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Marketing Manager

Marketing Manager. Revenue Management, Newsboy Problem Allocating Funds to Advertising Managing Sales Effort Market Analysis Pricing Decisions (w.r.t. elasticity) Forecasting. Yield Management. “Newsboy Problem”, see p. 604- in W&A and Walton1-6.xls Determine Purchase/Supply of Service

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Marketing Manager

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  1. Marketing Manager • Revenue Management, Newsboy Problem • Allocating Funds to Advertising • Managing Sales Effort • Market Analysis • Pricing Decisions (w.r.t. elasticity) • Forecasting

  2. Yield Management • “Newsboy Problem”, see p. 604- in W&A and Walton1-6.xls • Determine Purchase/Supply of Service • Demand uncertain, Prob. Distrib. • Cost of Overshoot & Undershoot • Seasonal Products (Xmas, fashion, fresh food, travel, airplanes, …)

  3. Allocate Funds to Advertising • How much to spend on each media? • See AdGoals.xls and p. 465- in W&A • Cost known • Estimate response ! • Optimize => most effective allocation w.r.t. response • GP, IP or NLP

  4. Market Analysis • Cluster Analysis page 444- in W&A (using Evolutionary Solver) • Discriminant Analysis p 450- in W&A (using Evolutionary Solver) • Decision Trees page 543 in W&A

  5. Pricing Decisions • Determine Sales Price to max profit, see Pricing1.xls page 351- in chapter 7 in W&A • Need to estimate the price elasticity of the market: • Demand function (line, expon.,…) • Estimate the parameters (statistics) • NLP

  6. Forecasting Models • See chapter 16 in W&A (Pharmaceutical.xls) • Regression • Correlation • Time Series Analysis • Moving Average (MA, WMA) • Expon. Smoothing (ES, DES, Winter) • ForecastPro software

  7. Expon. Smoothing • 1. Single ES: Lt = a*Yt + (1-a)*Lt-1 • 2. Holt: Lt = a*Yt + (1-a)*(Lt-1+Tt-1) Tt = b*(Lt – Lt-1) + (1-b)*Tt-1 3. Winter: Lt = a*(Yt/St-N) + (1-a)*(Lt-1+Tt-1) Tt = b*(Lt – Lt-1) + (1-b)*Tt-1 St = g*(Yt/Lt) + (1-g)*St-N Ft+m = (Lt + m*Tt)*St+m-N

  8. Monitoring the Model • Error Et = Yt – Ft • SUM = sum(Et)/n • MAD = sum(abs(Et))/n • Tracking Signal = SUM/MAD • MAPE = sum(abs(Et)/Yt)/n

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