Endnotes
Chapter 1
1. Word Reference, www.wordreference.com. Accessed 22 April 2005.
2. Bartlett, John. (1992). Bartlett’s Familiar Quotations, 16th edition; Justin Kaplan, general editor.
3. Hauser, John, and Gerald Katz. “Metrics: You are What You Measure,” European Management Journal, Volume 16 No 5 October 1998.
4. Kaplan, Robert S., and David P. Norton. (1996). Balanced Scorecard, Boston, MA: Harvard Business School Press.
5. Brady, Diane, with David Kiley and Bureau Reports, “Making Marketing Measure Up,” Business Week.
6. Strictly speaking, all the numbers can contain some error. Share may be estimated, for example, from retail sales to consumers. Sales might come from shipment to retailers.
7. Barwise, Patrick, and John U. Farley. (2003). “Which Marketing Metrics Are Used and Where?” Marketing Science Institute (03-111), working paper, Series issues two 03-002.
8. Ambler, Tim, Flora Kokkinaki, and Stefano Puntoni. (2004). “Assessing Marketing Performance: Reasons for Metrics Selection,” Journal of Marketing Management, 20, 475–498.
Chapter 2
1. “Wal-Mart Shopper Update,” Retail Forward, February 2005.
2. “Running Out of Gas,” Business Week, March 28th, 2005.
3. American Marketing Association definition. Accessed 06/08/2005. http://www.marketingpower.com/live/mg-dictionary.php?SearchFor=market+concentration&Searched=1.
4. Check the Marketing Evaluations, Inc., Web site for more detail: http://www.qscores.com/. Accessed 03/03/05.
5. Claritas provides the Prizm analysis. For more details, visit the company Web site: http://www.clusterbigip1.claritas.com/claritas/Default.jsp. Accessed 03/03/05.
6. Reichheld, Fred, The Ultimate Question: Driving Good Profits and True Growth (Boston: Harvard Business School Publishing Corporation, 2006.)
7. http://www.theultimatequestion.com/theultimatequestion/measuring_netpromoter.asp?groupCode=2
8. Timothy Keiningham, Bruce Cooil, Tor Wallin Andreassen and Lerzan Aksoy (2007) “A Longitudinal Examination of Net Promoter and Firm Revenue Growth.” Journal of Marketing, Volume 71, July 2007.
Chapter 3
1. “Running Out of Gas,” Business Week, March 28th, 2005.
2. This formula should be familiar if we consider that the supplier selling price is merely the cost to that layer of the chain. So this becomes Selling Price = Cost/(1 – Margin %). This is the same as Sale $ = Cost $ + Margin $.
3. Those familiar with basic economics use the term “marginal cost” to refer to the cost of an additional unit of output. In this linear cost model, marginal cost is the same for all units and is equal to the variable cost per unit.
4. Both contribution per unit ($) and contribution margin (%) are closely related to unit margin ($) and margin (%). The difference is that contribution margins (whether unit- or percentage-based) result from a more careful separation of fixed and variable costs.
Chapter 4
1. Harvard Business School Case: Nestlé Refrigerated Foods Contadina Pasta & Pizza (A) 9-595-035. Rev Jan 30 1997.
2. Kusum Ailawadi, Donald Lehmann, and Scott Neslin (2003), “Revenue Premium as an Outcome Measure of Brand Equity,” Journal of Marketing, Vol. 67, No. 4, 1-17.
3. Bruno, Hernan, Unmish Parthasarathi, and Nisha Singh, eds. (2005). “The Changing Face of Measurement Tools Across the Product Lifecycle,” Does Marketing Measure Up? Performance Metrics: Practices and Impact, Marketing Science Conference Summary, No. 05-301.
4. Young and Rubicam can be found at: http://www.yr.com/yr/. Accessed 03/03/05.
5. Bruno, Hernan, Unmish Parthasarathi, and Nisha Singh, eds. (2005). “The Changing Face of Measurement Tools Across the Product Lifecycle,” Does Marketing Measure Up? Performance Metrics: Practices and Impact, Marketing Science Conference Summary, No. 05-301.
6. See Darden technical note and original research.
7. The information from Bill Moran comes from personal communications with the authors.
8. Interbrand can be contacted at: http://www.interbrand.com/. Accessed 03/03/05.
Chapter 5
1. “Vodafone Australia Gains Customers,” Sydney Morning Herald, January 26, 2005.
