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Definition
It is only because of marketing that a business can actually proceed with its main
operations i.e. lead generations, conversions, sales and profits.
The answer to the question of what is marketing analytics is simply the measuring,
managing and analyzing the marketing performance. The concept of marketing
analytics facilitates not only to improve the effectiveness but also allows the
marketers to take a successful shot at optimizing the return on investment.
It is shocking to see that most of the organizations tend to ignore the concept and
importance of marketing analytics. It is surely a great way to obtain a picture of as
to how the marketing efforts are deriving revenue.
The importance of marketing analytics is not only depicted from the fact that it
provides a clear picture about the marketing efforts, but also from the fact that it
also allows you to monitor campaigns that can easily facilitate the saving of
resources.
(i) Understanding the customer and market trends is really important in today’s
time. Marketing analytics easily allows understanding of big picture trends that too
by focusing on every single detail.
(ii) With the aid of providing you with a clear picture of the efforts and the returns,
it allows you to easily depict that which programs worked and also depicts the
reasons why it failed or even succeeded.
(iii) The market study is also an important part of the business. Marketing analytics
allow monitoring of trends over time.
(iv) Marketing analytics allows understanding the return on investment by
providing a clear picture of the working and the reports of each programme.
(v) By easily helping to study the market trends, marketing analytics facilitates to
proficiently forecast future results.
Turning to search marketing, keywords also allow understanding what even the
mindset of the customers is. Analytics help you find the keywords that can easily
be used to optimize business processes by –
(i) Customer surveys — One can easily infer the relative priorities of competing
interests by the examination of keyword frequency data
(ii) Industry trends — It becomes really easy to understand and predict trends in
customer behavior
(iii) Product design — It is vital to understand what are the solutions that a
customer is looking for. Keywords can easily facilitate the understanding of what
the customer actually wants
The main questions that strike the mind of the marketers after evaluating and
understanding the importance of marketing analytics, is where to start and how to
work proficiently with marketing analytics tools.
With the easy availability of search engines, search engine optimization, paid
search marketing it has become easy to implement the concept of marketing
analytics.
There are many Marketing Analytics tools that are available for the marketers to
easily use for their aid. Below are some of the most famous tools that can be
effectively used for the concept of marketing analytics-
1.Event-based tools
This is one of the effective tools of marketing, also known as click analysis.
This tool mainly focuses on the things that matter the most to the business, like
shopping cart matters to an e-commerce website. This tool helps to track the
actions of individual users within an app, website.
The main and best tools of marketing analytics mostly have broad-ranging
capabilities.
The marketers can also integrate more offers with the aid of tracking more devices
and channels. Some of the tools that facilitate the collection of marketing data are
website analytics tools, app analytics tools, marketing automation, and data
platforms.Some of the best event based marketing analytics tools are-
1. MixPane
What do you expect from a top quality marketing analytics tool? It should focus
primarily on tracking different events related to you on your website and mobile
app, yes you heard it right, it can very well track the events on the mobile app as
well.
You just feed in the details about what you want to track and MixPanel will handle
the rest on its own. Though MixPanel was originally created for Product managers,
it has so much for marketers as well. The base package starts from $99 per month
and you can enhance it accordingly.
2. Heap Analytics
This is a newcomer in the field of marketing analytics but you won’t be able to
complain about its performance. The working of this platform is much similar to
that of MixPanel and can automatically track actions on your website and your
app.You can manually set the preference and Heap Analytics will accordingly
manage the rest. Funnels can also be created by using Heap Analytics. You can
further view the analysis report and work accordingly on your website or app and
enhance your marketing campaign.
3. Oribi
When it comes to simplicity Oribi excels its competitors and provide its users with
the easy user-interface. The main focus of this tool is on faster data-driven
decisions.One of the best features of this tool is that it will automatically track the
data on your website and there is no need to manusally set everything. Even a
small change in your website will be tracked by Oribi and it will highlight it in the
dashboard. You can choose the subscription plan of $79 per month or $799 per
year.
