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Lecture 8
Empirical Marketing
| Question | Answer |
|---|---|
| What is required when all resources are limited? | - requires resource trade-offs and mismanaging the tradeoff may have cascading effects - decisions are tough and happen in real time |
| What are the key reasons why resource tradeoff decisions constantly evolve? | 1. change in resource limits 2. change in customer needs 3. change in the firms lifecycle of products/services 4. changes in the market landscape 5. changes in the effectiveness of marketing activities |
| Describe changes in resource limits | - resources to spend are finite - resource slack refers to potentially utilizable resources a firm could divert or redeploy - resource slack may fluctuate over time - in periods of downturn marketing investments are often cut or scaled down |
| Describe changes in customer needs | MP1#- crucial to identify target segments - size, needs and financial pay off across these segments change often |
| Describe changes in the life cycle stage of a firms products/services | MP2#- we know theres different lifecycle stages - each stage requires different investments |
| Describe changes in the market landscape | MP3#- SCA form a buffer against competitors - attractive markets will attract new competitors and increased competition will lead to exits - market constantly changes from entries and exits |
| What are the outputs of the managing resource tradeoff framework? | - Fundamental problem: identify best metrics - Both financial + marketing metrics are necessary to find different aspects of marketing investment - 3 components of resource allocation: ~ budget per activity ~ allocation of categories % ~ time horizon |
| Describe the Heuristics era | - No hard data, simple rule of thumb for allocating resources - Remains used because of simplicity and organization - Fails to take into account marketing principles - Anchoring and adjustments heuristics are widely used |
| What were the anchoring and adjustment heuristics used? | -% of sales: marketing reflects the sales revenue -% of profits method: vary with the profits earned by the product in previous periods -Historical: set allocation close to previous one -competitive parity: allocation to match competitors |
| What is the data era? | - IT infrastructure has become well developed - Volume of data has increased - Customers have become more sophisticated and are highly informed - increasing demand for accountability effectiveness be proved - markets are highly competitive+ globalized |
| Describe the data era | - firms started using past data showing link between past trade-offs and outcomes for the actual effects -reveals if continue its level or resource commitment or adjust them -give the exact impact a small input will exert - avoids waste or reliance |
| How should firms allocate resources? | - No perfect system - Method needs to be: ~simple enough to be transparent to managers ~sophisticated enough to account for the interdependencies across multiple inputs with different effects - Best approach is an iterative approach |
| What is a response model | - Is a model that captures the relationship between past marketing resources and outcomes - Marketing inputs - competitive actions - environmental factors - market response model - business outputs - optimize+ evaluate - objectives - Adjust |
| What are the marketing inputs in a response model? | - marketing actions - competitive actions - environmental factors |
| What are the marketing outputs in a response model? | Marketing metrics for managers to adjust actions - sales - customer satisfaction - service quality - brand awareness - brand strength + quality - customer retention - loyalty |
| What are the response model forms? | - linear: constant relationship between input and output -concave : curve flattens at some higher level - s-shape: slow to start and reach saturation |
| What is the linear model and the log-log model? | Linear model: b captures effect of 1 unit change in independent variable on change in dependent variable Log-log model: b captures elasticity (% change) |
| Elaborate on the changes in the effectiveness marketing of marketing activities | -Changing segments, different lifecycle stages, changing economy or competitive landscape may change marketing effectiveness -But even in stable times, marketing can lose or gain effectiveness over time |
Created by:
janasultan
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