Marketing analytics

Marketing data analytics is the use and study of data related to marketing activities. Data
analytics in marketing is used to determine the success of past campaigns in terms of ROI,
conversions, customer behavior and preferences, and organic traffic. By analyzing the data
regarding past campaigns using marketing analytics, marketing departments should be able
to use patterns or trends to improve activities, resource allocation, and campaign planning.

The marketing data analytics sphere usually includes three components: analyzing the
present, reporting on the past, and predicting for the future.
 Analyzing the present: Marketers need to assess marketing analytics from current
campaigns and activities in order to get a clear picture of where the marketing activities
stand and to compare them to past campaigns. In this case, they’ll be focused on website
traffic and sources for it, social media engagement and click-throughs, as well as the
current state of the sales pipeline and revenue metrics.

 Reporting on the past: Marketing departments also rely on reported marketing data
analytics at the completion of campaigns, focusing on information such
as lead conversion, customer lifetime value, and sales funnel churn rate.

 Predicting for the future: Finally, marketing departments rely on marketing analytics to
plan future projects. This type of data analytics in marketing will include lead scoring,
targeted content distribution, and upselling readiness and relies on datasets as well as
modeling and AI.

How Organizations Use Marketing Analytics

Product Intelligence

Product intelligence involves taking a deep dive into the brand’s products as well as analyzing
how those products stack up within the market. Typically done by speaking to consumers,
polling target audiences or engaging them with surveys, organizations can better understand the
differentiators and competitive advantages of their products. From there, teams can better align
products to the unique consumer interests and problems that help drive conversions.

Customer Trends and Preferences

Analytics can tell a lot about your consumers. What messaging / creative resonates with them?
Which products are they buying and which have they researched in the past? Which ads are
leading to conversions and which are ignored?

Product Development Trends

Analytics can also offer insight into the types of product features consumers want. Marketing
teams can pass this information on to product development for future iterations.

Customer Support

Analytics also helps uncover areas of the buyer’s journey that could be simplified or improved.
Where are your clients struggling? Are there ways you can simplify your product or make the
check-out process easier?

Messaging and Media

Data analysis can determine where marketers choose to display messages for particular
consumers. This has become especially important due to the sheer number of channels. In
addition to traditional marketing channels such as print, television and broadcast, marketers must
also know which digital channels and social media networks consumers prefer. Analytics
answers these key questions:

 Which are driving the most sales?

 What message is resonating with your audience?

Competition

How do your marketing efforts compare with the competition? How can you close that gap if
there is one? Are there opportunities your competitors are capitalizing on that you may have
missed?

Predict Future Results

If you have a thorough understanding of why a campaign worked, you’ll be able to apply that
knowledge to future campaigns for increased ROI.

Marketing analytics key features and capabilities:

 Real-Time Analytics and Insights

 Brand Measurement Capabilities

 Granular, Person-Level Data

 The Ability to Correlate Online and Offline Attribution Metrics

  Contextualized Customer and Market Insights

 Annual Media Plan Recommendations

Pros and Cons of Marketing Analytics

PROS

1. Insights Into Customer Behaviors and Preferences

With permission-based marketing, you are able to gather extra intel that is like icing on the
proverbial marketing analytics cake. You gain a more comprehensive set of data points that you
can analyze and leverage to create custom lists that align with your targeting needs.
Demographic and lifestyle analytics help you develop very niche audiences that are relevant for
certain distributions areas, specific product interests, promotional activities, and more! Analytics
help you turn one large customer database into a collection of very customized target lists.

2. Audience Segmenting/Tailored Messaging

Now that you’ve defined interest groups within your audience using analytics, you can deliver
tailored communications for a personalized approach. Is a new retailer carrying your product?
Inform shoppers in that area using the location data you’ve analyzed. Do you have some new
recipes rolling out? Share a link to those resources with shoppers who have expressed interest in
that kind of content. Analytics make your marketing efforts more successful when you are
meeting a relevant need based on your ability to understand your customers better.

3. Validation/Justification for Budget

Marketing budgets can be a tricky situation at times. It’s not uncommon for the person who
holds the purse strings to not be involved in the day-to-day aspects of the marketing program or
even understand marketing at all. We recommend using analytics to help set some guardrails and
expectations that make the marketing line item less undefined…and maybe less concerning.
Marketing can be perceived as a gray area with only theoretical benefits, so when you can show
results via marketing analytics each month – the value becomes much more black and white.