4. Kiss Metrics
Kiss Metrics ranks among the toppers in the list of marketing analytics tools and it
deserves that as well. It has been designed to track the activity on your website and
you can further use its analysis report to enhance the user’s engagement and
improve your business.
It will also let you know about what impact will your changes in the website will
cause hence you can tweak that at the same time to enhance the results.
2.Testing Tools
This tool allows the marketers to test multiple variants of a feature or a message.
These tools even facilitate contact with users using channels like emails, push
notifications, in-app notifications, and even web-hook. Some of the AB testing
tools for you here are-
1. Optimizely
It is best used to test different variations of any page or any element related to your
website. You can further decide which variation is going to suit your requirement
depending upon the analysis report of optimizely.
You can lead experiments on your website and test which is the best variation for
your marketing goals.
2. VWO
Visual Website Optimizer or VWO works in a similar fashion as Optimizely. It can
also provide you with the best results about different variations on your website
and you can then analyze which variation suits your marketing goals.
One of the best features of this tool is that it offers a visual editor hence you can
create visual changes and test them accordingly to pick the best one for you.
Such tools allow outlining that how much time the user spends at looking at the
screen and what he actually looks on to.
The basic aid that helps in the collection of the data is cursor movement as a proxy.
These tools also help the users to segment the data and find that how down the user
actually scrolled too.
Marketers can use the data to proficiently rearrange their interfaces and
successfully bring a positive change in their services. Best Marketing Analytics
tools in this category are-
1. Hotjar
Hotjar offers many analytics features that you can use to enhance your overall
marketing campaign and eventually improve your business. The main features of it
are – Feedback polls, conversion funnel analysis, surveys and registration form
analysis.
It provides you with a heat map which can be used to track how visitors are
interacting with your website and what actions do they take on it.
2. Crazyegg
Just like Hotjar, crazyegg also offers a heatmap through which you can understand
the performance of your website. It will let you know what actions people are
taking on your website, how they scroll, where do they click and so on.
Their analysis report is so rich in terms of information that you can optimize your
website in the best ways to enhance the user’s engagement and get better
conversions as well.
Digital Marketing Analytics
These tools collect data from the aid of marketing and advertising channels. These
tools can be easily grouped into five categories
Social media platforms offer free analytics that allows marketers to understand
how users react to their profile and online appearance.
(ii) MozPro
(iii) SEMrush
1. Cyfe
You can view the data from different marketing tools on a single dashboard of
Cyfe. Tracking data from different social media platform is a cakewalk while you
are using Cyfe. It is a great tool for marketers who want to see different variations
of results on a single dashboard.
2. Klipfoli
Here you can build your own dashboard and it will provide you with all the
marketing analysis data that you need. You can manually put the data from
different tools on its dashboard and it will show you accordingly.
Some of the major tips that should be the point of focus when using marketing
analytics tools are listed below-
(iii) Implementing natural search — The habit of inculcating the best keywords
into your website increased the chances of clicks more than even a paid
advertisement. This surely facilitates the generating of new content.
(v) Using paid search marketing — Taking the aid of paid search marketing,
lowers the bid and also improves the ad position. Having said that, it does not
mean that you should only rely on paid marketing but yes you can’t choose to
ignore its importance. This can easily be one of the proficient marketing analytics
examples.
(vi) Messing with the data — It should always be kept in view that the reports
and information which is gathered from the search marketing provides aids in all
aspects of the business and even the offline revenue and primarily the product
development. You should always provide proper attention to the implementation of
search efforts.
It is only the strength of this campaign that facilitates and portrays that how well
the ranking is in the search engine. The fact that your site would never be seen by
prospective clients without a decent ranking should always be kept in context.
It offers expert analysis on to the site and obviously the performance of the efforts
that the marketers put in. Let us have a look on some of the marketing analytics
examples to understand the concept in more comprehensive manner-
This campaign is one of the best Marketing Analytics Examples that showcase
how analytical data helped Amazon gauge how customers purchase groceries. It
also updated the company about how suppliers would do their interaction with the
grocer.
