Chapter 2 share of hearts, minds and martkets

BỘ GIÁO DỤC VÀ ĐÀO TẠO TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN *** BÀI TẬP NHÓM HỌC PHẦN: MARKETING METRIC Giảng viên: TS Lê Thùy Hương Nhóm 04 Lưu Khánh Linh Hồng Minh Phương Bùi Thế Anh Trịnh Đức Dương Ngô Đức Anh Khúc Phạm Băng Châu Trần Diana Nguyễn Lan Nhi 11202156 11206561 11200038 11201001 11200182 11200551 11200939 11202984 Hà Nội, ngày 26 tháng 04 năm 2023 MỤC LỤC CHAPTER 2: SHARE OF HEARTS, MINDS AND MARTKETS Trang 03 CHAPTER 3: MARGINS AND PROFITS Trang 09 CHAPTER 4: PRODUCT AND PORTFOLIO MANAGEMENT Trang 15 CHAPTER 5: CUSTOMER PROFITABILITY Trang 23 CHAPTER 6: SALES FORCE AND CHANNEL MANAGEMENT Trang 26 CHAPTER 7: PRODUCT AND PORTFOLIO MANAGEMENT Trang 39 CHAPTER 8: PROMOTION Trang 44 CHAPTER 9: ADVERTISING METRICS Trang 49 CHAPTER 10: ONLINE, EMAIL AND MOBILE METRICS Trang 54 CHAPTER 11: MARKETING AND FINANCE Trang 59 CHAPTER 2: SHARE OF HEARTS, MINDS AND MARTKETS Market share 1.1 Unit market share Definition: The units sold by a particular company as a percentage of total market sales, measured in the same units Formula: Exercise: In 2020 liquid milk sales of TH are 30000 boxes, total market liquid milk sales is 70000 boxes So, the unit market share is Unit market share = 30000/70000= 43% Explain: 43% is the percentage of liquid milk sold to the market by TH compared to the total amount of liquid milk sold to the market in 2020 1.2 Revenue market share Definition: Revenue market share differs from unit market share in that it reflects the prices at which goods are sold Formula: Exercise: In 2020 Sales Revenue of TH yogurt is 300 billion dong and total market revenue of yogurt is 1200 billion dong So, the revenue market share is: Revenue market share = 300/1200 = 25% Explain: 25% is the percentage of TH yogurt sold compared to the total revenue of the yogurt industry sold in 2020 Solution: If TH wants to increase their market share, TH can consolidate and expand the market segment for high-income customers and seek to expand the market to middle- and low-income customers Relative market share and Market concentration Definition: Relative market share indexes a firm’s or a brand’s market share against that of its leading competitor Market concentration measures the degree to which a comparatively small number of firms accounts for a large proportion of the market (unit or revenue) (3 or leading competitors in the market) Formula: Exercise: In 2020, TH’s market share is 22% There are some strong competitors in the market such as: Vinamilk with 48%, Nutifood with 11%, Vinasoy with 9% So, the Relative market share and market concentration are: Relative market share = 22%/ 48%= 0.45 Market concentration = 22%+ 48%+ 11%= 81% Explain: TH's market share was 0.45 less than Vinamilk's market share in 2020 and the market concentration of the dairy market was quite large, accounting for 81% Solution: It can be seen that compared to Vinamilk, TH has less competitive advantage due to its lower market share Vinamilk's competitive strategy is to invest in the world's leading modern technology line to ensure 100% pasteurized clean milk quality Although Vinamilk has a solid foundation, it still focuses on the material, considering this as a strategic lever and competitive advantage to surpass other competitors in the fresh milk segment Therefore, in addition to the support of modern technology, TH needs to develop its advantages through advertisements, newspapers, sponsoring TV programs, emphasizing messages on safety and hygiene issues At the same time, promoting the "clean" factor of TH true products and other social activities such as nutrition programs for children and students, gratitude to customers, etc are essential Brand development index Definition: The brand development index (BDI) quantifies how well a brand is performing within a specific group of customers, compared with its average performance among all consumers Formula: Exercise: Among households without children, TH’s sales run 1000-ton products per week in 100000 households In general population, TH’s sales run 1000-ton products per week in 50000 households So, the BDI is: BDI = ( 1000/100000)/ (1000/50000) = 0,5 Explain: The average amount of milk that TH sold to households without children is 0.5 times the amount of milk TH sold to all households in general Solution: To be able to sell more products to households without children, TH needs to focus on developing new product lines that are suitable for adults TH can launch TH Protein Shake product line for gym people, or herbal tea and beauty tea product lines aimed at female customers who care about their appearance and health Category Development Index Definition: The category development index (CDI) measures the sales performance of a category of goods or services within a specific group, compared with its average performance among all consumers Formula: Exercise: