Magic Numbers for Consumer Marketing: Key Measures to Evaluate Marketing Success

Overview

"While marketing may be an art, the reality is evaluating return on investment is definitely a science. John Davis' book Magic Numbers for Consumer Marketing is the perfect recipe book for the creative marketer who wants to be able to forecast whether their concoction of promotional ingredients will miraculously rise into a beautiful cake. There's no better guide for the marketing executive to understanding whether their investment is paying ...
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Overview

"While marketing may be an art, the reality is evaluating return on investment is definitely a science. John Davis' book Magic Numbers for Consumer Marketing is the perfect recipe book for the creative marketer who wants to be able to forecast whether their concoction of promotional ingredients will miraculously rise into a beautiful cake. There's no better guide for the marketing executive to understanding whether their investment is paying off at the bottom line."
Chip Conley, Founder and CEO, Joie de Vivre Hospitality

Magic Numbers for Consumer Marketing fills a real need in the marketplace for a concise, readily accessible reference book on consumer marketing metrics. John Davis has gathered, in one place, all the key numbers consumer marketers — not to mention their CEOs and CFOs — should be familiar with and should be using in evaluating their product and market strategies. What I really like about the book is that, through the various examples in each of the sections, a reader gets valuable perspective on how to use each metric. This book belongs on every marketers and general manager’s bookshelf.”
Milind M Lele, Managing Director, SLC Consultants, Inc., Adjunct Professor, Graduate School of Business, University of Chicago

"In an environment that increasingly demands quantitative rationales, Magic Numbers for Consumer Marketing provides a comprehensive definition of measures, how to calculate them and where to find the data. However, the real value of this book is John's ability to explain with great clarity and relevant anecdotes and cases how to use the numbers and what they mean. This is an excellent reference - a 'must' for both marketing students and practitioners."
Matthew de Villiers, CEO and Managing Director, FutureBrand Asia Pacific

"Magic Numbers on Consumer Marketing is a must-have reference book for marketers. Not only has it successfully organized the complex economics of marketing into a set of key formulas but it is also a great tool to develop one's business acumen. It will help marketers develop their business wisdom allowing them to make a better transition towards CEO positions".
Professor Jean-Claude Larreche, Alfred H.Heineken Chair, INSEAD

"John Davis is one of the most original and thoughtful observers of brand and marketing strategy today. Everyone who wants to improve or to understand better the world of measuring marketing should—indeed must--read this book. His ideas will change how you view the marketing metrics landscape in a most positive way."
Lynn Kahle, James Warsaw Professor, Lundquist College of Business, University of Oregon

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Editorial Reviews

From the Publisher
When I first picked this book up, I didn’t want to like it, even though its curious alpha-numeric front cover made me think of our own company’s name.
At first glance, it looked like a bunch of marketing theories, ideal for the young student (John Davis is now lecturer at Singapore Management University). After all, does anyone need to know that LTVC = [M-C] x (PxY) - A + (AxN)] x F? (by the way, that’s the formula for Lifetime Value Analysis—of course).
Then it was a whimsical comment in the foreword that really hit home: ‘If you are a mindless thrillseeker, then by all means go to the market without learning anything. Don’t bother with medical school before becoming a doctor. How hard can neurosurgery be anyway?
Davis’ book is filled not with things that are nice to know, but things we ultimately must know if we are going to rise to the top of our profession.
This is not the book to read for some mindless escapism. A lot of it is hard work. There are 61 different sets of formulae laid out here, each one neatly set up in terms of the data, the way to calculate it and what it means and potential challenges. And it’s the ‘What It Means’ sections where theories become reality, and the book moves from textbook to practical primer.
The author uses some of his own case studies from his time at Nike and other US companies, mixed in with a bunch of other real work examples from LVMH, WalMart, Mercedes, Hewlett-Packard, etc.
The breadth of the coverage is actually pretty extraordinary. From the basics of market share and market demand principles, to media metrics and direct marketing measures, there is the practical evidence to underwrite most marketing theory.
Two areas for me though stood out — one on the theory and implementation of brand value frameworks and brand culture — from Y&R’s renowned Brand Asset Valuator to Brand Finance’s excellent theories of Brand Valuation.
This whole approach, while still intangible and challenging, is one of the few solid theories where marketers and agencies can actually show their value to a business, beyond pure sales. The other is the basics of valuing business — revenue, profit, earnings per share, price-earning ratios. All the things you never learnt in school, but become essential if you want to succeed in business
A recent global McKinsey study into CEOs’ views of their CMOs was not flattering. While there were a few positive adjectives such as committed and creative, they were outweighed by a long list of phrases such as inconsistent, undisciplined, not accountable, expensive and faddish (ouch!).
One CEO said their CMO was “more like a small child than an executive”. With most CEOs now looking at the ROI on everything (one can see them asking their spouses “What is the ROI on our marriage?”), the marketing and advertising community will have to step up. This book should help them. (Media, December 2, 2005)
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Product Details

