Marketing

Short Term vs Long Term Marketing Goals

Short Term Goals – Improve current results by applying marketing techniques

Long Term Plans – Protect value of brands in the long-run.

Growing a brand in the long-run requires constant efforts and a lot of work. Some companies have excelled in that:

Red Bull – Hosting extreme sport events all over the world. Red Bull not only sponsors events they also stream these events live to connect. Drinks that make you fly and reiterated consistent campaigns, red bull gives you wings.

Creating a recognizable brand is a long-term exercise, which is hard but very rewarding and makes the difference between champion companies with a loyal customer base and firms that are an okay second choice

It takes time for a message to people, but once it does it sticks with people and becomes valuable.

Customer Lifetime Value

(Selling price – Variable cost) x repeat purchases per year x number of years


An Exampole
Price per unit: .60 per bottle
Cost per unit: .25
margin per unit .35

Loyal customer
200 bottles per year
5 years
(.6-.25)x200x5=350 (customer lifetime value)

“CLV allows us to better decisions about sales, marketing, product development and customer support.”

CLV
Illustrates a customer that buys the firm’s products over and over can be more valuable than somebody who spends more, but does it only once.

CLV allows us to distinguish profitable client relationships:
Group A:
Group B: The most profitable client group
Group C:

Focuses on relationships and preserving long term value.

Another customer: (a 2nd customer) Because he is not loyal to particular brand of water and switches very quickly.
Price per unit: .8
Cost per unit: .25
Margin per unit: .55

220 bottles per yr
2 years
(.8-.25)x220x2=$242 (customer lifetime value)


Moral of the story continued business over the long term is more important

CLV is a function that depends on three variables:

Unitary Margin
Frequency of Purchases
Length of Time (client/firm relationship)

Helps us understand how much can be invested in marketing to acquire new clients

If a new client is worth $400, you don’t want to spend more than that to win them over as a customer.

CLV- helps find profitable, and discontinue if client group is loss making.
Focus on profitable client groups and change the offering for unprofitable groups.

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