Total number of households in Hai Ba Trung District: 12000 Total liquid milk crates they bought: 25000 Total number of households in Hanoi: 100000 Total liquid milk crates they bought:600000 CDI = (25000/12000)/ (600000/100000) = 0.34 Explain: The average amount of milk that TH sold to Hai Ba Trung district is equal to 0.34 times the average amount of milk that TH sold to Hanoi market Solution: To increase sales of products in a specific area, TH needs to invest in more stores and actively distribute to agents throughout the region This makes it more convenient for customers in case they want to use TH's products (easy to find, don't have to go far) At the same time, TH can free ship for customers who buy massive quantities (such as 24 cartons of milk) and order through TH's branch stores in the area Penetration Definition: Penetration is a measure of brand or category popularity It is defined as the number of people who buy a specific brand or a category of goods at least once in a given period, divided by the size of the relevant market population Formula: Document continues below Discover more from: Digital Marketing DM2021 355 documents Go to course 16 100 câu hỏi đáp án thi trắc nghiệm Điều dưỡng viên giỏi lần thứ - Năm 2014 Digital Marketing 86% (14) Slides Digital Marketing Bài 12 Digital Marketing 100% (3) Bài tập unit - A,an, the chuyên ams - - Diritto commerciale 12 Digital Marketing 100% (3) DM - ko có đaauuuuuuu Digital Marketing 100% (3) [ykhoa 247.com] giáo trình vi sinh đại học y dược huế 220 Digital Marketing 100% (2) The customer rules - book 14 Digital Marketing 100% (2) Exercise: Total Population in VN: 10.000.000 people 8.000.000 people out of 10 million people bought yogurt 5.000.000 people out of 10 million people bought TH yogurt products Market penetration = 8.000.000/10.000.000=0,8 Brand penetration = 5.000.000/10.000.000=0,5 Penetration share = 0,5/0,8= 62.5% Explain: 80% is the percentage of Vietnamese population that buys yogurt 50% is the percentage of the Vietnamese population that buys TH yogurt The number of people who buy TH yogurt is equal to 62.5% of the number of people who buy yogurt in general in Vietnam Solution: Currently, most of TH's customers are women and children Therefore, to increase brand penetration, TH needs to invest and develop products aimed at other customers such as the elderly Elderly people often not eat well, leading to a lack of necessary micronutrients to nourish the body Supplementing nutrients from functional foods, especially milk, is considered an important and reasonable solution to ensure that the elderly always have good health TH may launch a line of dairy products for the elderly, including: - Milk with good fat like plant sterol: for the elderly with cardiovascular disease - Milk with balanced calcium, vitamin D and phosphorus: for the elderly with bone and joint diseases - Milk with abundant vitamins and minerals: for people who eat poorly, lack nutrition Share of requirements Definition: Share of requirements, also known as share of wallet, is calculated solely among buyers of a specific brand Within this group, it represents the percentage of purchases within the relevant category, accounted for by the brand in question Formula: Exercise: In a given year, the unit purchases of TH yogurt were 900.000 bottles Among the households that bought TH, total purchases of yogurt came to 1.500.000 bottles Share of Requirement = 900.000/1.500.000=60% Explain: 60% is the percentage of people buying TH yogurt compared to the total purchase of all other yogurts in a given year Solution: To increase the share of requirements to 80%, 90%, TH can make a difference in service delivery The reasons why customers still buy yogurt or fresh milk products of other brands can include discounts, buy get free of brands, new product launches or customers' inconvenience in buying T's products => TH can implement a service to deliver milk (or products ordered by customers) with a frequency of time / week to households in the given area This makes customers maintain using TH's products more often Usage index Definition: The usage index is a relative measure that indicates how heavily the customers of a given brand use the product category Formula: Exercise: In 2020, the average yogurt purchased by people using TH brand was 120.000 bottles During the same period, average yogurt consumption by people using any kind of yogurt was 90.000 bottles Usage Index = 120.000/90.000= 1,33 Explain: The average amount of yogurt people buys from TH is 1.25 times the average amount of yogurt people buy of all brands Net promoter Definition: Net promoter is a measure of the degree to which current customers will recommend a product, service, or company Formula: Exercise: TH measures their promotion strategy with Percentage of Promoters is 60% Percentage of Detractors is 5% Net Promoter Score = 60%-5% = 55% Explain: 