Netflix used the analytics data to find out specific inclinations of their audiences.
Accordingly, company sent emails to their subscribers about the programs that
would be best fit for them.
Granular Segmentation
Marketing departments depend on the right segmenting to deliver impactful messaging and
relevant communications to leads and customers. After all, one email that targets males aged 20–
55 probably won’t incite as much engagement compared to a message targeting a smaller age
bracket, an audience with a shared interest or audience with similar spending activity.
But there’s a reason many marketing analytics teams don’t go as granular as they’d like in their
communications. It’s because they don’t have access to marketing analytics dashboards that
instantly group customers based on different metrics.
For example, a marketing assistant could search ThoughtSpot for customers that have purchased
six or more times this year in the Southwest region to gather contacts for an upcoming joint
promotion with a business chain in the area.
Tailored Messaging
Effective marketing has always been about persuasion. But instead of trying to persuade the
masses, marketing today is about delivering personalized messaging and offers to both customers
and potential customers alike.
Send something irrelevant to a lead and they’ll disregard the message and probably your business
along with it. Do the same thing to an active guest and they’ll think you’re not paying close
enough attention, damaging your rapport.
Marketing analytics tools can also play an integral role in the timing of communications and the
mode through which they’re sent. This gives businesses the best chance of reaching customers in
a good state of mind.
The more a marketing department interacts with leads and customers, the better understanding
they have of their audience base. This is especially helpful in our digital age because, just like
the preference of communication medium, consumers tend to spend time in different places.
Tracking customer behavior, including engagement and buying activity across channels, gives
marketing a comprehensive understanding of how to interact with a customer. This includes what
kinds of communications they respond best and worst toward, as well as strategies that can
increase their lifetime value.
Leveraging a marketing data analytics tool offers knowledge at scale for an entire marketing
department and beyond. Platforms like ThoughtSpot allow marketing teams to better segment
audiences, deliver tailored messaging and gain a complete view of customers across channels.
For solving any marketing problem, adequate, reliable, relevant and timely data are
necessary. Major part of research budget, efforts, and time is occupied in collecting
data. Data, being raw information, cannot provide clear indication or implication.
They are to analyzed and interpreted to get meaningful implication. Only
information developed from data can be used for taking decisions or formulating
strategies. Marketing research uses two types of data – primary data and secondary
data. Both data have their uses and limitations. Also, different methods are used for
collecting both types of data.
Primary Data:
Primary data are those details, which are directly and completely related with the
problem on hand. Primary data are original information and are treated as the basic
input for analyzing and solving any problem related to marketing activities.
ADVERTISEMENTS:
They are deliberately, rigorously, and consciously collected from the relevant
respondents to generate original information that can be used directly to solve the
marketing problem. They are collected as per company’s plan. For example, if a
company wants to solve the problem related to distribution activities, whatever
data collected in light of this problem can be referred as primary data.
Primary data are collected from relevant respondents. They are not readily
available, their collection and analysis need rigorous efforts. Success of marketing
research depends upon quality and quantity of primary data. In fact, no research
project can be completed without primary data.
Primary data constitute the basis information to solve the marketing problems.
ADVERTISEMENTS:
8. They are required be furnished, processed, or analyzed before they are used.
ADVERTISEMENTS:
Primary data are the basic input in solving problem. They are expensive, time
consuming, and they need more efforts. Sources of primary data depend upon type
of problem. They are collected by using specific methods and tools.
Most commonly used sources of primary data may include:
1. Consumers
2. Retailers
3. Wholesalers
4. Dealers/agents
5. Suppliers
6. Employees of company
7. Salesmen
8. Trade associations
9. Professional experts
11. Competitors
2. External Sources
Internal Sources:
i. Sales and purchase records
External Sources:
i. Government publication and reports
1. TECHNOLOGY
With the rapid rise of e-commerce, the mobile Internet, and Web penetration in
emerging markets, the Boston Consulting
Group believes brand marketers must enhance their “digital balance sheets.”
