About 3M -

The 3M Company, formerly known as the Minnesota Mining and

Manufacturing Company, is an American multinational conglomerate
corporation based in St. Paul, Minnesota. To achieve high rates of innovation,
3M placed a heavy emphasis on R&D. 3M followed the incremental approach
of innovation and product development. Company allows all staffs to spend
15% of their time to explore new ideas. Major innovations are Post-it note,
Waterproof Sandpaper and Mask Tape. 3M was highly penetrated on a niche for
surgical drapes and prepping in US market. Tools used by 3M to identify
market needs:

• Data from sales representatives

• Focus groups
• Customer evaluations of current products
• Site visits by 3m Scientists and technologists

About Nexcare -
Nexcare is 3M's personal health care brand. The brand competes with Johnson
& Johnson's Band-Aid brand in the adhesive bandage and first aid market. The
brand also sells similar products such as bandages, gauze, surgical tape, cold
sore treatment and liquid bandage products.
The Nexcare brand was created to unify the variety of superior 3M health care
and skin care products in the retail marketplace around the world. It reflects the
3M tradition of creating innovative, quality products that feature ultimate
comfort combined with high quality materials. Our promise to the consumer is
Ultimate Skin Healing Performance for Everyday Life
The brand has used a mascot called "Nexcare Nana", an elderly stunt woman, to
demonstrate the durability of the products. Since 2017, they are an official
supplier of USA Swimming. In 2018, as part of an ad campaign for the brand
called "Tough Love" intended to prompt parents not to be over-cautious about
their children's play, 3M signed American Ninja Warrior contestant Jessie Graf
as a spokeswoman. The brand is also a sponsor of the American Red Cross's
observation of World Donor Day to encourage blood donation.
 ➢ Relative market share -

Purpose - To assess a firm’s or a brand’s success and its position in the market

Relative market share is a marketing metric used to compare the firm’s market
share to the largest competitor in the market. When calculating relative market
share, the market leader’s market share is used as the benchmark.

Relative market share = Brand’s market share

Largest competitor’s market share

➢ Brand Development Index -

Purpose - To understand the relative performance of a brand within specified

groups

BDI or Brand Development Index is a tool used to measure the relationship

between the net sales of a particular brand in a particular market with respect to
its population. The Brand Development Index is an index that relates the
percent of a brand’s sales in a market to the percent of total market. BDI or
brand development index is used to quantify the relative performance of a
particular brand in a defined customer group. It is usually done based on
demographics or psychographics. Brand development index helps a company
identify strong and weak segments for particular brands. BDI can be used to
gauge the presence of brand in a particular market. It goes well with the
aggressive and defensive marketing strategies of a brand.

Brand Development Index- Brand sales to group / Household in group

Total Brand sales / Total Households

➢ Category Development Index -

Purpose - To understand the relative performance of a category within

specified customer group

The category development index (CDI) is an indicator of how well a product or

service category performs in a given market segment as compared to its
performance in the total market as a whole. To determine CDI, a category’s
percentage sale in a specific market is divided by the total population
percentage of that market and then multiplied by 100. A CDI value above 100 is
considered good. The Category Development Index helps marketers identify
strong and weak segments for categories of goods and services. These segments
are mainly formed on the basis of demographic or geographic information. CDI
gives information about the areas which are doing well as compared to others
and thus advertising budget allocation can be done easily to maximize a product
category knowledge and profit.

Category development index = Category sales to group / Household in group

Total category sales / Total household

➢ Market penetration -

Purpose - To measure brand or category popularity

Market penetration for a good or service indicates potential for increased sales.
In other words, the smaller a product's market penetration, the more a company
should invest in its market penetration strategy for marketing that item. For this
reason, high market penetration indicates that a product has become established
and the company is a market leader.

