Metric Study Guide

# O grp reach x frequency o if a marketer knows that

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o GRP = Reach x Frequency o If a marketer knows that the target audience needs to be exposed to the marketing campaign 5 times before they decide to purchase, and he/she wishes to reach 50% of the market, then the marketer needs a media schedule that would give at least 250 GRP’s. (50% x 5)*100 Response Rate- number of people who respond to an offer relative to the number of people who received the offer. o Response rate ‘ # responses ÷ number exposed o Response is considered in whether or not the consumer finds the offer attractive. o Can be measured in: o Request for additional information o Store visit o Free gift, or discount opening Conversion Rate- the percentage of customers who both respond and buy a company’s products or services o Conversion rate = # of people who both respond and but ÷ # of people who respond o The more clear the initial offer, the more highly linked response rates are with conversion rates o Low or dropping conversion rates can signal a problem Advertising to sales ratio- describes the effect of advertising on a company’s total sales. o Advertising sales ratio = total advertising expenditures during time ÷ total sales during time

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o Lower ratios signal that advertising is very effective- or product has high level of interest derived from somewhere other than paid advertising Price Elasticity of Demand (PED)- gives an idea of consumers’ sensitivity to price change. o PED = % of change in Quantity sold / % of change in price When the PED falls between -1 and +1 it is considered inelastic. When the PED is over “1” (either positive or negative value) it is considered elastic. o Positive values mean that the product sells more when the price is higher o Negative values mean that the product sells more when the price is lower Markup price includes the percentage of desired profit added to the product cost o Markup price = unit cost / (1-desired return) o Note: unit cost = (fixed cost + variable cost)/unit sales Markup Amount: Markup = Total sale price x desired return Markup percentage : 1 – (Σ Unit Cost / Σ Revenue) Target Return Price (TRP)- the price needed to achieve desired return on investment (ROI). o TRP = cost per unit + ((desired return on investment)/ units sold) Sales Price Variance- actual revenue compared to revenue based on expected selling price o SPV = Rev actual – Rev expected selling price Competition-Oriented Pricing- measures of competitors’ prices: o Typical (usually average) o High price o Low price Customer-Oriented Pricing- gathers what consumers are willing to pay o “Customary” price o Metric: Expected price o Metric: Consumer price perceptions o Psychological pricing: e.g., \$2.99 vs. \$3.00 Yield Management Systems- adjusts prices to profitably fill unused capacity o Complex formulas that... o Discount early purchases
o Limit discounted sales o Overbook capacity o Metrics needed: o # of likely cancellations o Break-even quantity (for discounted price) o Consumer price sensitivity (for higher prices) Latitude of Price Acceptance- lowest and highest prices consumers find acceptable for product category o Below lowest price-> low quality or different product o Above highest price -> too expensive or different product Markdown Goods Percentage- % of sales at reduced price o
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• Spring '18
• Danny Weathers
• new product development, researcher, Operationalization Concretization

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