55% is the percentage of TH's customers willing to recommend their products to others Solution: TH can increase Promoter by implementing a discount program when customers buy large quantities of the same product (fresh milk, yogurt, Because the effective frequency is 3, only those who have seen the ad three or more times have been effectively reached The effective reach is thus 20,000 + 1,000 = 21,000 In percentage terms, the effective reach of this ad is 21,000/261,000 = 8% of the population Share of Voice Definition: Share of Voice: The percentage of advertising in a given market that a specific product or brand enjoys Purpose: To evaluate the comparative level of advertising committed to a specific product or brand Formula: Example: Milk market spends million dollars on advertising in which TH spends 200 thousand dollars Share of Voice of TH = 200.000/2.000.000 = 10% The percentage of advertising in a milk market that TH Group enjoys is 10% Advertising Elasticity of Demand Definition: The advertising elasticity of demand is the change in demand from a change in advertising pending Purpose: Understanding the Responsiveness of Demand to Advertising Formula: Example: 57 TH sells casual boxes They all their advertising online, mainly through banner ads TH’s marketer wants to know the advertising elasticity of demand and runs a test using different levels of advertising spend in two periods that are thought to be comparable The marketer is thus willing to assume that any difference in sales is caused by the difference in advertising spending Let us assume that advertising elasticity of demand is constant Period 1: Advertising Spending (A1) was 5,000 and Quantity Demanded (D1) was 150,000 Period 2: Advertising Spending (A2) was 5,500 and Quantity Demanded (D1) was 155,000 Advertising elasticity of demand can be assessed by the impact of the increased advertising between periods A and B Given constant elasticity we must use the following formula Advertising Elasticity of Demand - ADE (1) = ln (155,000/150,000) / ln (5,500/5,000) = 0,344 CHAPTER 10: ONLINE, EMAIL AND MOBILE METRICS Pageviews, and Hits Definition: Hits: A count of the number of files served to visitors on the Web Because Web pages often contain multiple files, hits are a function not only of pages visited, but also of the number of files on each page Formula 1: TH’s website served 10 files per page and generated 1,000,000 pageviews => Hits = 10 * 1,000,000 = 10,000,000 (files) So, a count of the number of files served to visitors on the TH's Website is 10,000,000 (files) Formula 2: 58 There are 1,000,000 hits on TH’s Website that serves ten files each time a page is accessed => Pageviews = 1,000,000/10 = 100,000 (views) So the number of times a TH's page has been displayed to user is 100,000 (views) Rich Media Display Time and Interaction Rate Definition 1: Rich media display is the metrics to monitor how long their advertisements are holding the attention of potential customers Formula 1: TH has a 1- minute marketing campaign on Tik Tok, this has 3,000 viewers, and display time is hour (10,800s) => Average rich media display time = 10,800 / 3,000 = 3,6s In conclusion, this campaign didn’t attract people viewers Definition 2: Rich media interaction rate to assess the effectiveness of a single rich media advertisement in generating engagement from its viewers Formula 2: Advertisement of TH has 200 impressions, among those 150 clicks on this ad => Rich Media Interaction Rate = 150/200 = 75% Clickthrough Rates Definition: Clickthrough rate is the percentage of impressions that lead a user to click on an ad Formula: There are 1,000 clicks on TH's website that serves up 100,000 impressions Clickthrough Rate (%) = 1,000 / 100,000 = 1% → The clickthrough rate is 1%: 59 If the same website had a clickthrough rate of 0.5%, then there would have been 500 clicks: Clickthrough = 100,000 * 0.5% = 500 → TH website has click through rate of 1% which means in 100,000 impressions, 1% will lead to the user to click on WHISTAIL’s adds If a different website had a 1% clickthrough rate and served up 200,000 impressions, there would have been 2,000 clicks: Number of Clicks = 1% * 200,000 = 2,000 Cost per Impression, Cost per Click, and Cost per Order Example: A TH's retailer spent 80 million VND on online advertising and generated 1.5 million impressions => Cost per Impression ($) = 80 million / 1.5 million= 53.3 million VND This led to 18,000 clicks => Cost per Click ($) = 80 million / 18,000 =4,444 VND Only in 10 of the clicks (1/10 * 18,000 = 1,800) resulted in a purchase => Cost per Order ($) = 80 million / 1,800 = 44,444 VND Visits, Visitors, and Abandonment Definition: Visits: measures the number of sessions on the Web site Visitors: measures the number of people making those visits Abandonment Rate: This measures the percentage of carts that were abandoned before completion The percentage of