  • ISBN-13: 9780470821626
  • Publisher: Wiley, John & Sons, Incorporated
  • Publication date: 9/5/2005
  • Series: Magic Num8ers Ser.
  • Edition number: 1
  • Pages: 228
  • Product dimensions: 7.40 (w) x 10.22 (h) x 1.41 (d)

Meet the Author

John Davis is Chairman of Brand New View, a brand strategy firm.  He also teaches at Singapore Management University. He has been a featured speaker at numerous conferences around the world and has been interviewed by media in both Asia and the United States for his views on branding and marketing strategy.  He has spent more than 20 years in business as both an entrepreneur and marketing executive, having launched two award-winning companies and led marketing teams at Nike, Informix and Transamerica.
He was born in the San Francisco Bay Area, earning his undergraduate degree in Political Science from Stanford University and his MBA from Columbia University.
John, his wife Barbara, their 3 children, Katie, Chris and Bridget, and their dog 'Grinner' live in Singapore.
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Table of Contents

Introduction.

PART ONE: MAGIC NUMBERS FOR UNDERSTANDING A MARKET.

1. Market size.

2. Market Growth.

3. Market Coverage.

4. Market Share.

5. Market Penetration.

6. Market-Share Index.

7. Market-Share Potential.

8. Market-Share Development Performance.

9. Market Demand.

10. Future Demand.

PART TWO: MAGIC NUMBERS FOR UNDERSTANDING YOUR COMPANY.

11. Revenue.

12. Gross Profit.

13. Net Profit.

14. Profit Impact.

15. Earnings-Based Value.

16. Return on Sales.

17. Return on Assets.

18. Return on Equity.

19. Brand-Value Frameworks.

20. Brand Equity.

21. Brand-Name Premium.

22. Recall.

23. Recognition.

24. Brand-Culture Framework.

PART THREE: MAGIC NUMBERS FOR UNDERSTANDING CUSTOMERS.

25. Segment Profitability.

26. Loyalty Framework.

27. New-Product Purchase Rate.

28. Share of Customer.

29. Customer Investment.

30. Customer-Acquisition Costs.

31. Customer Break-Even Analysis.

32. Lifetime Value of Customer (LTVC).

PART FOUR: MAGIC NUMBERS FOR UNDERSTANDING MARKETING.

Princing Measures.

33. Price.

34. Premiums.

35. Marketing ROI (floor price).

36. Mark-up Price.

37. Target-Return Price.

38. Pricing Frameworks.

Advertising Measures.

39. Share of Voice.

40. Advertising-to Sales Ratio.

41. Reach.

42. Frequency.

43. Gross Rating Points.

44. Cost Per Gross Rating Point.

45. Click-Through Rates.

46. Profit Per Campaign.

Retail Marketing Measures.

47. Turnover.

48. Gross Margin Return on Inventory Investment.

49. Sales Per Square Foot.

50. Sales/Profit Per Employee.

51. Average Transaction Size.

52. Average Items Per Transaction.

53. Retailer's Margin Percentage.

Direct Marketing Measures.

54. Response Rate.

55. Conversion Rate.

56. Direct-Mail Revenue Goals.

57. Direct-Mail Profit Goals.

58. Direct-Mail Gross Profit.

59. Direct-Mail Net Profit.

60. Direct-Mail ROI.

Market Research Measures.

61. Market Research Budget.

Supplement: Using the Magic Numbers in a Marketing Plan.

Appendix: Finding the Information.

Index.

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