 125
revenue market share, calculating, 33
revenue return to incremental marketing, 352
revenue return to total marketing, 352
revenue share of requirements, 46
reward structures, supply chain metrics, 213
rich media display time, 291, 317–318
rich media interaction rate, 291, 318–319
ROA (return on assets), 342, 369–370, 372. See also DuPont Model
ROC (return on capital), 342
Rogers, Martha, 167
ROI (return on investment), 338, 342–343, 357
ROIC (return on invested capital), 342
ROIMI (return on incremental marketing investment), 352
ROMI. See return on marketing investment
RONA (return on net assets), 342
ROS (return on Sales), 338, 340–342, 357, 369
S
salaries. See sales force compensation
sales, decomposing, 371–372
sales force compensation, 195
calculating, 196–197
incentive plans, 197–198
purpose, 196
sales force effectiveness, 192
calculating, 192–195
customer service, 194
expenses, 194
purpose, 192
sales force funnel, 199
sales force objectives, 189–191
sales force territories, 186
balancing, 187–188
comparing, 188
estimating size of, 189
purpose, 187
redefining, 189
sales force tracking. See pipeline analysis
sales goals, 190–191
sales pipeline, 184
same stores growth, 126–128
sample selection, customer satisfaction, 59
sampling size of marketing metrics survey, 11–12
search engine marketers, 327
search engines, 325–327
seasonal variations (ROI), 343
second-price auctions, 228
secondary line competitive injury, 251
segment utilities, 112
segmentation by geography, 55
segments
BDI, 42
CDI, 42
conjoint utilities, 147–149
separating customer responses from non-customer responses, 54
served market, 34–35
service levels, 209–210
Shames, Erv, 364
share of category, 39
share of requirements, 45–47
share of shelf, 208
share of voice, 313
share of wallet, 44–47
shopping basket margin, 218
shrinkage, 214
signals, 54
SKU (stock keeping unit), 86, 215
slope, optimal price, 244
slotting allowances, 101
social networking, friends/followers/supporters, 333–335
sole usage, 47
spreadsheets, calculating NPV, 350
State Farm, 157
stepped payments, 100
store versus brand measures, 208
supplier selling price, 75
calculating, 77
calculating average, 85
supply chain metrics, 209
complications, 212–213
inventories, evaluating, 213
inventory days, 211–212
inventory tracking, 211
inventory turns, 211
out-of-stocks, 210
purpose, 209
reward structures, 213
service levels, 210
surveys, 114
customer satisfaction, 59
customer survey responses, 116
marketing metrics survey
cautions about, 10–11
rankings, 21–24
results, 13
sampling size, 11–12
metric usage survey, 385–390
T
target market fit, 125
target rating points (TRPs), 288, 296–297
target revenue, 106–107
target volumes not based on target profit, 108
targets, profit-based sales, 106–107
terminal values, 349
territories. See sales force territories
test markets. See also trials
assumptions, 120–121
awareness, 114
distribution, 115
simulated results and volume projections, trial volume, 114
theoretical price premiums, 226
three (four) firm concentration ratio, 38
threshold, 289
threshold response model, frequency response functions, 306
time, measuring market share over, 35
tolerable discrimination, 285
top of mind, 53
total cost per unit, 94–96
total coupon cost, 276
total number of active customers, 45
total outlet sales, 208
total selling costs, 98
total variable selling costs, 98
total volume, 118–119
“the trade,” 278
trade satisfaction, 59
trial rate, 113–115
trial volume, 116–117
trial-repeat model, 124
trials, 112, 121, 124. See also test markets
discounted trial, 124
forced trial, 124
purpose, 113
repeat volume, 117
total volume, 118–119
TRPs (target rating points), 288, 296–297
U—V
under-servicing, 187
unit margin, 69–71
unit market share, 33
unit share of requirements, 46–47
units, 69
USAA, 157
usage, 54
user behavior, web sites, 328–331
value of future period, 128–129
variable cost per unit versus total cost per unit, 96
variable costs, 91
calculating, 91–95
classification of, 96
purpose, 91
Venn diagram, 304
video interactions, 320
volume projection, 112–113
conjoint utilities, 150–151
spreadsheet, 119
W—Z
warm leads, 200
wear-in, 310
wear-out, 310
web pages. See also Internet
hits, 314–315
pageviews. See pageviews
web sites
traffic, assessing, 314–315
user behavior, 328–331
weighted contribution margin, cannibalization, 132
weighted share of sales allotment, 190
whale curve, customer profit, 167
willingness to recommend, 56–57
willingness to search, 62–63
Zellner, Arnold, 377