shopping carts that are abandoned Formula: 60 TH found that of the 1,000 customers who loaded items into their electronic baskets, only 800 actually purchased Calculate Abandonment Rate Carts not completed = 1,000 - 800 = 200 Abandonment Rate = 200/1,000 = 20% Explanation: 20% abandonment rate means 20% customers will abandon their basket, not moving to the final purchase Bounce Rate (Web Site) Definition: Bounce Rate is a measure of the effectiveness of a Web site in encouraging visitors to continue their visit It is expressed as a percentage and represents the proportion of visits that end on the first page of the Web site that the visitor sees Formula: Example: TH found that of the in 1,000 customers who visited their website, 200 visitors ended on the first page of the website Calculate Bounce Rate Bounce Rate = 200/1,000 = 20% Solution: In order to reduce Bounce Rate, TH can design better user experience for their website or imply a clear call-to-action button or some A/B testing Social Media Metrics: Friends/Followers/Supporters/Likes Definition: Cost per Friend (Like): The cost to the organization per friend recruited or like generated Example: A TH's retailer spent 100 million VND on providing social networking presence and recruited 1000 friends Cost per Friends = 100,000,000/1000 = 100,000 VND It means the cost to the organization per friend recruited is 100,000 VND 61 A TH's retailer spent 100 million VND on providing social networking presence and generated 100,000 likes Cost per Like = 100,000,000/100,000 = 1000 VND It means the cost to the organization per like generated is 1,000 VND Mobile Metrics Definition 1: Average revenue per user (ARPU) is a widely used metric for app marketers Example: If TH generated $200 last month and had 4000 active users during that month, the Average Revenue Per User would be $0.05 ($200 / 4000 = $0.05 ARPU) Definition 2: Store Visits: When you have the number of consumers going into a store you can compare this to an online action, for instance the number who downloaded a coupon, to assess how effectively the online strategy drives offline actions, visits to stores Example: On average, in month, there are 2450 visitors to TH's dairy store, of which on the online system including apps and e-commerce sites, this number is 7000 visits → Online to offline conversion =2450/7000 = 0.35 = 35% → Compare to the online action of TH’s consumers, only 35% have physical response of visiting the store offline Email Metrics Definition 1: Email Open Rate: The percentage of email delivered that gets opened Example 1: If TH sends out 10 emails and of them bounce, the number of delivered emails becomes If, out of those emails, are opened, TH rate open rate is 62 then 2/6 = 0.33 Multiplying that by 100 gives TH an email open rate of 33.3% Definition 2: Email Clickthrough Rate: The percentage of email delivered that gets clicked on Example 2: If TH send an email campaign to 100 people and 20 people clicked on links within email of TH, then Th's click through rate would be 20% Definition 3: Email Unsubscribe Rate Example 3: If 5000 emails are delivered in TH email campaign and 100 subscribers have opted-out then TH's unsubscribe rate is 2% A good unsubscribe rate is 0.5% Definition 4: Email bounce rate relates to emails that can’t be read Example 4: TH sends out 2,000 emails and 100 of them bounce TH's calculation would be (100 / 2,000) x 100, which would provide TH with an email bounce rate of 5% CHAPTER 11: MARKETING AND FINANCE Net Profit and Return on Sales Definition: Return on sales (ROS) is net profit as a percentage of sales revenue used to measure levels and rates of profitability Formula: Example: In 2018, to produce 1000 tons liquid milk TH True milk spent billion for total cost, revenue is billion, Interest Payment is 50 million, taxes 200 million 63 and Depreciation and Authorization Charge is 100 million Net profit, ROS and EBITDA? Explain the answer: Net profit= 3-2=1 (billion) ROS= 1/3= 33,33 % EBITDA= 1000+50+200+100=1350 million dong =>Net profit measures the profitability of ventures after accounting for all costs, 1million is profitability of ventures after accounting for all costs of TH True milk =>Return on sales (ROS) is net profit as a percentage of sales revenue.33,33 % is net profit as a percentage of sales revenue of TH True milk => 1350 million dong is operating cash flow in spite of Earnings Before Interest, Taxes, Depreciation, and Amortization of TH True milk Return on Investment Definition: ROI and related metrics (ROA, ROC, RONA, and ROIC) provide a snapshot of profitability adjusted for the size of the investment assets tied up in the enterprise Purpose: To measure per period rates of return on dollars invested in an economic entity Formula: Example: TH True milk invests millions in a real estate business and generates a net profit of 15 billions Calculate ROI? Explain the answer: ROI = 