Massive amounts of information and data about almost everything are now
available to consumers and marketers.
2. GLOBALIZATION
The world has become a smaller place. New transportation, shipping, and
communication technologies have made it easier for
us to know the rest of the world, to travel, to buy and sell anywhere.
By 2025, annual consumption in emerging markets will total $30 trillion and
contribute more than 70 percent of global GDP growth.
Demographic trends favor developing markets such as India, Pakistan, and Egypt,
with populations whose median age is below 25.
In terms of growth of the middle class, defined as earning more than $3,000 per
year, the Philippines, China, and Peru are the three fastest-growing
countries.
them to another.
3. SOCIAL RESPONSIBILITY
Poverty, pollution, water shortages, climate change, wars, and wealth
concentration demand our attention.
The private sector is taking some responsibility for improving living conditions,
and firms all over the world have elevated the role ofcorporate social
responsibility.
The organization’s task is to determine the needs, wants, and interests of target
markets and satisfy them more effectively and efficiently than competitors, while
preserving or enhancing consumers’ and society’s long-term well-being.
Market Insight
One of the first things an investor considers before investing in your business is
how big is your market. Your total addressable market (TAM) is how big your
business could theoretically become if it were to own 100% of its market — if
every possible customer was a customer of your company and you had no
competition. This is an important consideration because the larger the market the
larger the business can become!
Obviously, few businesses will ever come close to 100% market share and the
TAM is a yardstick used to compare different businesses instead of a measure of a
specific business. If you are considering investing in a business with a TAM of
$10M and another with a TAM of $100M, the latter company has more potential
because its market is larger. If you assume a successful business might own 10% of
their TAM (much more realistic than 100%) then it becomes easier to compare
these businesses since $1M < $10M.
But how do you figure out your TAM? What if you are a new business who does
not yet understand fully who your customers will be? What if you are in a new
market that is growing and changing every day?
we’ll cover techniques and considerations for sizing your TAM. Specifically:
As you’ll see, market sizing requires a significant amount of creativity on your part
since you will need to make many assumptions to create an estimate. We will get
started with Top Down market sizing next.
Our first approach to estimating your total addressable market (TAM) is a Top-
Down analysis. As the name implies, in a Top-Down analysis we will start with the
largest possible size estimate and reduce it using information and assumptions
about our business and market.
There are many publicly available sources of market data, especially here in the
US where the new Data.Gov initiative makes a lot of raw data about the size of
commerce available. You can find out everything from national trade data to how
much parents spend on their children. The Bureau of Labor Statistics publishes an
annual Consumer Expenditure Survey (CES) which tells us that the average
household spends $751 on fruits and vegetables every year, for a total of $94.4B
spend every year in the US.
Not everyone who buys fruits and vegetables will want them on demand or be
reachable with deliveries! In fact, it only makes sense to offer Tomatology in large
cities. About 30% of the population (according to the CES) lives in large cities so
we’ll assume only 30% of those sales can be served by Tomatology. That reduces
our estimate to $28.3B.
Also, not all of the fruits and vegetables that are purchased are tomatoes!
According to the USDA, only 5% are tomatoes (which are legally classified as a
vegetable in the US). That reduces our estimate to $1.4B.
Of course, not everyone will order their tomatoes on demand! Supermarkets will
always have some market share, so we will assume that 20% of households would
order their tomatoes on demand if offered. That brings our estimate to $140M.
Finally, our business model assumes consumers will buy more tomatoes when they
are delivered straight to your door! Our expectation is to grow tomato consumption
by 10%. This increases our estimate to $154M.
A shorter version of our Top-Down analysis might look like the following:
For a real top-down analysis you would continue this process with more rigorous
assumptions, getting to the most refined market size you can. Obviously, if you
miss any important assumptions you will over-estimate your TAM using this
technique. That is why, next, we’ll discuss Bottom-Up estimation!
(Note: Tomatology is a very bad idea. However, if you start that business based on
this idea I expect you to give me credit.)