Market penetration - Customers who have purchased a product in the category

Total population

➢ Brand penetration -

Purpose - It is a measure of brand popularity

Brand Penetration is a measure of the popularity of the brand. Brand penetration

is defined as the number of people who buy a particular brand over a specific
period of time divided by the size of the concerned market’s population. Brand
penetration is a measure of adoption of a brand or the number of sales of a
brand as compared to the total theoretical market for that brand. Brand
penetration is a business growth strategy in which several initiatives are being
taken to increase the market share for its brand in a particular market segment.
It is an effort to dig deeper into an existing market place. Thus, brand
penetration is both measurement and projection of how successful a brand has
been or will be against the competition & a critical component in brand
management. Brand Penetration involves assertive sales force or additional
marketing to penetrate deeply into an existing customer base. Increased market
share is most of the times, the objective for using “Brand Penetration” as a
marketing strategy. It is generally the first step towards business growth and
performed by early-age businesses. Importance of Brand Penetration

Brand Penetration - Customers who have purchased the brand

Total population

➢ Trial and Penetration-

Test markets and volume projections enable marketers to forecast sales by

sampling customer intentions through surveys and market studies. By
estimating how many customers will try a new product, and how often they’ll
make repeat purchases, marketers can establish the basis for such projections.

Trial Rate (%) = First-time Triers in Period t (#) Total Population (#)

First-time Triers in Period t (#) = Total Population (#) * Trial Rate (%)

Penetration t (#) = [Penetration in t-1 (#) * Repeat Rate Period t (%)] + First-
time Triers in Period t (#)

Penetration t = the actual number of “customers”, “subscribers,” etc. in a

specific the time period t multiplied by the repeat rate plus the number of first
time triers in time period t

Importance/Purpose- Trial and repeat calculations are often used to anticipate

sales in future periods for new products. The purpose of this approach for
Nexcare is that everyone buying the product will either be a new customer,
whom Nexcare will call a trier. By adding new and repeat customers in any
period, we can establish the penetration of a product. By using test market
results, Nexcare can develop a model for making volume projections and
establishing a target penetration metric.

➢ Repeat Volume
This sales metric helps determine the number of sales that are resulted from
repeat purchases – basically, the number of times the same customer has bought
your products/ services.

The Repeat Purchase Volume is usually investigated by the sales manager, who
will communicate the information to the management teams

Repeat Buyers (#) = Trial Population (#) * Repeat Rate (%)

Repeat Volume (#) = Repeat Buyers (#) * Repeat Unit Volume per Customer
(#) * Repeat Occasions (#)

Importance/Purpose- The Repeat Purchase Volume metric is tightly related to

the customer retention variable – Nexcare must be able to retain its customers
for them to come back and make another purchase.
 ➢ CAGR

Most profit-making companies are expected to grow over time— increasing

sales, raising profits, and increasing shareholder value.

When the industry and markets are growing, a company that does not "grow"
may be at risk of losing out to competition, losing customer confidence, and
losing investor confidence.

The multi-period growth metric Cumulative average growth rate CAGR, for
instance, often appears in the financial sections of company "Annual Reports."
Companies often use CAGR to summarize 5- or 10-year growth rates of sales
revenues and profit.

The CAGR is a constant year-on-year growth rate applied over a period of time.
Given starting and ending values, and the length of the period involved, it can
be calculated as follows:

CAGR (%) = {[Ending Value ($,#)/Starting Value ($,#)] ^ 1/Number of Periods

(#)} – 1

Importance/Purpose-

It would help in evaluating how different investments have performed over time in
Nexcare. The marketing strategist can compare the CAGR to evaluate how well one
stock performed against other stocks in a peer group or against a market index. The
CAGR can also be used to compare the historical returns of stocks to bonds or a
savings account.

➢ Brand Asset Valuator (Young & Rubicam)

Young & Rubicam, a marketing communications agency, has developed the
Brand Asset Valuator, a tool to diagnose the power and value of a brand. In
using it, the agency surveys consumers’ perspectives along four dimensions:

■ Differentiation: The defining characteristics of the brand and its

distinctiveness relative to competitors.

■ Relevance: The appropriateness and connection of the brand to a given

consumer.

■ Esteem: Consumers’ respect for and attraction to the brand.