2. “Atlanta Braves Home Attendance.” Wikipedia, the free encyclopedia. http://en.wikipedia.org/wiki/Major_League_Baseball_attendance_records
3. Thanks to Gerry Allan, President, Anametrica, Inc. (developer of Web-based tools for managers) for his work on this section.
4. Pfeifer, P.E., Haskins, M.E., and Conroy, R.M. (2005). “Customer Lifetime Value, Customer Profitability, and the Treatment of Acquisition Spending,” Journal of Managerial Issues, 25 pages.
5. Kaplan, R.S., and V.G. Narayanan. (2001). “Measuring and Managing Customer Profitability,” Journal of Cost Management, September/October, 5–15.
6. Peppers, D., and M. Rogers. (1997). Enterprise One to One: Tools for Competing in the Interactive Age, New York: Currency Doubleday.
7. Berger, P.D., B. Weinberg, and R. Hanna. (2003). “Customer Lifetime Value Determination and Strategic Implications for a Cruise-Ship Line,” Database Marketing and Customer Strategy Management, 11(1), 40–52.
8. Gupta and Lehman. (2003). “Customers as Assets,” Journal of Interactive Marketing, 17(1), 9–24.
Chapter 6
1. Material in Sections 7.1–7.5 is based on a Note on Sales Force Metrics, written by Eric Larson, Darden MBA 2005.
2. Zoltners, Andris A., Prabhakant Sinha, and Greggor A. Zoltners. (2001). The Complete Guide to Accelerating Sales Force Performance, New York: AMACON.
3. Wilner, Jack D. (1998).7 Secrets to Successful Sales Management, Boca Raton, Florida: CRC Press LLC; 35–36, 42.
4. For more on these total allocations, see Zoltners, Andris A., Prabhakant Sinha, and Greggor A. Zoltners. (2001). The Complete Guide to Accelerating Sales Force Performance, New York: AMACON.
5. Zoltners, Andris A., Prabhakant Sinha, and Greggor A. Zoltners. (2001). The Complete Guide to Accelerating Sales Force Performance, New York: AMACON.
6. Dolan, Robert J., and Benson P. Shapiro. “Milford Industries (A),” Harvard Business School, Case 584-012.
7. Zoltners, Andris A., Prabhakant Sinha, and Greggor A. Zoltners. (2001). The Complete Guide to Accelerating Sales Force Performance, New York: AMACON.
8. Jones, Eli, Carl Stevens, and Larry Chonko. (2005). Selling ASAP: Art, Science, Agility, Performance, Mason, Ohio: South Western, 176.
9. Product category volume is also known as weighted distribution.
10. The authors use the term product category volume (PCV) for this metric. However, this term is not as widely used in industry as all commodity volume (ACV).
Chapter 7
1. Dolan, Robert J., and Hermann Simon. Power Pricing: How Managing Price Transforms the Bottom Line, New York: The Free Press, 4.
2. Barwise, Patrick, and John U. Farley, “Which Marketing Metrics Are Used and Where?” Marketing Science Institute, (03-111) 2003, working paper, Series issues two 03-002.
3. Constant elasticity functions are also called log linear because they can be expressed as: log Q = log A + elasticity x log (p).
4. In graphing such relationships, economists often plot price on the vertical axis and quantity demanded on the horizontal axis. When reviewing a graph, managers are advised to always check the axis definitions.
5. If price elasticity is expressed in shorthand as a positive number, then we do not need the negative sign in the formula that follows.
6. Poundstone, William. (1993). Prisoner’s Dilemma, New York: Doubleday, 118.
Chapter 8
1. In this context, we use the term “permanent” with some flexibility, recognizing that even long-term arrangements must be subject to change in response to market and industry dynamics.
2. Often, contribution can be used as a proxy for profits.
3. Distribution for coupons is used in the sense of postage and insertion costs, rather than retail and inventory logistics.
4. For a richer discussion, see Ailawadi, Farris, and Shames, Sloan Management Review, Fall 1999.
5. Roegner, E., M. Marn, and C. Zawada. (2005). “Pricing,” Marketing Management, Jan/Feb, Vol. 14 (1).
6. “How to Fix Your Pricing if it is Broken,” by Ron Farmer, CEO, Revenue Technologies for The Professional Pricing Society: http://www.pricingsociety.com/htmljournal/4thquarter2003/article1.htm. Accessed 03/03/05.