4. Sales Support

Not only do analytics make your marketing efforts smarter, but they can support smarter sales
efforts too. They can be used to help sales decks tell a richer story. They also provide the sales
team with more ways to validate your company as a preferred brand partner. If you have a
hungry sales team looking for persuasive talking points, marketing analytics is a great place to
start.
CONS

1. Data Paralysis

With good marketing software comes A LOT of data that can feel overwhelming. If you’re
considering a transition to data-driven marketing practices, but feel overwhelmed with every
report and every dashboard your are looking at, consider taking a step back and identifying 3-4
metrics per marketing activity that you can track. For example, if website analysis is new for
you, focus on tracking monthly web visits, page views, and sources. For social media, maybe it’s
simply community growth, engagements and web referrals. Start small and as you get
comfortable tracking those things, you will begin to see trends or changes that cause you to give
it a second look and become interested in a new data point.

2. Data Indifference

Unfortunately, marketers committed to monthly data analysis and reporting are sometimes
sharing that information with leadership or other work teams that just don’t seem interested.
Don’t let that deter you from maintaining solid data that will help you answer questions down the
road and deflect concerns about the plans you have in place. Stay persistent in your own
learnings to shape a marketing program that you know is working.

3. Data Requires Analysis and Understanding

If you’re a one-(wo)man show or operate with few resources, it’s entirely possible you have a
team full of wonderful, creative minds that just don’t excel with numbers and graphs. Marketing
analytics do require certain skills that not all marketers possess. It’s important to assign this
responsibility to someone who can get lost in a sea of numbers and come up with valid
takeaways that highlight both marketing opportunities and marketing wins.

Market Data Sources (Primary and Secondary)

Market research generally involves two different types of research: primary and secondary.

Primary research is research you conduct yourself (or hire someone to do for you.) It involves
going directly to a source – usually customers and prospective customers in your target market –
to ask questions and gather information. Examples of primary research are:

 Interviews (telephone or face-to-face)

 Surveys (online or mail)

  Questionnaires (online or mail)

 Focus groups

 Visits to competitors' locations

When you conduct primary research, you’re typically gathering two basic kinds of information:

1. Exploratory. This research is general and open-ended, and typically involves lengthy
interviews with an individual or small group.

2. Specific. This research is more precise, and is used to solve a problem identified in
exploratory research. It involves more structured, formal interviews.

Primary research usually costs more and often takes longer to conduct than secondary research,
but it gives conclusive results.

Secondary research is a type of research that has already been compiled, gathered, organized
and published by others. It includes reports and studies by government agencies, trade
associations or other businesses in your industry. For small businesses with limited budgets,
most research is typically secondary, because it can be obtained faster and more affordably than
primary research.

A lot of secondary research is available right on the Web, simply by entering key words and
phrases for the type of information you’re looking for. You can also obtain secondary research
by reading articles in magazines, trade journals and industry publications, by visiting a reference
library, and by contacting industry associations or trade organizations. (Note: When you locate
the research you want, check its publication date to be sure the data is fresh and not outdated.)

One excellent source of secondary research data is government agencies; this data is usually
available free of charge. On the other hand, data published by private companies may require
permission, and sometimes a fee, for you to access it.
Market Sizing

Determining the number of potential buyers in a particular market segment is crucial before
launching a product or service in the market. When you understand the market size, you can
distinguish between the general market and the specific demographic that you need to target for
your business. You can do this by looking at the market potential or the volumes, which depend
on the number of customers and their demand. In this article, we define market size, examine
how it differs from market value, look at some market sizing techniques and explain how to
calculate your market size.

Market size is the total number of potential clients or buyers in a particular market segment. It's
helpful for an organization or small business to determine its market size before launching a new
service or product to ensure it reaches its expected audience. In various careers, such as
marketing, sales and business consulting, such analysis is a critical part of business planning, as
many investors conduct market sizing analysis before venturing into a new business. Knowing
you've done your research also helps these professionals understand your goals and proposals.

Market sizing is the act of approximating how many people use a certain service or product, an
estimation that evaluates the potential reach of your brand. When market sizing, try to identify
these three quantifiable standards:

Units: The total quantity of products and clients in the market

Value: The total value of products or clients in the market

Market share: The percentage of products sold and clients gained by a specific organization

How to calculate market size

Whether you plan to enter a new market, launch new products or identify your target audience,
understanding your market size is a vital starting point. Follow these steps to calculate your
market size:

1. Define your target consumers

Your target consumers are those most likely to buy your products or services. Often, your target
consumers share a common trait, such as:

 Age range
 Gender
 Location
 Education
 Income bracket
You can determine your target consumers by examining who's currently purchasing your
offerings and analyzing their characteristics. For example, a store that specializes in basketball
apparel might have customers in all age ranges but find that it's mostly 20- to 30-year-old
basketball fans buying its products. That would be the manufacturer's target consumer.

