Weekly Marketing Outputs as Inputs for the Biz-Cafe Machine

Ted Mitchell

Outputs at one level can be Inputs at another level of analysis

• Quantity Demanded is an output resulting from the 4 P’s being inputted

• Quantity Demanded is an Input into the generation of Revenue being Outputted

• Revenue is an Input into the Gross profit being generated as an Output

• Gross profit is an Input Into the Marketing Profit Being Outputted

• Marketing Profit is an Input into the Net Profit being Outputted

Can Outputs be used as Inputs?

• Consider levels of Customer Awareness• Direct Link between Amount of Advertising dollars

Inputted, A, and the Quantity of Units sold, Q• However Customer Awareness, W, is also an output

that is generated by the advertising dollars, A, inputted.

• Awareness levels, W, can be considered a marketing input that generates the number of units sold, Q

• Awareness levels, W, can be treated as either an input or an output depending on the level analysis

Advertising Creates Demandand Awareness

The Coffee Shop

Machine

Advertising

Outputs from The Marketing Machine

RevenuesQuantity of Goods Sold

ProfitsAwareness levels

Now I must consider levels of

customer awareness as

a potential Input

Potential for Two-Step Machines

Advertising

Awareness levels

Demand, Quantity sold

It might be easier to measure Awareness levels, W

• Than to measure and aggregate all the individual impacts of advertising, radio, TV, social media, word of mouth, etc.

• Demand, Q = (sales per awareness point) x percent awareness, W

Can Outputs be used as Inputs?

• Consider levels of Quality of Product Mix• Direct Link between Amount of Product Quality Inputted, U,

and the Quantity of Units sold, Q• However Customer Ratings (stars), is also an output that is

generated by the the quality of the product mix

• Star Rating on Quality, *, can be considered a marketing

input that generates the number of units sold, Q

• Customer Quality Ratings, *, can be treated as either an

input or an output depending on the level of analysis

Product Mix Creates Demandand Customer Quality/Star ratings

The Coffee Shop

Machine

Product Quality

Outputs from The Marketing Machine

RevenuesQuantity of Goods Sold

ProfitsCustomer Ratings *

Now I must consider levels of

customer ratings as a potential

Input

Potential for Two-Step Machines

Product/Service Mix

Customer * ratings

Demand, Quantity sold

Easier to Measure Customer Ratings on Quality Evaluations, *

• Than to measure and aggregate all the individual impacts of quality of coffee, service time, variety of choices, depth of line, etc.??

• Demand, Q = (sales per *) x (number of stars *)

Can Outputs be used as Inputs?

• Consider levels of Price• Direct Link between Price Tag Inputted, P, and the Quantity

of Units sold, Q• However Customer Ratings on the price (stars), is also an

output that is generated by the price tag on the pricing mix

• Star Rating on Price, *, can be considered a marketing

input that generates the number of units sold, Q

• Customer Price Ratings, *, can be treated as either an input

or an output depending on the level of analysis

What choice of ingredients do you have for the Pricing Mix?

The Coffee Shop

Machine

Pricing Ingredients

Outputs from The Marketing Machine

RevenuesQuantity of Goods Sold

ProfitsDemand

Now I must

choose the

pricing mix

Product Mix Creates Demandand Customer Quality/Star ratings

The Coffee Shop

Machine

Price Mix

Outputs from The Marketing Machine

RevenuesQuantity of Goods Sold

Profits Price Tag Ratings *

Now I must consider levels of

customer ratings as a potential

Input

Potential for Two-Step Machines

Pricing Mix

Customer * ratings

Demand, Quantity sold

Easier to Measure Customer Ratings on Price Evaluations, *

• Than to measure and aggregate all the individual impacts of price tags, coupons, deals, using credit, etc.??

• Demand, Q = (sales per *) x (number of stars *)

Other Metrics that are outputs that could be inputs

• Customer Satisfaction • Ambience (What is being bought?)• Service (Capacity)• (Hours) Convenience• That is why it is so important to have a clear

overarching goal for the final output!

If Customer satisfaction rating is an

• Input to a marketing machine • Then what is the output to be measured?

If Customer ambience rating is an

• Input to a marketing machine • Then what is the output to be measured?

If Customer service rating is an

• Input to a marketing machine • Then what is the output to be measured?

If Customer Ratings of Convenience is

• An Input to a marketing machine • Then what is the output to be measured?

Still leaves the Big Question!

• What should be changed to change the rating.• If I find a clear and un-deniable connection

between an increase in customer evaluation ratings, E, and the quantity being sold, Q

• It does not explain which of the 4P’s must be adjusted, by how much it must be adjusted to increase the E rating to achieve the desired sales volume

Any Questions about

• The potential role of the customer’s evaluation/star ratings as Inputs to a Marketing Machine that Generates Outputs

• Awareness• Price• Ambience• Service• Hours