1. SIX Ways to Conceptualize and Present Marketing As a Machine Ted Mitchell

2. 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

3. 1) As a Picture The Marketing Machine Inputs to The Marketing Machine Price Tags Product Quality Promotion Place Outputs from The Marketing Machine Revenues Quantity of Goods Sold Profits Demand Now I am the manager of this machine

4. 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 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

5. 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)

6. The Equation of a Two-Factor Model Output, 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

7. #3 The Tabular Format for Presentation Ted Mitchell

8. 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

9. 3) A Recorded Performance that is fully calibrated First 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

10. #4 Presentation as a Factor Focused graph in a Cartesian System

11. 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

12. The Factor-Focused Presentation Using Cartesian System Input Factor on the X-axis Conversion Rate Factor on the Y-Axis 0, 0 Amount of Input, I conversion rate, r o Observed point (I, r) Area is the Machine’s Output = I x O

13. The Factor-Focused Presentation Using Cartesian System Input Factor on the X-axis Conversion Rate Factor on the Y-Axis 0, 0 20 Servers, 150 cups sold per server X Observed point (20, 250) Area is the Observed Output = 150 x 20 = 3,000 cups sold Area is the Observed Output = 150 x 20 = 3,000 cups sold

14. #5 Presentation as a Slope-Origin Graph in a Cartesian System of Coordinates Ted Mitchell

15. 5) Presentation as a Slope-Origin Graph X-axis 0, 0 X Y-axis o Observed point P = (x, y) Y Slope of Line Y/X Slope of Line Y/X Origin 0, 0

16. 5) Presentation as a Slope-Origin Graph Input on the X- axis 0, 0 Input, I Y-axis o Observed Point, P = (I, O) Output, O Slope of Line, r = O/I is the conversion rate

17. #5 The Input-Output as A Slope-Origin Equation Input Factor Output 0, 0 20 Servers 3,000 cups sold X Observed point P = (20, 3,000) Conversion rate slope r = 3,000/20 = 150 cups per server Conversion rate slope r = 3,000/20 = 150 cups per server Slope-Point Equation for Two-Factor machine 3,000 cups = r x 20 cups Slope-Point Equation for Two-Factor machine 3,000 cups = r x 20 cups

18. 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

19. # 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

20. 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

21. Any Questions? What are the Five Basic Ways of presenting a single performance of a Two-Factor marketing Machine? A single calibrated performance is recorded with an Output, an Input Factor and a conversion rate, r = O/I Each Presentation has advantages and disadvantages