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Simple Two-Factor Models for Place (Hours) and Promotion (Number of Servers) in Biz-Cafe

Simple Two-Factor Models for Place (Hours) and Promotion (Number of Servers) in Biz-Cafe. Ted Mitchell. Place in the Four P’s of Marketing. Place Variables are any inputs to the Marketing Machine that generate time and place utilities for the customer The classics are: Location

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Simple Two-Factor Models for Place (Hours) and Promotion (Number of Servers) in Biz-Cafe

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  1. Simple Two-Factor Modelsfor Place (Hours) and Promotion (Number of Servers) in Biz-Cafe Ted Mitchell

  2. Place in the Four P’s of Marketing • Place Variables are any inputs to the Marketing Machine that generate time and place utilities for the customer • The classics are: • Location • Delivery, Logistics • Channels and Supply Chain • Hours of Operation

  3. The Most Obvious Place Component in Biz-Café is • Hours of Operation, H, as an input • Leading to Three Outputs • 1) Quantity Sold, Q, as an Output • 2) Sales Revenues, R, as an Output • 3) Gross Profit, G, as an Output

  4. Hours Open as Input Machine Efficiency = Output/Input Marketing Machine Converter $$$$$$$ Output $$$$$

  5. Increased Hours, H, lead to • More Cups sold, Q • Cups sold, Q = Cups per Hour x Hours openQ = (Q/H ) x H • Q = cups per hour x H • More Revenue, R • Revenue, R = Dollars (Revenue) per hour x Hours • R = (R/H) x H • R = dollars per hour x H • More Gross Profit, G • Gross Profit, G = Dollars (Gross) per hour x (Hours, H) • G = G/H x Hours, H • G = dollars per hour x H

  6. Simple Two-Factor Modelfor Promotion in Biz-Cafe Ted Mitchell

  7. Promotion in the Four P’s of Marketing • Promotion Variables are any inputs to the Marketing Machine that are responsible for communicating to the customer • The classics are: • Advertising • Sales Force • Consumer Sales Promotions • Distributor Sales Promotions

  8. Promotion as Input Machine Efficiency = Output/Input Marketing Machine Converter $$$$$$$ Output $$$$$

  9. The Most Obvious in Biz-Cafe • Print Advertising, Ad, as input • Radio Advertising, O, as input • Awareness as an Output

  10. Sales Force as Input Machine Efficiency = Output/Input Marketing Machine Converter $$$$$$$ Output $$$$$

  11. Less Obvious Input • Number of Servers, S, as an input • 1) Cups Sold, Q, as an OutputCups sold, Q = (cups per server) x Servers, S • 2) Sales Revenues, R, as an OutputDollars of Revenue, R = (sales per server) x servers, S • 3) Gross Profit, G, as an OutputDollars of gross profit, G = (dollars profit per server) x servers, S

  12. Both the Inputs • 1) The number of hours the store is open, H • 2) The number of servers hired, S • Dealing with two different two factor models of the marketing machine as if they were holding one or the other constant is a little awkward • We would like these two variables to be in the same analysis and the same time

  13. Expand the Two-Factor Model • To deal with Three Factors • For example: • Quantity of cups sold, Q = (Cups sold per server) x (servers working per hour) x number of hours

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