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22 Cards in this Set
- Front
- Back
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Market Response Model
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External Influences
-Competitors -Environment |
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Linear Response Model
(on test see slide) |
y= sales
x= advertising (controllable) y intercept when sales=0 (see slide) |
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8 types of models
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see paper flash cards or slides
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Calibration
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Making model fit data
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Calibration Process
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Least squares regression (excel)
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Calibration Objective
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Uses actual data
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Calibration R-square
dont think we need to know this... |
Goodness of FIt 0 (poor) -1 (good)
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Market Response Models -- Objective - Profit
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Unit Margin = Unit Price – Unit Variable Cost
Profit = Unit Margin x Quantity – Relevant Costs Relevant Costs = Unique costs (ads) + Allocated fixed costs |
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Market Response Models -- Objective - Market Share
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Need to precisely define market
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Objective - Sales goals
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Corporate-wide or by Business Unit
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Objective -- Uncertainty
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Risk aversion: Preference for certainty
50% chance of making $300K, but losing $100K |
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Objective -- Multiple Goals
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Maximize market share AND profitability
Multi-criteria decision making: Optimize one Goal programming: Set targets for each |
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Dynamic Effects
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Instantaneous (Sales Promotion), Delayed Response
(Common), Hysteresis (Slow decay after promo.), New Trier (Try new brand), Stocking (Stock up for future) See flashcards or slide |
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market share
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= us / (us+them)
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vector
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line
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matrix
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multiple rows and columns
y 4,2 4=row 2=column |
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logit
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predicts what products customers will purchase
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Shared Experience and Qualitative Models -- Shared Experience
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benchmarking
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Shared Experience -- PIMS
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PIMS = Profit Impact of Marketing Strategy
Pool experience of multiple firms Gain insights and guidance |
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Shared Experience and Qualitative Models -- Advisor
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Compare ad spending to product & market characteristics
Provide norms for spending levels |
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Qualitative
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Often, no quantitative model possible
Example approach: Rule-based representation |
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Qualitative Models -- Rule based representation
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if then rules
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