2. Quantify your target customers

Once you've defined who your target customers are, you can consult statistical resources to
determine how many you might reach. Public databases can reveal the number of people in your
defined range who fit your target criteria. You can also conduct market research to estimate the
percentage of the total target audience that would be interested in your brand. For example, the
owners of the earlier mentioned basketball apparel store might mail questionnaires to those aged
20 to 30 years to rate their level of interest in basketball and basketball apparel.

3. Determine available market and demand

Your research might reveal the approximate number of consumers who are interested in buying
your product or service, but the number of people who actually can or plan to follow through
with a purchase may be much lower. This smaller subset of the target customer base is the
available market. For example, a sneaker manufacturer might identify 100,000 people interested
in its product, but research on income and accessibility shows that only half of them have the
means to follow through with a purchase. In that case, the available market is 50,000 potential
customers.

4. Multiply demand by market value

Finally, to determine your market size, you can multiply the demand you've calculated by the
value of each unit you sell.

Applications & Approaches (Top-down and Bottom-up)

Top-down approach to management:-

In the top-down approach to management, a team or project manager makes decisions, which
then filter down through a hierarchical structure. Managers gather knowledge, analyze it, and
draw actionable conclusions. They then develop processes that are communicated to and
implemented by the rest of the team. You may hear this style of management referred to as
“command and control” or “autocratic leadership.”

The top-down approach is probably what you think of when you think of the management
process. Traditional industries like retail, healthcare, or manufacturing typically apply the top-
down management style.
Top-down approach works

When approaching a project from the top down, higher-level decision-makers start with a big
picture goal and work backward to determine what actions different groups and individuals will
need to take in order to reach that goal.

The entire project planning process takes place at the management level. Then, once an action
plan has been created, decision-makers communicate it to the rest of the team to be implemented
(usually without much room for adjustment ).

Advantages of top-down management

There are benefits to a top-down management style, especially for larger teams that consist of
multiple smaller teams or groups that function together in a broader organizational hierarchy.

Well-known management style

The top-down management style is common, which means there’s less of a learning curve for
new hires if they came from a company that uses this structure. As a team leader, you can help
new team members adjust more quickly by incorporating some familiar elements of top-down
methodology into your management style.

Greater clarity

The top-down approach results in clear, well-organized processes that leave little room for
confusion. Because all decisions are made in one place and all communication flows in one
direction, mix-ups and misunderstandings happen less frequently than with other management
styles.

More accountability

When problems or inefficiencies do occur, the top-down management approach makes it easy to
track them to their source. With clearly defined teams that each have their own separate
responsibilities, it’s easier to locate, diagnose, and solve problems quickly and efficiently.

Quicker implementation

Since the decision-making process takes place at just one level of management, they can be
finalized, distributed, and implemented much more quickly than decisions that require input from
multiple leaders or project stakeholders.
Disadvantages of top-down management

Though top-down methodology has some advantages, there are also drawbacks to consider in
how this approach might impact individual team members and overall team morale. Ultimately,
top-down management doesn’t work for everyone. It can limit creativity and slow down
problem-solving, so it may not be the best choice for teams that require greater flexibility and
responsiveness.

More of a strain on leadership

Since all decisions are made at the top, a mismatched project management hire can have a bigger
impact on the success of the team. Many process problems are only visible at the lower level,
so project managers who fail to solicit feedback from individual team members before making
decisions can inadvertently cause significant problems, delays, and losses.

Less creativity

With all communication flowing from leaders to team members with little room for dialogue, the
top-down approach allows fewer opportunities for creative collaboration. Less interdepartmental
collaboration may also eliminate fresh perspectives and stifle innovation.

Team disengagement

One challenge with the top-down management approach is that it requires proactive work to keep
non-leadership team members feeling engaged, connected, and respected. When all decisions are
made at the top, the rest of the team might feel that their feedback and opinions aren’t valued.

Greater distance between decision-makers and decisions

While a bottom-up approach allows decisions to be made by the same people who are working
directly on a project, the top-down style of management creates distance between that team and
decision-makers. This can lead to poorly-informed decisions if leadership doesn’t ask for input
or feedback from their project team.

Bottom-up management

When approaching project objectives from the bottom up, a team will collaborate across all
levels to determine what steps need to be taken to achieve overall goals. The bottom-up approach
is newer and more flexible than the more formal top-down strategy, which is why it’s more
commonly found in industries where disruption and innovation are a priority.
Advantages of bottom-up management

The bottom-up style of management solves many of the problems that come with the top-down
approach. This approach has advantages that make it a great fit for creative teams and industries
where collaboration is key, like software development, product design, and more.

