Marketing Decision Analysis
Marketing Decision Analysis Market Share Analysis 1 Hierarchy of Effects is a sequence of stages customers pass through in developing brand association. 1. Awareness: Percentage of potential consumers who recognise the brand o Ad Awareness o Brand Knowledge
2. Attitude: Consumers’ beliefs and feelings towards a brand
3. Usage: Consumers’ self-reported purchase behaviour as a user
Customer Satisfaction Customer Satisfaction = Performance ─ Expectation – – –
Leading indicator of purchase intentions and loyalty Sales and market share indicate a firm’s current performance Customer satisfaction indicates a firm’s long-term performance
Measuring Customer Satisfaction 1. Percentage of satisfied customers Using a Likert scale
2. Willingness to recommend Percentage of customers willing to recommend your brand o ‘Soft’ loyalty metric 3. Willingness to search Percentage of customers willing to search to avoid switching brands o ‘Hard’ loyalty metric Net Promoter Score measures the degree to which current customers will recommend your product.
Advantages: o Effectively measures customer loyalty o Accurately predicts future revenue growth Disadvantages: o If NPS = 0, are there 50% promoters and 50% detractors or is everyone passive? o If detractors leave the firm, resulting in an increase of NPS, does this mean the firm is growing?
Market Share Analysis 2 Market Share (MS) is a firm’s share of the market. –
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MS critically depends on market definition which must specify (sub)category, time period and region Unit MS of Mercedes in the US in 2011 = 1.9% Unit MS of Mercedes among luxury cars in the US in 2011 = 17% Too broad market definition may lead to unrealistic goals while too narrow may lead to missed opportunities MS should not be regarded as the only performance goal for a firm
Market Share vs. Sales – – –
When Relative Price Index > 1 (Revenue MS > Unit MS), your brand’s Price is higher than Average Price in Category A brand’s MS can increase even if there is no change in the brand’s sales Primary demand is demand for a whole market and Selective demand is demand for a particular brand Primary demand changes when MS increases and Sales Revenue remains unchanged
2. Attitude: Consumers’ beliefs and feelings towards a brand
3. Usage: Consumers’ self-reported purchase behaviour as a user
Customer Satisfaction Customer Satisfaction = Performance ─ Expectation – – –
Leading indicator of purchase intentions and loyalty Sales and market share indicate a firm’s current performance Customer satisfaction indicates a firm’s long-term performance
Measuring Customer Satisfaction 1. Percentage of satisfied customers Using a Likert scale
2. Willingness to recommend Percentage of customers willing to recommend your brand o ‘Soft’ loyalty metric 3. Willingness to search Percentage of customers willing to search to avoid switching brands o ‘Hard’ loyalty metric Net Promoter Score measures the degree to which current customers will recommend your product.
Advantages: o Effectively measures customer loyalty o Accurately predicts future revenue growth Disadvantages: o If NPS = 0, are there 50% promoters and 50% detractors or is everyone passive? o If detractors leave the firm, resulting in an increase of NPS, does this mean the firm is growing?
Market Share Analysis 2 Market Share (MS) is a firm’s share of the market. –
– –
MS critically depends on market definition which must specify (sub)category, time period and region Unit MS of Mercedes in the US in 2011 = 1.9% Unit MS of Mercedes among luxury cars in the US in 2011 = 17% Too broad market definition may lead to unrealistic goals while too narrow may lead to missed opportunities MS should not be regarded as the only performance goal for a firm
Market Share vs. Sales – – –
When Relative Price Index > 1 (Revenue MS > Unit MS), your brand’s Price is higher than Average Price in Category A brand’s MS can increase even if there is no change in the brand’s sales Primary demand is demand for a whole market and Selective demand is demand for a particular brand Primary demand changes when MS increases and Sales Revenue remains unchanged
