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Market-Based Management

Market-Based Management. What typifies successful businesses?. Success/Profitability Drivers. 1. Market attractiveness 2. Competitive advantage 3. Market orientation. Profitability. Customer Satisfaction & Retention. Market-Based Strategy & Strategy Implementation. Market Orientation

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Market-Based Management

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  1. Market-Based Management

  2. What typifies successful businesses?

  3. Success/Profitability Drivers 1. Market attractiveness 2. Competitive advantage 3. Market orientation

  4. Profitability Customer Satisfaction & Retention Market-Based Strategy & Strategy Implementation Market Orientation of a Business

  5. Marketing Orientation Requires…… • Market-based organizational structure • Market-oriented employees • Market-oriented culture • Market-based management systems

  6. A Market-Based Management System... Tracks and communicates both internal and external market performance metrics. Measures market-level profitability.

  7. External Performance Metrics • Indicators of future revenues and profits • Customer awareness • Customer interest • Rate of product trial • Degree of customer satisfaction/dissatisfaction • Customer perceptions of quality and value • Market share • Customer retention • Revenue per customer

  8. Internal Performance Metrics • Sales • ROI • Net profits

  9. Market-Level Profitability • How do marketing expenses impact a firm’s profitability? Net Marketing Contribution (NMC)= Market Demand Market Share Price/ Variable Cost/ Unit Unit Marketing Expenses - x x -

  10. Impact of NMC on net profit…. Net Profit= Operating Expenses Overhead Expenses - NMC -

  11. Breakdown of NMC Formula Market x Market x (Price/unit - VC/unit) - Mkt Expenses Demand ShareMkt Demand (in units) x Mkt Share = Sales volume in unitsSales vol. in units x Price/unit = Sales volume in dollarsPrice/unit - VC/unit = Contribution margin (CM)Price/unit x %margin = Contribution margin/unitPrice/unit - contribution margin/unit = Variable cost/unit

  12. Impact of NMC on Marketing Strategy... Market Demand Market Share Price/ Variable Cost/ Unit Unit Marketing Expenses - x x -

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