FORMULAS
% Margin on Cost = % Margin on SP/(100% - % Margin on SP) |
% Margin on Selling Price = % Margin on Cost(100% + % Margin on Cost) |
Contribution = Total Revenue - Total Variable Costs |
Unit Contribution = Selling Price - Unit Variable Costs |
Fixed Costs = Unit Contribution * BEQ |
BEQ = Fixed Costs / Unit Contribution |
Profit Impact = (Unit Cont. * Units Prod. & Sold) – Fixed Costs (– cannibalization–if any) |
CLV = Lifetime Value - Acquisition Cost |
LV = Customer Lifetime (in months) * Monthly Profit |
Customer Lifetime (in months) = 1/monthly churn rate |
Customer Monthly Profit = Gross Margin – Assigned Costs |
AC = Initial Cost to Acquire Cost. (usually ads + sales) |
ROMI = (Margin - Investment) / Investment |
* If market share is given in $, divide by retail selling price to obtain market value in units |
* Assume Margin on SP unless otherwise specified |
MARGIN STRUCTURE = M > W > R
5-Step Methodology
1 - Problem Statement
State the PROBLEM in one or two sentences; major objectives + a listing of major overriding factors |
2 - Situational Analysis
Strength & Weaknesses (w/i company's ctrl) ; Opportunities & Threats (out of ctrl) |
3 - Identification and Evaluation of Alternatives
Find alts and elaborate on pros/cons of each. |
4 - R&R / BUY-IN
the math, the decision criteria, time to sell recommendation |
5 - Plan of Action
ST (6 months) vs LT (18 months) |
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Pricing
Value Mindset = Focus on Customer Value (no cost) |
True Economic Value = Objective Value |
Perceived Value = Value Attributed by Customer |
Price ≤ Perceived Value, but, Price > COGS |
Dynamic Pricing considers product variation, controlling availability, and geographically. |
% Change in Quantity ÷ % Change in Price = Price Elasticity of Demand |
company prices a solution (and not a product)
capturing value is more important than maximizing sales |
Customer Experience (CX)
Customer Journey (CJ) |
Sum of customer interactions with brand. |
Goal of CJ |
Make journey sticky through exceptional & personalized experience; creates customer engagement. |
Pillars of Customer Experience |
Personalization, Integrity, Expectations, Resolution, Time & Effort, and Empathy |
Journey Management Capabilities |
Automation, Proactive Personalization, Contextual Interaction, and Innovation |
Steps in CJ MAP |
understand target; map out touchpoints; identify customer pain points; reg. assess comp. perf. ; prioritize + fix roadblocks ; update & improve |
Retailing
Strategy : Segmentation & Targeting; Store Differentiation & Positioning |
Marketing Mix : Product & Service Assortment; Retail Prices; Promotion, and Distribution (incl. location) |
Omni-Channel Retailing : integration of online and offline shopping behaviours to create seamless experience
goal = achieve a better shopping experience + increase conversions |
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Branding
Brand Equity includes:
Brand Loyalty, Brand Awareness, Perceived Quality, Brand Associations
Other Assets include patents, intellectual property.. |
Purpose-Driven Branding =
having compelling reason for being, beyond profit + living out desire to impact society positively/purposefully |
Major Brand Portfolio Strategies =
* Mono-Brand (or Branded House) where single brand is used on all products. ie. crocs
* Multi-Brand (or House of Brands) individual brand names created for diff products + corporate name is hidden from view/minimized. ie. P&G - Tide&Gain |
Multi-Branding
Pros: greater flex. w/ differentiating + customizing; commands greater retail presence (shelf-space); less risk for brand reputation.
Cons: brand-building requires high capital inv. ; no benefit of existing brand equity |
Marketing in a Digital World
This is the new normal for marketing. Without digital presence, brands are already at a disadvantage. |
Main Benefits
* improved measurement
* improved targeting |
Impact on Target Market: greater volume + accuracy of info, easy to micro-target, easy access to customer, geographical data |
Impact on Product: easy to obtain benefits/feedback, personalization, tech facilitates augmentations |
Impact on Price: dynamic pricing, price discrimination, instantaneous price comparison |
Impact on Distro: direct-distro, omni-channel = req., tracking increases cust. delight |
Impact on Marketing Comms: 1-on-1 tracking, adjustability, content challenge, greater integration = req., consumer = always "on", targeted messages |
Marketing Funnel: Awareness > Consideration > Intent > Purchase |
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