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There are Five Ways to Present
• The Single Performance of a Two-Factor Marketing Machine
• 1) As a Picture (or verbal description)• 2) As a Slope-Origin Equation• 3) In a Table• 4) As a Factor-Focused Graph on Cartesian
System of Coordinates• 5) As a Slope-Origin Graph on Cartesian System
of Coordinates
1) As a Picture
The Marketing Machine
Inputs to The Marketing Machine
Price TagsProduct Quality
Promotion
Place
Outputs from The Marketing Machine
RevenuesQuantity of Goods Sold
ProfitsDemand
Now I am the
manager of this
machine
1) A Picture of A Two-Factor Machine with One Type of Input and One Type of Output
The conversion rate of the machine
Input to The Marketing Machine
Number of ServersNumber of Servers
Number of Servers
Number of Servers
Outputs as Quantity Customers demanded from The Marketing Machine
Quantity of Goods Sold
Now I am the
manager of this
machine
Quantity of Goods Sold Quantity of
Goods Sold
2) As an (Slope-Intercept) Equation
• With Marketing Output being the result of multiplying an Input by a Conversion rate Output = Conversion Factor x Input Factor
• Output, O = (Conversion rate, r) x (Input, I)• where
Conversion rate or efficiency, r, is calculated as r = Output/Input
• Output, O = (Conversion rate, O/I) x (Input, I)
The Equation of a Two-Factor ModelOutput, O = (O/I) x Input, I
• The equation is a Mathematical Identity• It is a Tautology or it is True by definition• It converts One Type of Marketing Input
into One Type of Marketing Output
3) The machine’s equation in the first column
Input Factor: Advertising Expense, A = W/r
Conversion Factor: rate of converting Advertising into Awareness, r=W/A
Output: Customer Awareness level, W = r x A
3) A Recorded Performancethat is fully calibratedFirst Performance
Input Factor: Advertising Expense, A
A1 = $1,500
Conversion Factor: rate of converting Advertising into Awareness, r=W/A
r1 = 600/$1,500= 0.4 pts per dollar
Output: Customer Awareness level, W = r x A
Gained 600 points
Remember the Factors in a Two-Factor Model of a Marketing Machine are
• 1) The Amount of the Input, I• 2) The conversion rate, r• Together they determine the output of the
machine
The Factor-Focused Presentation Using Cartesian System
Input Factor on the X-axis
Conversion Rate Factor on the Y-Axis
0, 0Amount of Input, I
conversion rate, r
o
Observed point (I, r)
Area is the Machine’s Output = I x O
The Factor-Focused Presentation Using Cartesian System
Input Factor on the X-axis
Conversion Rate Factor on the Y-Axis
0, 020 Servers,
150 cups sold per server
X
Observed point (20, 250)
Area is the Observed Output = 150 x 20 =
3,000 cups sold
5) Presentation as a Slope-Origin Graph
X-axis0, 0 X
Y-axis
oObserved point
P = (x, y)Y
Slope of LineY/X
Origin 0, 0
5) Presentation as a Slope-Origin Graph
Input on the X-axis
0, 0Input, I
Y-axis
o
Observed Point, P = (I, O)
Output, O
Slope of Line, r = O/Iis the conversion rate
#5 The Input-Output as A Slope-Origin Equation
Input Factor
Output
0, 020 Servers
3,000 cups sold
X
Observed point P = (20, 3,000)
Conversion rate sloper = 3,000/20 = 150
cups per server
Slope-Point Equation for Two-Factor machine
3,000 cups = r x 20 cups
Two graphical presentations of a single performance can of be confusing!
• The area in a slope-origin presentation calculated by multiplying the Input by the Output to get the area has no interpretive value
• But the line connecting the origin to the observed point is important description
• In the Two-Factor Presentation the area calculated by multiplying the Input, I by the conversion rate, r, is the output and
• the line connecting the origin to the observation has no interpretive value
# 6: The presentation of Inverse Relationships
• The sixth presentation is to deal with inverse relationships such as the Selling price
• The verbal and mathematical conversion of the Price tag, P, into a metric of Value = 1/P
• Provides us with a slope-origin presentation and equation for explaining and predicting how a decrease in price is an increase in value to the customer
6) Presentation of Value as a Slope-Origin Graph
Input on the X-axis
0, 0 Input is Value = 1/Price
Y-axis
o
Observed Point, P = (Value, Sales)
Output is the Sales Volume
Slope of Line, r = Sales/(1/P)is the conversion rate