Consider the following scenarios: A) The plan was unveiled in the meeting. A proposed moderate increase in price would lead to increased profits. It sounded reasonable to all. B) The plan was unveiled in the meeting. A 3% increase in price was proposed to generate $2 million more in profits. One of the reps asked…
Does Acquisition Cost Reduce CLV?
Marketing suffers from serious definitional problems which undermine the communication function of metrics. I therefore recommend a step forward; lets all exclude acquisition costs from customer lifetime value (CLV) calculations. Customer lifetime value is the net present value of a customer relationship. There are strong assumptions and fiddly discounting but the idea is simple. Valuing…
Selfishness and Rationality
Many people believe that selfishness is central to rational decision making but this is wrong by any meaningful definition of rationality. Definitions matter in the real world. Managers can believe they commit a business sin by considering others but what does selfishness mean? A totally selfish decision maker would not buy food for their children….
Market Share is Malarkey
Students, teachers, managers and commentators all love market share. Many think a reasonable business goal is to increase market share. My only question is: Why? A reasonable business goal is to make a profit. This will eventually turn into cash which buys nice things. Greed may be a vice but we all get why people…
What Is Marketing?
Many issues in management seem to cause confusion. The first I see as a marketing professor is the simple question “What is marketing?” Lets get rid of some preconceptions first: Marketing is not advertising, Marketing is not selling, and Marketing is not about persuading people to buy the product you want to make. Marketing is…