7. The following are the two main types of injury contemplated by the Act: (a): Price discrimination might be used as a predatory pricing tactic, setting prices below cost to certain customers to harm competition at the supplier’s level. Anti-trust authorities use the same standards applied to predatory pricing claims under the Sherman Act and the FTC Act to evaluate allegations of price discrimination used for this purpose. (b) Secondary Line competitive injury: A seller charging competing buyers different prices for the same “commodity” or discriminating in the provision of “allowances” such as compensation for advertising and other services may be violating the Robinson-Patman Act. This kind of price discrimination can hurt competition by giving favored customers an edge in the market that has nothing to do with their superior efficiency. However, in the U.S., price discrimination is generally lawful, particularly if it reflects the different costs of dealing with diverse buyers or results from a seller’s attempts to meet a competitor’s prices or services. Clearly this is not intended to be a legal opinion, and legal advice should be sought for a company’s individual circumstances.
Chapter 9
1. Farris, Paul W. (2003). “Getting the Biggest Bang for Your Marketing Buck,” Measuring and Allocating Marcom Budgets: Seven Expert Points of View, Marketing Science Institute Monograph.
2. Known as client-side tagging, beacon, and 1 × 1 clear pixel technology.
3. The Interactive Advertising Bureau gives the following definition of ad impression: “A measurement of responses from an ad delivery system to an ad request from the user’s browser, which is filtered from robotic activity and is recorded at a point as late as possible in the process of delivery of the creative material to the user’s browser—therefore closest to actual opportunity to see by the user.” Interactive Audience Measurement and Advertising Campaign Reporting and Audit Guidelines. September 2004, United States Version 6.0b.
4. The spending data is taken from “Internet Weekly,” Credit Suisse First Boston, 14 September 2004, 7–8.
5. http://www.nielsen-netratings.com/. Accessed 06/11/2005.
6. http://www.google.com/support/googleanalytics/bin/answer.py?answer=81986&cbid=gbo1sdrurcrz&src=cb&lev=answer.
Chapter 10
1. Economic value added is a trademark of Stern Stewart Consultants. For their explanation of EVA, go to http://www.sternstewart.com/evaabout/whatis.php. Accessed 03/03/05.
2. The weighted average cost of capital, a.k.a. the WACC, is just the percentage return expected to capital sources. This finance concept is better left to specialist texts, but to give a simple example, if a third of a firm’s capital comes from the bank at 6% and two-thirds from shareholders who expect a 9% return, then the WACC is the weighted average 8%. The WACC will be different for different companies, depending on their structure and risks.
3. Excel has a function to do this quickly, which we explain at the end of the section. However, it is important to understand what the calculation is doing.
4. A terminal value in a simple calculation might be assumed to be zero or some simple figure for the sale of the enterprise. More complex calculations consider estimating future cashflows; where this is done, ask about assumptions and importance. If the estimated terminal value is a significant area of the analysis, why have you curtailed the full analyses at this point?
5. Hawkins, Del I., Roger J. Best, and Charles M. Lillis. (1987). “The Nature and Measurement of Marketing Productivity in Consumer Durables Industries: A Firm Level Analysis,” Journal of Academy of Marketing Science, Vol. 1, No. 4, 1–8.
Chapter 11
1. Churn = percent of customers lost each year.
2. ACV = all commodity volume, a measure of distribution coverage (refer to Section 6.6).
Chapter 12
1. An identity is “an equality satisfied by all values of the variables for which the expression involved in the equality are defined.” American Heritage Dictionary, 2nd Edition, Houghton Mifflin Company, Boston, 1982.
In finance, economics, and accounting, an identity is “an equality that must be true regardless of the value of its variables, or a statement that by definition (or construction) must be true.” Where an accounting identity applies, any deviation from the identity signifies an error in formulation, calculation, or measurement. http://en.wikipedia.org/wiki/Accounting_identity#cite_note-0
2. Borden, Neil H., Source: Journal of Advertising Research, 4, June 1964: 2-7.
3. Zellner, A., 2001. “Keep It Sophisticatedly Simple.” Zellner, A., Kuezenkamp, H., McAleer, M. (eds.), Simplicity, Inference and Econometric Modeling. Cambridge University Press, Cambridge, 242–262.
4. Ambler, Tim. (2000). Marketing and the Bottom Line: The New Metrics of Corporate Wealth, London: Prentice Hall.
5. Meyer, Christopher. (1994). “How the Right Measures Help Teams Excel,” Harvard Business Review.