More informed decisions

In collaborative settings, those who work directly on projects and oversee project management
can speak to the decisions that will impact their future work. Upper managers work directly with
team members to chart a course of action, which prevents potential process blind spots that might
otherwise appear when decisions are made without team input.

Better team morale

The bottom-up approach encourages greater buy-in from team members because everyone is
given the opportunity to influence decisions regardless of seniority. It also facilitates better
relationships between colleagues by offering members of all seniority levels an equal opportunity
to influence project outcomes. In doing so, this approach increases the likelihood that all
members will be invested in the team’s success.

More room for creativity

In top-down processes, there are fewer opportunities for teams to give input or suggestions.
Collaborative approaches like the bottom-up approach, on the other hand, create opportunities
for feedback, brainstorming, and constructive criticism that often lead to better systems and
outcomes.

Disadvantages of bottom-up management

Of course, there’s a reason that the bottom-up approach hasn’t been more widely adopted: it
comes with a number of challenges that make it incompatible with certain types of teams,
projects, and industries.

Reduced momentum

A purely bottom-up approach to solving a problem might result in “too many cooks in the
kitchen.” When everyone in a group is invited to collaborate, it can be harder to arrive at a
decision and, as a result, processes can slow down.

Shift in team dynamics

Though it’s important to give team members the opportunity to provide feedback, not everyone
is comfortable doing so—especially with leadership in the room. Keep in mind that everyone has
different comfort levels and pushing too hard for feedback might stifle honesty or creativity.
Lack of high-level insight

In many ways, it makes sense for project decisions to be made at the project level. However,
projects are still impacted by higher-level factors like company goals, budgeting, forecasting,
and metrics that aren’t always available at the team level. Processes designed from the bottom-up
can suffer from blind spots that result from a lack of access to insights from upper management.

PESTLE analysis

It is a broad fact-finding activity around the external factors that could affect an organisation’s
decisions, helping it to maximise opportunities and minimise threats. It audits six external
influences on an organisation:

 Political: Tax policy; environmental regulations; trade restrictions and reform; tariffs;
political stability

 Economic: Economic growth/decline; interest, exchange, inflation and wage rates;

minimum wage; working hours; unemployment (local and national); credit availability;
cost of living

 Sociological: Cultural norms and expectations; health consciousness; population growth

rates; age distribution; career attitudes; health and safety

 Technological: New technologies are continually emerging (for example, in the fields of
robotics and artificial intelligence), and the rate of change itself is increasing. How will
this affect the organisation’s products or services?

 Legal: Changes to legislation impacting employment, access to materials, quotas,

resources, imports/exports, and taxation

 Environmental: Global warming and the increased need to switch to sustainable

resources; ethical sourcing (both locally and nationally), including supply chain
intelligence. Pandemics and other emergencies.

PESTLE analysis tips

Some useful tips for carrying out a PESTLE analysis:

 Collaborate - multiple perspectives can identify more risk.

  Use expertise and resources within the organisation.

 Use PESTLE analysis alongside other techniques, such as SWOT analysis, Porter's
Five Forces, competitor analysis, or scenario planning.

 Incorporate a PESTLE analysis into an ongoing process for monitoring changes in the
business environment.

 Avoid collecting vast amounts of detailed information without analysing and

understanding your findings appropriately.

 Don’t jump to conclusions about the future based on the past or present.

Advantages:

 It’s a simple framework.

 It facilitates an understanding of the wider business environment.

 It encourages the development of external and strategic thinking.

 It can enable an organisation to anticipate future business threats and take action to avoid
or minimise their impact.

 It can enable an organisation to spot business opportunities and exploit them fully.

Disadvantages:

 Some PESTLE analysis users oversimplify the amount of data used for decisions – it’s
easy to use insufficient data.

 The risk of capturing too much data may lead to ‘paralysis by analysis’.

 The data used may be based on assumptions that later prove to be unfounded.

 The pace of change makes it increasingly difficult to anticipate developments that may
affect an organisation in the future.

 To be effective, the process needs to be repeated on a regular basis.

Porter's Five Forces?

According to Porter, there are five forces that represent the key sources of competitive pressure
within an industry They are:

1. Competitive Rivalry.

2. Supplier Power.

3. Buyer Power.

4. Threat of Substitution.

5. Threat of New Entry.

He described them further in his later article, "The Five Competitive Forces That Shape
Strategy." [2]

Porter stressed that it's important not to confuse these five forces with more fleeting factors, such
as industry growth rates and government interventions. According to Porter, those are examples
of temporary factors, while the Five Forces are permanent parts of an industry's structure.

