Question One

Explain the basic type of marketing measurement and its relevant in marketing planning decision

INTRODUCTION

Marketing performance measurement and management ( MPM) is a term used by marketing professionals to describe the analysis and improvement of the efficiency and effectiveness of marketing. This is accomplished by focus on the alignment of marketing activities, strategies, and metrics with business goals.

Marketing measurement t involves the creation of a metrics framework to monitor marketing performance , and then develop and utilize marketing dashboards to manage marketing performance.

Performance management is one of the key processes applied to business operations such as manufacturing, logistics, and product development. The goals of performance management are to achieve key outcomes and objectives to optimize individual,  group, or organizational performance. Marketing Performance Measurement (MPM) however, is more specific. It focuses on measuring, managing, and analyzing marketing performance to maximize effectiveness and optimize the return of investment (ROI) of marketing.

Three elements play a critical role in managing marketing performance

       i.            Data,

     ii.            Analytics, and

  iii.            Metrics.

Data and analytics

One of the core methodologies to measure marketing effectiveness is the collection of appropriate data. The gathering of right types of data, and its accuracy, is crucial in measuring the marketing performance.

Agreement between the marketing department and the senior management is important in selecting appropriate data to be collected.

While data collection is relatively simple, a thorough analysis to make sense of collected data is critical. By thoroughly analyzing the data, organizations can gather

actionable business insights to improve the marketing effectiveness and marketing efficiency. For example, organizations can use the analytics to drive the marketing return on investment, and make faster and better business decisions.

One common use of these analytics is optimizing marketing spending by using market mix models - models that measure the impact of marketing activities, competitive effects, and market environment on sales of a product. The consumer packaged goods (CPG) industry extensively uses this method, and it is now being adopted elsewhere. For example, in Financial Services, Marketing Mix Modeling projects and tools will collect all marketing spend into a single database, and analyze spend's effects on acquisition of new customers, retention, average customer value, up-sell of additional services, and so on. These models use data to create a model that establishes the link between spend in various channels, geographies and so on with incremental sales.

Measurement and metrics enable marketing professionals to justify budgets based on returns and to drive organizational growth and innovation. As a result, marketers use these metrics and performance measurement as way to prove value and demonstrate the contribution of marketing to the organization.

Popular metrics used in analysis include activity - based metrics that involves numerical counting and reporting. For example, tracking downloads, Web site visitors, attendees at various events are types of  activity-based metrics. However, they seldom link marketing to business outcomes.

Instead, business outcomes such as market share, customer value, and new product adoption offer a better correlation. MPM focuses on measuring the aggregated effectiveness and efficiency of the marketing organization.

 Some common categories of these specific metrics include

       i.            Marketing's impact on share of preference,

     ii.            Rate of customer acquisition,

  iii.            Average order value,

  iv.            Rate of new product and service adoptions,

     v.            Growth in customer buying frequency,

  vi.            Volume and share of business,

vii.            Net advocacy and loyalty,

viii.            Rate of growth compared to competition and the market, margin, and customer engagement.

An ideal dashboard should show the progress of marketing, help assess productive areas, and help in the decision making. In addition, dashboards provide an indication on the value of marketing and also helps to align marketing with the business.

MPM professionals develop closed-loop business processes for data collection, performance target setting, measurement and reporting.  Processes must describe a document outlining the step-by-step actions that marketing must take to

follow the process consistently. A valuable aid is the process map. Process mapping is a technique to create a clearly defined objective to meeting business results.

According to Marketing Metrics in Action: Creating a Performance-Driven Marketing Organization ,[5] the creation of a performance-driven organization requires two elements: a set of standards and processes for identifying and accessing relevant data, and the ability to generate performance metrics from the data.

A marketing plan may be part of an overall business plan . Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.

A marketing plan is a comprehensive blueprint which outlines an organization's overall marketing efforts. A marketing process can be realized by the marketing

mix. The last step in the process is the marketing controlling. The marketing plan can function from two points: strategy and tactics (P. Kotler, K.L. Keller).

QUESTION TWO

What Are The Methods Of Estimating The Marketing

INTRODUCTION

Estimating the potential of a market is very important for a company planning to enter a new market. This is a process where an organization estimates the attractiveness of the market for selling its products or services. Before venturing into a market and investing huge sums of money, it is very important to asses it in order to avoid irrecoverable losses.

Besides studying the broad market factors such as the size of the population, GDP and the spending capacity of the market, firms should also analyze market specific factors such as customers'tastes and preferences, the cultural factors prevailing, their willingness to buy the products and so on.

Data regarding customer and market specific factors can be obtained through primary and secondary sources. Estimating the future sales of the company in a given market is called sales forecasting.

Methods Of Estimating The MarketTop of Form

Bottom of Form

There are many methods to estimate market and sales potential that are complex, expensive, and take a lot of time. They also happen to be unnecessary. What follows are five simple methods that can be effectively employed by any company.
Before we get to those, however, some simple definitions:

Market potential. The total potential sales of a product within a given period of time and for a given geographic area. This is an optimum figure representing the total sales of all prospects that could use the product.

Sales potential. This is the share of market potential allocated to a specific geographic area for a particular product, or the share of the total market potential that a manufacturer can reasonably expect to sell.

Sales projection. Using historical sales to project future sales.

The following are the methods of estimating market:

1.      Market potential by number of prospects. Generally, this is determining a macro market size by the total number of prospects. This step requires accessing a database such as the Dun & Bradstreet's Zap Data to find out how many prospects are in a specific SIC or NAICS code market segment. Say, for instance, the entire food industry has 44,988 plants.