While Top-Down market sizing is usually easy to do, it can be misleading. Can
you really reach that entire market? How much would it cost you even if you
could? The good news is that Bottom-Up market sizing gives us a clear picture of
those factors.
To do a bottom-up analysis you start with the basic units of your business (your
product, price, customers) and estimate how large you can scale those units.
A shorter version of our Bottom-Up analysis might look like the following:
This is, like our Top-Down model, simplistic and a real Bottom-Up model would
include many more steps to get to a better estimate.
Note that our Bottom-Up model ignored some important factors like how long it
would take us to reach consumers, churn rates of customers and whether there is
competition. Remember, we are trying to size our Total Addressable Market which
is only our market potential. The market reality in your business plan will need to
address these other concerns and determine what percentage of your TAM is really
achievable.
So now that we have Top-Down and Bottom-Up market sizing experience, which
do we choose when sizing a market? Tune in tomorrow, the answer may surprise
you!
Over the past few days we’ve reviewed Top-Down and Bottom-Up approaches to
sizing a market. They both have advantages and disadvantages based on the kinds
of assumptions you make as part of the approach.
Both. On their own, neither Top-Down or Bottom-Up analysis give you a complete
picture. Top-Down hides the difficulties in reaching various segments of customers
while Bottom-up assumes there will always be more customers in the segments
you know how to reach.
You have a good estimate of your market size when both your Top-Down and
Bottom-Up models agree with each other. It may require updating your
assumptions to get to such agreement, but those updates should be positive
improvements that make the final estimate more accurate. It’s the equivalent of
comparing your homework with a friend’s to see if you got the same answers.
Luckily our Top-Down and Bottom-Up models for Tomatology, our hypothetical
leader in on-demand tomato delivery, roughly agree at a market size around
$150M. If you aren’t so lucky, reexamine your assumptions and see where the gap
might exist. If you cannot make the two estimates agree there might be something
fundamentally broken about your market or your business.
We can get even more confident in our estimates using comparables. Comparables
are companies that are similar to yours, either in business model, product types or
market position. A good comparable is a company that is already at scale and
serving the same customers that you will serve (both now and in the future).
Instacart
Amazon Fresh
Boxed
Postmates
By looking at the size of these comparable businesses you can determine if your
estimate is realistic. If your market estimate is $1B but no existing comparable
does more than $10M in revenue then you are probably overestimating the
potential (or you have a clever way to grow the market!). If your estimate is
$100M and some of your comparables do $200M in business then you might be a
little too small. Use it as a third check of your estimate!
Next, we’ll look at how to size new markets, who don’t have existing customers or
any available comparables. It will require us to get even more creative!
While market sizing can seem straightforward after everything we’ve discussed,
the more interesting markets to size are the ones that don’t yet exist. These are new
markets, created by changing consumer needs, technological innovations or shifts
in the availability of resources. New markets lack all of the inputs we used for our
previous sizing exercises!
Have no fear, you can still estimate the size of a new market although it will be
less accurate. To do so you need to make more aggressive assumptions.
Let us assume Tomatology (our hypothetical on-demand tomato delivery
company) runs into hard times as consumers don’t buy tomatoes on demand as
much as our estimates would have predicted. So, we come up with a new product
called a Tomapple which is a hybrid of a tomato and an apple! But what is the
market size for the Tomapple? No one buys them today so we can’t use the Top-
Down or Bottom-Up approaches we used so far.
Or can we?
Even those the Tomapple doesn’t exist yet, consumers buy other food every day.
New products are either going to be replacements for existing products or create
new demand for something that consumers don’t spend on today. It’s important to
know which category your product falls into because sizing is different for each:
Replacements: Sizing the market for a replacement works exactly the same as
sizing for an existing product. You simply size the market for the product you will
be replacing and make an assumption about how much of that market you can
replace with your new product.
New Demand: New demand sizing is harder and requires you to understand how
much buying power your prospective customers have today and how much is
available to spend on something new. This is why new products often target
wealthier customer segments as luxury goods (iPhone, Tesla, etc.) because those
customers have more buying power and hence the ability to buy something new.