■ Knowledge: Consumers’ awareness of the brand and understanding of what it

represents.
Importance/Purpose-

BAV is important for not only increase market share along with increasing its
valuation in the marketplace.

▪ Increases market share: Good brand equity results in loyal customers

who prefer one brand over the other and increases its market share.
▪ Price premium: Positive brand equity can charge more for its product
than the actual market price.
▪ Asset: Brand equity is an intangible asset of an organization and like any
other asset; this too can be licensed, leased or sold to others.

➢ Recency and Retention

Purpose: To monitor firm performance in attracting and retaining customers.

Only recently have most marketers worried about developing metrics that focus
on individual customers. In order to begin to think about managing individual
customer relationships, the firm must first be able to count its customers.
Although consistency in counting customers is probably more important than
formulating a precise definition, a definition is needed nonetheless. In
particular, we think the definition of and the counting of customers will be
different in contractual versus non-contractual Situations.

Recency: The length of time since a customer’s last purchase.

Retention Rate: The ratio of the number of customers retained to the number

at risk.

➢ Customer profit

Purpose: To identify the profitability of individual customers.

Companies commonly look at their performance in aggregate. A common

phrase within a company is something like: “We had a good year, and the
business units delivered $400,000 in profits.” When customers are considered, it
is often using an average such as “We made a profit of $2.50 per customer.”
Although these can be useful metrics, they sometimes disguise an important fact
that not all customers are equal and, worse yet, some are unprofitable.

Customer Profitability: The difference between the revenues earned from and
the costs associated with the customer relationship during a specified period.

➢ Customer lifetimevalue

(CP) is the difference between the revenues and the costs associated with the
customerrelationship during a specified period. The central difference between
CP and customer lifetime value (CLV) is that CP measures the past and CLV
looks forward. As such, CLV can be more useful in shaping managers’
decisions but is much more difficult toquantify. Quantifying CP is a matter of
carefully reporting and summarizing the results of past activity, whereas
quantifying CLV involves forecasting future activity.

Customer Lifetime Value ($) = Margin ($) * Retention Rate (%)

1 + Discount Rate (%) – Retention Rate (%)

➢ Prospect lifetime value

Purpose: To account for the lifetime value of a newly acquired customer

(CLV) when making prospecting decisions.

One of the major uses of CLV is to inform prospecting decisions. A prospect is

someone whom the firm will spend money on in an attempt to acquire her or
him as a customer. The acquisition spending must be compared not just to the
contribution from the immediate sales it generates but also to the future cash
flows expected from the newly acquired customer relationship (the CLV). Only
with a full accounting of the value of the newly acquired customer relationship
will the firm be able to make an informed, economic prospecting decision.
Prospect Lifetime Value ($) = Acquisition Rate (%) * [Initial Margin ($) +
CLV ($)]

➢ Percentage sales on deal and pass through method

Purpose: To measure whether trade promotions are generating consumer

promotions.

Pass-Through: The percentage of the value of manufacturer promotions paid to

distributors and retailers that is reflected in discounts provided by the trade to
their own customers.“Middlemen” are a part of the channel structure in many
industries. Companies may face one, two, three, or even four levels of
“resellers” before their product reaches the ultimate consumer. For example, a
beer manufacturer may sell to an exporter, who sells to an importer, who sells to
a local distributor, who sells to a retail store. If each channel adds its own
margin, without regard for how others are pricing, the resulting price can be
higher than a marketer would like. This sequential application of individual
margins has been referred to as “double marginalization.”

➢ Price waterfall method

Purpose: To assess the actual price paid for a product, in comparison with the
list price.

In pricing, the bad news is that marketers can find it difficult to determine the
right list price for a product. The good news is that few customers will actually
pay that price anyway. Indeed, a product’s net price—the price actually paid by
customers—often falls between 53% and 94% of its base price.

Net Price ($) = List Price ($) – [Discount A ($) * Proportion of Purchases on
which Discount A is Taken (%)] – [Discount B ($) * Proportion of
Purchases on which Discount B is Taken (%)] and so on . .

Waterfall (%) = Net Price per Unit ($)/List Price per Unit ($)