1. Conceptualizing The Marketing Process as a Machine Converting Marketing Effort into Marketing Goals and Outcomes
Ted Mitchell

2. Almost everything Can be conceptualized as a machine
Machines can characterized as having three constituent parts
1)Inputs, 2) Outputs, and 3) Conversion rates

3. A Basic Machine The Machine’s Conversion Process Input
I am the manager of this machine
Input
Input
Input
The Machine’s Conversion
Process
Outputs
Outputs
Outputs
Outputs
Many Outputs from The Marketing Machine

4. Humans are machines Needing the inputs of food, water, and air,
Converting them
Into the outputs to move about and find more inputs
the conversion process is called metabolism measured in calories per day

5. Tree Leaves are machines
Inputs: carbon dioxide, light and water
Output: Oxygen
Conversion called Photosynthesis measured as the percent of light energy converted into chemical energy

6. Cars are Transportation Machines
Inputs: gasoline, driving time
Outputs: miles of distance covered
Conversion rates include: miles per gallon and miles per hour
I need Inputs

7. Marketing is an Abstract Machine
It needs inputs and has outputs
Inputs: The Four P’s of the marketing mix
Outputs: Profits, Revenues, Demand, Customer Satisfaction
Conversion rates: measured as profits returned per dollar of marketing expense, revenues generated per sales call, units sold per advertising insert, etc.

8. Marketing Machine: 4 P’s as Inputs
Many Inputs to The Marketing Machine
Place
Now I am the manager of this machine
Promotion
Price Tags
Product Quality
The Marketing Machine
Quantity of Goods Sold
Revenues, R
Customer Satisfaction, S
Customer Awareness, W
Gross Profits, G
Marketing Profits, Z
Many Outputs from The Marketing Machine

9. Basic Premise Marketing Managers know how to drive a marketing machine
Marketing Students must learn to drive a marketing machine
Driving a marketing machine can be compared to driving a car

10. Consider the Situation of
Driving a car for a distance and evaluating your car’s performance compared to the performances of other cars
is similar to
driving a marketing machine to produce profitable sales and comparing your marketing machine’s performance to the performances of other marketing machines

11. Both Cars and Marketing Machines
Are very complex machines
To learn Driving
We start with highly simplified Models
Of Cars as Transportation Machines with the desired outcome of a distance travelled
Of Marketing Machines as a business machines with the desired outcome of generating profitable sales

12. A Car is a Transportation Machine
There are many potential goals and objectives that could be assigned to a car as a transportation machine
Its primary and overarching goal is to maximize the distance it travels
The primary output of a transportation machine is measured by the number of miles it travels

13. Marketing as a Business Machine
There are many potential goals and objectives that could be assigned to marketing as a business machine (demand, revenue, profit)
Its primary and overarching goal of the marketing machine is to maximize profitable sales
A basic metric for measuring the output of the marketing machine is the number of things, goods and services it sells
The most popular metric for measuring marketing output is the number of dollars, $, it generates

14. The Performance of a Car
As a transportation machine is measured in terms of three dimensions
1) number of miles travelled (Output)
2) amount of resources the car uses to travel the miles (Inputs)
3) the efficiency of the car at converting the inputted resources into miles driven (Conversion rate) measured as miles per input mpg and mph

15. The Performance of a Marketing Machine
A Marketing machine is measured in terms of three elements
1) number of dollars generated (Output)
2) amount of business resources the machine uses to produce marketing profits (Input)
3) the efficiency of the marketing machine at converting the business resources into dollars of profit (conversion rate) measure as dollars of profit per dollars of expense
Sales Returned on Advertising, Profit Returned on Marketing

16. There are many possible
Metrics for measuring inputs
A transportation machine such as a car has inputs
Amount of fuel, Number of hours it is driven
and converts them into miles of distance travelled
A marketing machine such as a coffee shop has inputs
Number of servers working, Number of hours the shop is open
and converts them into dollars of profits generated

17. Process miles per gallon
A Basic Car
gasoline
gasoline
Strange looking Car
gasoline
gasoline
The Car’s Conversion
Process miles per gallon
Miles Travelled
Miles Travelled
Miles Travelled

18. Simple Models of A Car’s Performance as a Transportation Machine
Input to the Car, I
Gasoline: Gallons, G
Conversion rate, r = O/I
Miles per gallon, r = mpg or M/G
Output from the Car, O = r x I
Distance travelled: Miles, M
A better car and driver will get more miles for the same resources than a poorer car and driver.

19. Simple Models of A Car’s Performance as a Transportation Machine
Inputs to the Car, I
Gasoline: Gallons, G
Driving Time: Hours, H
Conversion rate, r = O/I
Miles per gallon, r = mpg = M/G
Miles per Hour, r = mph = M/H
Output from the Car, O = r x I
Distance travelled: Miles, M
Distance travelled, Miles, M
A better car and driver will get more miles for the same resources than a poorer car and driver.

20. A Basic Marketing Machine
Number of servers hired
Number of servers hired
It looks like A Two-Factor marketing machine
Number of servers hired
Number of servers hired
Marketing Machine
Cups sold per server
Profit from Cups of Coffee sold
Profit from Cups of Coffee sold
Profit from Cups of Coffee sold

21. Simple Models of Marketing Machine Performance
Inputs to the Marketing Machine, I
Number of Servers Hired: S
Conversion rate, r = O/I
Profits Returned per Server, Return on Servers r = Z/S
Output from the Machine, O = r x I
Dollars of Marketing Profits, Z
A better marketing manager and machine will generate more dollars of profits than an average marketing machine and manager

22. Simple Models of Marketing Machine Performance
Inputs to the Marketing Machine, I
Number of Servers Hired: S
Number of Store Hours, H
Conversion rate, r = O/I
Profits Returned per Server, Return on Servers r = Z/S
Profits Returned per Hour, Return on Hours r = Z/H
Output from the Machine, O = r x I
Dollars of Marketing Profits, Z
A better marketing manager and machine will generate more dollars of profits than an average marketing machine and manager

23. Called Two-Factor Machines
The amount of output from the machine, O
Is determined by Two Factors
Factor #1) the amount of Input the machine uses, I
Factor #2) the machine’s conversion rate or the efficiency of the machine’s ability to convert Inputs into Outputs, r = O/I

24. Many Types of Inputs
Business Machines have many types of resources, investments and activities that can be considered Inputs for a marketing machine
The Inputs for Marketing machines have been classified as the 4 P’s of the marketing mix
Selling Price
Product/Service mix
Promotion/Communication mix (advertising, sales people, events)
Time and Place mix (hours of operation, location, furnishings)

25. Any Questions? Is every one comfortable with
1)the concept of the marketing process as a machine which converts the 4 P’s of marketing inputs into outputs of profits, revenues, etc.?
2) A simple machine Machine Converts a single metric as an input into a single metric output!