15/5 =300% => 300% is rate per period of return on money invested in a real estate business of TH True milk Economic Profit—EVA 64 Definition: Economic profit has many names, some of them trademarked as “brands.” or economic value added (EVA) which is measure of net operating profit after tax adjusted for the cost of capital Purpose: To measure dollar profits while accounting for required returns on capital invested Formula: The EVA formula shows that there are three main components to EVA: Profit after tax (NOPAT), amount of capital invested, and WACC + NOPAT: can be calculated manually but is often listed in the company's financial statements + Investment capital: is the amount of money used to finance the company or for a particular project + WACC: average cost of capital, which is the cost of capital calculated based on the proportion of different types of capital used by the enterprise WACC is also often published as a public metric Example: TH True milk Company has profits—NOPAT—of $500,000 They have a straightforward capital structure, half of which is supplied by shareholders This equity expects a 10% return on the risk the shareholders are taking by investing in this company The other half of the capital comes from a bank at a charge of 9% The company employs total capital of $2 million Explain the answer: Weighted average cost of capital (WACC) = Equity (10% * 50%) + Debt (9% * 50%) = 9.5% Cost of Capital = Capital Employed * WACC = $2,000,000 * 9.5% = $190,000 Economic Profit = NOPAT – Cost of Capital = $500,000 – $190,000 = $310,000 Evaluating Multi-period Investments Definition: 65 Payback: The time (usually years) required to generate the (undiscounted) cash flow to recover the initial investment Net Present Value—NPV ($): The present (discounted) value of future cash inflows minus the present value of the investment and any associated future cash outflows Formula: Payback = Investment/ net profit Example: TH True milk’s investment for their new product is VND 1,500,000,000, the first year they have a net profit of VND 500,000,000, the second year they get 600,000,000 and that of the third year is 800,000,000 Calculate NPV after years with a discount rate of 5% Explain the answer: Discounting Nominal Value Year Investment Year Year Year (1.500.000.000) Total (1.500.000.000) 500.000.000 600.000.000 800.000.000 1.900.000.000 Income Undiscounted (1.500.000.000) 500.000.000 600.000.000 800.000.000 400.000.000 Cash Flow Discount Formula 1(1+5%)0 1(1+5%)1 1(1+5%)2 1(1+5%)3 Discount Factor 100,0% 95,2% 90,7% 86,4% 476 million VND 544,2 million 691,2 million Present Value 1,5 billion VND 211,4 million 66 VND VND VND → Thus, with TH True milk’s investment of VND 1.5 billion for their new product and net profit of VND 500 million, VND 600 million and VND 800 million over the years, Total Present Value with discount rate of 5% will be 211.4 million VND Marketing Return on Investment Definition: Marketing Return on Investment (MROI), also known as Return on Marketing Investment (ROMI): The incremental financial value attributable to marketing (net of marketing spending), divided by the marketing “invested” or risked Formula: Example: TH True milk has an advertising cost of $10,000 Before advertising the profit is $50,000, after advertising the profit is $100,000 Explain the answer: MROI = ((100.000 – 50.000) – 10.000) / 10.000 = 400% Marketing ROI is a measure of the performance and profitability of marketing campaigns Marketing ROI is 400% indicating a high performance company TH True milk can use this number to measure how marketing efforts are contributing to overall revenue growth 67 68 1D2A3A4B5D6D7B8B9A10C Net Profit = Sales Revenue - Total Costs = $100,000 - $60,000 = $40,000 Return on Sales = Net Profit / Sales Revenue = $40,000 / $100,000 = 0.4 or 40% EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) = Net Profit + Interest Payments + Taxes Incurred + Depreciation + Amortization Charges = $40,000 + $5,000 + $3,000 + $10,000 + $8,000 = $66,000 Conclusion: FPT has a net profit of $40,000, a return on sales of 40%, and an EBITDA of $66,000 The company is profitable and generating positive earnings before interest, taxes, depreciation, and amortization An An Tran Inventory Turns = Sales / Average Inventory = 8,000,000,000 VND / (2,000 x 100,000 VND) = 40 Inventory Days = 365 / Inventory Turns = 365 / 40 = 9.125 days Conclusion: The company has a high inventory turnover rate of 40, indicating that it is selling its products quickly The inventory days of 9.125 days also show that the company has a good control over its inventory levels The company can decrease its inventory by reducing the number of products it holds in its warehouse Improve demand forecasting: The company can improve its demand forecasting to better match inventory levels with customer demand This can help reduce excess inventory and decrease inventory days 69 70