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





I am an engineer, an electrical engineer.  In my career, I have experienced the excitement from being in successful companies, and the grief from working for failures and being laid off.  I would like to share with you some observations and data from those experiences.

This section describes my research into the relationship between investment in upstream marketing and success in technology-based enterprises.

Why do some new products take off, while others don’t sell at all?  What is the origin of the highly visible super successes, and outright failures, that are all around us?  Market research is the up-front process of ascertaining needs which customers are willing spend money to satisfy, thus guiding engineering to design products that sell successfully.  How much shall we invest in market research to enable that success, and when?  Engineers work out how to achieve an engineering challenge; sizing the engineering budget and staffing.  How do we size, budget, and staff the corresponding marketing challenge?

The MIT Enterprise Forum asked me to create "Marketing, Promotion, and Selling" for their inaugural Spring Workshop, and charged me with teaching how to budget for each function, separately.  When I reported finding no approach in the literature to calculate investment in the Marketing portion, independent of promoting and selling, the Workshop organizer directed me to, "Invent a new method."

Thus the Marketing/Engineering Investment Ratio™ (M/E Ratio™) was developed at the request of the MIT Enterprise Forum to guide technology-based enterprises.  The theory, data, and practice of the M/E Ratio™ were then taught for several years during MIT's entrepreneurship program, and subsequently incorporated into the foundation of the popular MIT Sloan School of Management graduate course, "Starting and Running a High Tech Company."


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