Summary Market Assessment
Lecture 1 Introduction
Effective market assessment requires several skills
1. making decisions based on critical thinking and structured decision process (no intuition)
2. extracting, analyzing, interpreting information from text, graphs, data
3. evaluating, choosing, calibrating market response models that enable better managerial
decisions
4. making reasonable assumptions and judgements calls in the light of limited information
5. communicating results professionally and providing clear recommendations
The Problem of “Management by Intuition”
Bat and Ball problem (bat 1 euro more than ball and total is 1.10). The answer is : 0.05/1.05
instead of 0.10/1.00, which we would say by intuition.
Intuition is powerful and problematic for managerial decision. It can create false
confidence in decision that result in poor decisions.
Need to go beyond intuition by analyzing things and using data!
Using 5C’s as a Framework to approach markets
Market Assessment = systematic use of data and judgements about 5C’s. basis to
develop marketing strategies for firm.
The Purpose of MA:
to enable and simplify decision making
To create a structure to focus on key issues enhance bottom-line impact
To be applied and efficiently used by decision makers “Quick and Dirty”
Extracting, Analyzing, Interpreting Information don’t be fooled by interpreting
Truncated chart: make difference appear bigger than it is in reality;
,A Basic Tool: Market Response Model
Market Response Models translate marketing inputs, competitive actions and
environmental factor into observed outputs (gives structures).
Inputs = marketing actions that the marketeer controls (price, advertising level) &
control variables (market size, competitive environment)
Outputs = Key metric of concert to firm
Response Model = the link from input to measurable outputs
Examples: we will only use easy models (example 1)
Types of Market Response Models
Number of marketing variables: one vs. many variables (only advertising or price too)
Competition: including vs. not including actions and reactions of competitors
Nature of the relationships between input and output variables: linear vs. s-shaped
Static and dynamic situations: snapshot vs. flow of actions
Level of demand: brand sales vs. brand share
Level of response: individual vs. aggregate
Model Calibration: the process of determining the appropriate values for the parameters.
Ways to calibrate models : objective vs. subjective calibration
1. Using statistical methods / estimating the model with data (regression analysis)
2. Judgmental process
3. Combination of both
Subjective calibration when no historical data is available
Pareto Principle = 80% of overall results are driven by 20% of the inputs
20% of social media posts generate 80% of traffic
Use in MA problems to pinpoint the most effective recommendations
Reduce distribution
by 10% is a big parts.
Focus on goals in
efficient ways
Three Common Flaws
Flaw 1: Ignoring quantitative results and decide by gut feeling
Flaw 2: Accepting modeling results uncritically
Flaw 3: Ignoring the big picture (overall objective) 5C’s
, Solving Cases
Step 1: Structure the Problem: what is the company’s problem, which business is the
company in, what is the company’s objective?
Step 2: Understand the Market: Profitability (problem), 5C’s (Business Situations)
Step 2A: Profitability Framework: Step 2B: 5C’s Framework
Step 3: Gather and Analyze the Right Data
Data-Driven Justification
Step 4: Provide a Clear Recommendation
1. Conclusion with actionable recommendation
2. Three supporting reasons with data
3. Conclusion again
Clear Recommendation and Implementation (Synthesis, Structure, Implementation)
Lecture 2 Segmentation & Targeting
PRIZM Lifestyle Segmentation: segment based on both household and geographical data.
3 step approach: STP
Lecture 1 Introduction
Effective market assessment requires several skills
1. making decisions based on critical thinking and structured decision process (no intuition)
2. extracting, analyzing, interpreting information from text, graphs, data
3. evaluating, choosing, calibrating market response models that enable better managerial
decisions
4. making reasonable assumptions and judgements calls in the light of limited information
5. communicating results professionally and providing clear recommendations
The Problem of “Management by Intuition”
Bat and Ball problem (bat 1 euro more than ball and total is 1.10). The answer is : 0.05/1.05
instead of 0.10/1.00, which we would say by intuition.
Intuition is powerful and problematic for managerial decision. It can create false
confidence in decision that result in poor decisions.
Need to go beyond intuition by analyzing things and using data!
Using 5C’s as a Framework to approach markets
Market Assessment = systematic use of data and judgements about 5C’s. basis to
develop marketing strategies for firm.
The Purpose of MA:
to enable and simplify decision making
To create a structure to focus on key issues enhance bottom-line impact
To be applied and efficiently used by decision makers “Quick and Dirty”
Extracting, Analyzing, Interpreting Information don’t be fooled by interpreting
Truncated chart: make difference appear bigger than it is in reality;
,A Basic Tool: Market Response Model
Market Response Models translate marketing inputs, competitive actions and
environmental factor into observed outputs (gives structures).
Inputs = marketing actions that the marketeer controls (price, advertising level) &
control variables (market size, competitive environment)
Outputs = Key metric of concert to firm
Response Model = the link from input to measurable outputs
Examples: we will only use easy models (example 1)
Types of Market Response Models
Number of marketing variables: one vs. many variables (only advertising or price too)
Competition: including vs. not including actions and reactions of competitors
Nature of the relationships between input and output variables: linear vs. s-shaped
Static and dynamic situations: snapshot vs. flow of actions
Level of demand: brand sales vs. brand share
Level of response: individual vs. aggregate
Model Calibration: the process of determining the appropriate values for the parameters.
Ways to calibrate models : objective vs. subjective calibration
1. Using statistical methods / estimating the model with data (regression analysis)
2. Judgmental process
3. Combination of both
Subjective calibration when no historical data is available
Pareto Principle = 80% of overall results are driven by 20% of the inputs
20% of social media posts generate 80% of traffic
Use in MA problems to pinpoint the most effective recommendations
Reduce distribution
by 10% is a big parts.
Focus on goals in
efficient ways
Three Common Flaws
Flaw 1: Ignoring quantitative results and decide by gut feeling
Flaw 2: Accepting modeling results uncritically
Flaw 3: Ignoring the big picture (overall objective) 5C’s
, Solving Cases
Step 1: Structure the Problem: what is the company’s problem, which business is the
company in, what is the company’s objective?
Step 2: Understand the Market: Profitability (problem), 5C’s (Business Situations)
Step 2A: Profitability Framework: Step 2B: 5C’s Framework
Step 3: Gather and Analyze the Right Data
Data-Driven Justification
Step 4: Provide a Clear Recommendation
1. Conclusion with actionable recommendation
2. Three supporting reasons with data
3. Conclusion again
Clear Recommendation and Implementation (Synthesis, Structure, Implementation)
Lecture 2 Segmentation & Targeting
PRIZM Lifestyle Segmentation: segment based on both household and geographical data.
3 step approach: STP
