Ralph E. Grabowski - marketingVP - fact-gathering, analytical Marketing to steer the enterprise

 

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Marketing is an investment
 

Investment evidence
the Marketing/Engineering Investment Ratio™ (M/E Ratio™)

"Your evidence of the relationship between Market Research and success is right on!  Dell's M/E Ratio™ is North of 1.5."  Michael S. Dell, Founder, Chairman, and CEO of Dell Computer Corporation

 
 

Contents

 

Definitions

"Congratulations on teasing out the Marketing data from the promoting and selling numbers.  A very engaging piece of work."  Dr. Gordon B. Baty, Zero Stage Capital

The unique aspect of this research is to separate out the front-end, upstream Marketing investment from the back-end, downstream promoting and selling expenses.  To do that, we need clear definitions.

Marketing is narrowly defined to exclude promoting and selling.  While promoting and selling are valuable functions, they occur at a different time than Marketing and their own substantial budgets might obscure the Marketing investment.

 

Marketing is market research and more

Marketing means designing your product or service to deliver benefits, and only those benefits, that customers are willing to spend money to receive; thus guiding engineering to design the right products.  This is also called market research.

Marketing is differentiated from promoting and selling in time.  Marketing is the upstream process that occurs before the product is ready; perhaps even before the product is committed to engineering.  Marketing is an iterative process conducted as a team with technologists.  Marketing is differentiated from promoting and selling in function, and includes:

  • budgeting the resources and time - the Marketing/Engineering Investment Ratio™
  • conducting primary and secondary market research
  • developing strategy

    "Market research is the fundamental intellectual discipline of strategy."  
    Dr. Barry Unger, co-founder of the MIT Enterprise Forum
  • articulating the value of the technology
  • understanding the potential customer
  • modeling both the customer's business, and your own
  • calculating customer payback
  • quantifying customer needs
  • specifying the product - guiding engineering
  • thinking through the "6 P's and a D"

    the 6 P's 1 - Price
    2 - Performance
    3 - Payback
    4 - Packaging
    5 - Positioning
    6 - Promotion

    and a D

    D - Distribution
  • questioning and surveying the customer
  • analyzing and reporting customer survey data
  • segmenting the market
  • sizing the market
  • scrutinizing the food chain
  • creating channels of distribution
  • surfacing competitive intelligence
  • developing an unfair, defensible, and decisive competitive advantage

    unfair - you have it, and the competition does not
    defensible - protected, as with patents
    decisive - compels purchase decisions
  • realizing value from intellectual property through patents and technology licensing
  • building strategic alliances
  • guiding promotion motion
  • guiding selling motion
  • guiding support
  • steering the enterprise

Some who may not have marketing titles participate in the marketing process, and count in that team process.  For example, not only may technologists contribute to the market research effort, but also the company President.

Marketing means steering the enterprise to achieve company financial and strategic goals.  Marketing also contributes to the creation of those financial and strategic goals.

 

Marketing/Engineering Investment Ratio™, M/E Ratio™, or M/E

The ratio of Marketing investment to Engineering investment, exclusive of promoting or selling. 

Formulating a ratio of marketing to engineering installs marketing concurrently with engineering.  Engineering comes before the product is ready, and so does marketing.  This ratio sizes the market research budget with a readily identified number (engineering investment).

 

Promoting

Informing potential customers that your product or service exists, delivers benefits that satisfy their needs, and that you are someone comfortable to buy from.

 

Selling

Given what you have, compelling orders by convincing potential customers that your product or service delivers benefits that address their needs, and provides a PAYBACK to justify purchase.

 

 
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