Marketing Analytics

Unit-1
Overview of Marketing Analytics

By: Deependra Singh, Assistant Professor, School of Management, The NorthCap University, Gurugram
 What is Marketing

• Marketing is defined based on two perspectives: i) Marketing as social process, and

ii) Marketing as organisational function.
• Marketing is a societal process by which individuals and groups obtain what they
need and want through creating, offering, and freely exchanging products and services of
value with others (Kotler et al., 2013).
• American Marketing Association (AMA) define marketing as an organisational
function and a set of processes for creating, communicating, and delivering value to
customers and for managing customer relationships in ways that benefit the organisation
and its stakeholders.
 What is Value
Value is :
• A fair return or equivalent in goods, services or money for something
• Relative worth, utility or importance: precise significance
• Something intrinsically desirable

Value=Benefits-Costs
 Conditions for an fair exchange of Value
• There must be at least two parties.
• Each party has something that might be of value to the other party.
• Each party is capable of communication and delivery.
• Each party is free to accept or reject the exchange offer.
• Each party believes it is appropriate or desirable to deal with the other party.
 Strategic Marketing Process

Business
Marketing
Analysis
Strategy
Implementation
Mission (Customer, (Segmentation, Marketing Mix and Evaluation
Company, Targeting,
Competitor etc.) Positioning)
 Challenges in Marketing
• Knowing customer churn
• Knowing how many market segmentation exists
• Allocating marketing budget
• Impact of a marketing campaign
• Knowing loyal customers
• Choosing, directing and managing marketing strategies
 Introduction to Marketing Analytics
• Marketing Analytics is the process of identifying metrices that are valid
indicators of marketing’s performance in pursuit of its objectives,
tracking those metrics over time and using the results to improve how
marketing does it work.
• It uses data, statistics, mathematics, and technology to solve marketing
business problems.
Components of Marketing Analytics

People Steps Tools & Data Input

Technology and Output
 Marketing Analytics Process

Analyse the Take improvement

Identify metrics
metrics action

Source: Rackley (2015)

 The 7-Step Marketing Analytics Process

• Step 1: Business Problem Understanding

• Step 2: Data understanding and collection
• Step 3: Data preparation and feature selection
• Step 4: Modelling development
• Step 5: Model evaluation and interpretation
• Step 6: Model and result communication
• Step 7: Model deployment
Source: Hair et al. (2022)
 Uses of Marketing Analytics
• Getting information related to new marketing trends
• Identifying successful programmes and evaluating their reasons of success
• Analysing trends overtime
• Optimizing the marketing efforts
• Targeting the potential customers
• Completely analysing ROI of marketing programmes
• Forecasting the outcome
• Providing better experience to the customers
 Trends in marketing analytics
• The Rise of Real-time marketing analytics
• Emphasis on data security and regulatory compliance
• Accelerated adoption of predictive analytics
• Rise of contextual customer experiences
• Content creation is empowered by AI and machine
• learning Digital Marketing
 Challenges for Marketing Analytics
• High amount of data generation (Data boom)
• Lack of understanding how to use data
• Lack of important data
• The missing data
• Fast-changing trends
• Trustworthiness of the data
• Lack of transparency
 Gap Analysis

• Gap analysis is crucial for examining product-market fit.

• Gap analysis compares what the customer needs and to what extent these needs are satisfied,

and develops analytical modeling to identify attributes found to be statistically significant in terms of

importance.
• Gap analysis assess the gap between the importance levels and the
satisfaction levels within each attribute.
• If the manager is looking into a new product where there are no competing
products in the market, the satisfaction level would not be available. However, the
importance levels still need to be determined which would help to define the product
design.
• So, gap analysis is a crucial concept to address the needs and preferences of
the market.
 Steps in Gap Analysis

Step 1 • Identifying target audience

Step 2 • In-depth interview/meeting with experts of the industry

Step 3 • Focus group discussions

Step 4 • Conduct representative empirical survey

 Customer Life-time Value (CLV)
• CLV/LTVC is a great way to identify how much value your customer
will bring to you over his/her lifetime.
• Customer lifetime value (CLV or often CLTV), lifetime customer value
(LCV), or life-time value (LTV) is a prediction of the net profit attributed to
the entire future relationship with a customer.
• CLV helps to determine the right amount of money to invest in
acquiring a customer and analyze customer acquisition strategy and solidify
your marketing budget.
Approaches to CLV
 Calculating CLV
• Step 1
Lets take an example
You are a coffee shop owner and have 100 customers visit you every week.
Most customers are regulars and visit you 5 times a week. On every visit,
they spend about $3.
• Step 2
Let’s make the following assumptions:
✓
On an average, these individuals will remain coffee consumers for 12 years.
✓
80% of the customers will repurchase from you in the following year.
✓
You make 20% profit margin on every customer visit.
✓
Rate of Inflation is about 10%.
• Step 3
Average revenue per customer over the 12 years =52 weeks * 5 visits/wk * $ 3/ visit
* 12 years= $9360
Average profit per customer over the 12 years=20% profit margin * Avg. Revenue
per customer/yr = $1872
LTVC = Avg. profit/customer * (80% retention rate) /(1+10%inflation- 80%retention rate)
= 1872*0.8/[(1+0.1)-0.8]
= $4992
• As long as the LTVC > Customer cost of acquisition, your marketing
expense in acquiring the customer was well spent.
• All your customers are not the same! Repeat the exercise for different
groups/segments of your customers to get even better results from LTVC.
• For increasing LTVC, Marketers should encourage your customers to
spend more and keep your customers coming back more often.
 Types of Marketing Analytics

Descriptive analytics Predictive analytics Prescriptive Analytics

• Descriptive analytics • Predictive analytics seeks • Prescriptive analytics uses

summarizes data into to predict the future by optimization to identify the best
meaningful charts and examining historical data, alternatives to minimize or
reports, for example, detecting patterns or maximize some objective.
relationships in these data,
about budgets, sales,
and then extrapolating
revenues, or cost.
these relationships
forward in time.
 References
• Evans, J. (2017). Business Analytics: Methods, Models, and Decisions.
Pearson Education
• Hair Jr., J. F., Harrison, D. E., Ajjan, H. (2022). Essentials of Marketing
Analytics. McGraw Hill LLC.
• Kotler, P. (2013). Marketing Management. Pearson Education.
• Rackley, J. (2015). Marketing Analytics Roadmap: Methods, Matrices and
Tools. Apress.