Let's take a look at Porter's Five Forces in more detail.

1. Competitive Rivalry

The first of Porter's Five Forces looks at the number and strength of your competitors. Consider
how many rivals you have, who they are, and how the quality of their product compares with
yours.

In an industry where rivalry is intense, companies attract customers by cutting prices

aggressively and launching high-impact marketing campaigns. This can make it easy for
suppliers and buyers to go elsewhere if they feel that they're not getting a good deal from you.

On the other hand, where competitive rivalry is minimal, and no one else is doing what you do,
then you'll likely have tremendous competitor power, as well as healthy profits.

Example

If you were setting up a haulage business, you'd likely be entering a crowded market. You'd have
to consider many potential rivals, how much they charged, and whether they were able to
discount deeply. You'd also need to think about their resources: you might be setting up to
compete with international logistics companies, as well as local competitors

Remember that at this point the analysis should focus on your potential rivals. Only start thinking
about your own offer when you've got your data together on the competition.
Note that Michael Porter developed his Four Corners Model all about competitor behavior. You
can find out more about that in our article.

2. Supplier Power

Suppliers gain power if they can increase their prices easily, or reduce the quality of their
product. If your suppliers are the only ones who can supply a particular service, then they have
considerable supplier power. Even if you can switch suppliers, you need to consider how
expensive it would be to do so.

The more suppliers you have to choose from, the easier it will be to switch to a cheaper
alternative. But if there are fewer suppliers, and you rely heavily on them, the stronger their
position – and their ability to charge you more. This can impact your profitability, for example, if
you're forced into expensive contracts.

Example

Let's say your business idea was to manufacture electronic devices. You'd have to assess your
supply options for a range of specialist components. If one supplier dominated the components
market, then they could raise their prices without worrying about their own competitors. This
might affect the viability of your product.

3. Buyer Power

If the number of buyers is low compared to the number of suppliers in an industry, then they
have what's known as "buyer power." This means they may find it easy to switch to new, cheaper
competitors, which can ultimately drive down prices.

Think about how many buyers you have (that is, people who buy products or services from you).
Consider the size of their orders, and how much it would cost them to switch to a rival.

When you deal with only a few savvy customers, they have more power. But if you have many
customers and little competition, buyer power decreases.

Example

Buyer power is a significant factor in food retail. Think of large supermarkets that operate in a
crowded, highly competitive market. This market has changed dramatically with the arrival of
cheap, no-frills food discounters. Shoppers have strong buyer power here. That's why
supermarkets have coupon schemes, loyalty cards, and aggressive discounting – to capture the
largest share of buyers.

These organizations in turn have strong buyer power with their own suppliers, using their
influence to drive down the cost of food at the manufacturing level.
4. Threat of Substitution

This refers to the likelihood of your customers finding a different way of doing what you do. It
could be cheaper, or better, or both. The threat of substitution rises when customers find it easy
to switch to another product, or when a new and desirable product enters the market
unexpectedly.

Example

If your organization makes medical instruments, you may find your position being threatened by
the rise of 3D printing. This enables instruments to be made from a wide range of materials,
sometimes at a fraction of the cost of traditional methods. If a competitor gets it right, it can
weaken your position and threaten your profitability.

5. Threat of New Entry

Your position can be affected by potential rivals' ability to enter your market. If it takes little
money and effort to enter your market and compete effectively, or if you have little protection
for your key technologies, then rivals can quickly enter your market and weaken your position.

However, if you have strong and durable barriers to entry, then you can preserve a favorable
position and take fair advantage of it. These barriers can include complex distribution networks,
high starting capital costs, and difficulties in finding suppliers who are not already committed to
competitors.

Existing large organizations may be able to use economies of scale to drive their costs down, and
maintain competitive advantage over newcomers.

If it costs customers too much to switch between one supplier and another, this can also be a
significant barrier to entry. So can extensive government regulation of an industry.

Porter's Five Forces Example

Even industries that seem to be well protected against new entry can prove to be vulnerable. For
many years, high-volume air travel was in the hands of a relatively small number of established
airlines. The barriers to entry were formidable. Start-up costs were high, routes and take-off slots
were mostly grabbed by the big operators, and the industry was strictly regulated.

Even so, some small operators did manage to break into the market, mostly by offering no-frills,
low-cost travel to popular destinations, and taking advantage of reduced regulation. These
smaller, more agile operators now hold strong positions in the industry, particularly in short- to
medium-haul travel.