2.     Simple sales potential. Sales potential are the prospects as a share of the market potential that might be able to buy your products. The more you can qualify this number, the more accurate the sales potential figure. Let's say your product is a specific type of machinery for cheese plants, and you've identified a total of 801 cheese plants. This number can be narrowed down by the size of the prospect company and a more specific type of cheese product.

3.     Simple sales potential using lead to quote ratios. Manufacturers of industrial products that do quotation analysis and keep track of their leads, quotes, and orders in a database can use lead to order ratios to make even more accurate estimates of sales potential.

4.     Sales potential using plant purchases. This type of sales potential estimate works best for industrial products that wear out and must be replaced inside a production process on a regular basis. By way of example: industrial cutting blades used in sawmills in a regional market. The first step in using the plant purchases method is to find out the number and size of sawmills in a geographic region. The size or type of mill can be determined by number of employees, number of shifts, or production (measured by an output figure, such as board feet per year). This is an important consideration, because different sizes of plants use different amounts of cutting blades.

The next step is to qualify the plants in terms of their purchases of certain types of blades. Most of the plants are easily qualified because they are customers of the cutting blade manufacturer, and the sales records should show the quantity and models purchased. The rest of the sawmills can be qualified by calling the buyers on the phone.

If your client has a good customer database it is easy to sort yearly sales by size of customer and then calculate a purchase average. The last step is to multiply the number of qualified plants by the average purchases to find the sales potential of the three different sawmill segments of the market.

5.     Sales potential using phone qualification and telemarketing. This type of sales potential estimate works best for capital products that must be quoted. Our example is a pallet transfer machine that can shift loads of meat products from one type of pallet to another.

The first step in using this method is to determine the appropriate NAICS or SIC code. The second step is to find the number of prospects. Because production capacity is a factor, the prospect companies must be over 50 employees in size.

Every prospect is called, and if they do not meet all three requirements, they are eliminated. If the prospect is qualified, the respondent is asked the name, phone number, and fax number of the employee who handles capital equipment. That person is faxed a flyer explaining the virtues of the machine. The fax is then followed up by a phone call to the prospective buyer to see if they are interested, want a quotation, or might have a budget for this kind of equipment.

QUESTION THREE

Identify the techniques for forecasting future market trends

INTRODUCTION

Forecasting is the process of making predictions of the future based on past and present data and analysis of trends. A common place example might be estimation of some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgmental methods. Usage can differ between areas of application: for example, in hydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "prediction" is used for more general estimates, such as the number of times floods will occur over a long period.

A market forecast is a core component of a market analysis. It projects the future numbers, characteristics, and trends in your target market. A standard analysis shows the projected number of potential customers divided into segments.

This example of a simple market forecast defines two target market segments and projects the potential customers in each of those segments by years.

Primary forecasting techniques help organizations plan for the future. Some are based on subjective criteria and often amount to little more than wild guesses or wishful thinking. Others are based on measurable, historical quantitative data and are given more credence by outside parties, such as analysts and potential investors. While no forecasting tool can predict the future with complete certainty, they remain essential in estimating an organization's forward prospects.

Techniques For Forecasting Future Market Trends

Adopting a forecasting techniques, ranges from the subjective forecasting which allows forecasters to predict outcomes based on their subjective thoughts and feelings. Subjective forecasting uses brainstorming sessions to generate ideas and to solve problems casually, free from criticism and peer pressure. They are often used when time constraints prohibit objective forecasts. Subjective forecasts are subject to biases and should be viewed skeptically by decision-makers.

Other sophisticated techniques of forecasting is Time-Series. Time-series forecasting is a quantitative forecasting technique. It measures data gathered over time to identify trends. The data may be taken over any interval: hourly; daily; weekly; monthly; yearly; or longer. Trend, cyclical, seasonal and irregular components make up the time series. The trend component refers to the data's gradual shifting over time. It is often shown as an upward- or downward-sloping line to represent increasing or decreasing trends, respectively. Cyclical components lie above or below the trend line and repeat for a year or longer. The business cycle illustrates a cyclical component. Seasonal components are similar to cyclicals in their repetitive nature, but they occur in one-year periods. The annual increase in gas prices during the summer driving season and the corresponding decrease during the winter months is an example of a seasonal event. Irregular components happen randomly and cannot be predicted.

Basically, there are three (3) methods of forecasting techniques which includes:

       i.            Qualitative method

     ii.            Quantitative method

  iii.            Judgemental methods

i.            Qualitative forecasting techniques are subjective, based on the opinion and judgment of consumers, experts; they are appropriate when past data are not available. They are usually applied to intermediate- or long-range decisions. Examples of qualitative forecasting methods are informed opinion and judgment, the Delphi method, market research, and historical life-cycle analogy.

ii.            Quantitative forecasting models are used to forecast future data as a function of past data. They are appropriate to use when past numerical data is available and when it is reasonable to assume that some of the patterns in the data are expected to continue into the future. These methods are usually applied to short- or intermediate-range decisions. Examples of quantitative forecasting methods are last period demand, simple and weighted N-Period moving averages, simple exponential smoothing, and multiplicative seasonal indexes.

iii.            Judgmental forecasting methods incorporate intuitive judgement, opinions and subjective probability estimates. Judgmental forecasting is used in cases where there is lack of historical data or during completely new and unique market conditions

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