#11/25: Principles of Marketing Engineering

Marketing Engineering: A systematic approach to harness data and knowledge to drive effective marketing decision making and implementation through a technology-enabled and model-supported decision process.

Market response models

  • Inputs: actions that the marketer can control + environment
  • Response model
  • Objectives: monitor/measure, etc.

Value = Benefits – Price

  • Benefits
    • function (does the job)
    • psychological (status)
    • economic (saves money)
  • Price
    • Monetary
    • Perceived risk
    • Inconvenience

Customer Need

  • subject and importance of need
  • temporal aspects of need (urgency, frequency and duration)

Measuring Customer Value

  • Objective Customer Value
    • Internal engineering assessment (internal estimate)
    • Indirect survey questions (pay for better quality, etc.)
    • Field value-in-use assessment (economic benefit): Not only marginal costs but initial investment, etc.
  • Perceptual Customer Value
    • Focus groups
    • Direct survey
    • Importance ratings
    • Conjoint analysis
    • Benchmarking
  • Behavioral Customer Value
    • Choice Models
    • Statistical models / Data mining

Segmentation -> Targeting -> Positioning

  • Creating
    • how does the segmentation fit into the strategy
    • which variables can be used
    • exclusive segments?
    • how many segments?
  • Traditional segmentation
    • reduce data (PCA)
    • develop measure of association
    • identify and remove outliers
    • form segments (cluster analysis): are they clear and robust?
    • profile segments & interpret


  • Attribute-based perceptual maps
    • identify other products & attributes
    • get data from questionnaires
    • reduce
    • plot
  • Preference Maps
    • weights for attributes
  • Joint-Space Maps

Translating Preference to Choice

  • first choice rule: infrequent, expensive
  • Share of preference rule: often, cheap, etc.

For [target segment], the [offering] is [positioning claim], because [single most important support].


  • Judgmental Methods
    • Sales force composite estimates: let the sales force forecast
    • Jury of executive opinion: different stakeholders
    • Delphi method: anonymous and iterative
    • Chain ratio method: split up in its factors

Conjoint study

  • select attributes of product
  • develop bundles
  • do survey
  • segment customers based o part-worth function
  • design market simulation
  • select choice rule
  • adj market shares

Top 10 Lessons

  • Marking Engineering is Marketing
  • ME is a means to an end
  • frames the opportunity costs for alt. actions
  • requires judgment
  • whole greater than the sum of its parts
  • data & info do not automatically result in value
  • rapid prototyping
  • every model has its downside
  • ME requires lifelong learning
  • be a coach rather than a teacher

Insights for better Implementation

  • Be opportunistic
  • Start Simple; Keep it Simple
  • Work backward
  • score inexpensive victories
  • develop a program, not just a project

I really liked Principles of Marketing Engineering. The book gives a great overview over the topic and different approaches. It’s written like a textbook, so it can be a bit lengthy in parts but otherwise, a nice book.

#30/111: Selling the Invisible

What is it about?

How to market a service business? Harry Beckwith tries to show how. He introduces you into the whole bandwidth of marketing from advertising to sales.

Key points?

Have a good product/service: If you product/service sucks it is hard to market it. First of all, you should focus on your offering and make it good.

Focus on one characteristic: And again, the good old positioning. Try to stand for one thing. Don’t be the cheapest, best, most regional and whatever it be. Be cheap. Be regional. Be fast.

Decrease risk: Often customer won’t buy the best solution. They will rather go with the least risky, one which has the fewest flaws. If you can offer a trial, offer one. If you in consulting, close a contract for a small piece of work and play the salami tactics.

Make your efforts visible: A lot of stuff happens behind closed doors and your customer and prospects will never hear of them. You have to communicate them actively. If your company got a great customer, make it public. If you have increased the profitability of your customers by 25%, make it public. Beware, not everything is interesting for anybody. You shouldn’t just brag, show how you can improve the business/life of your prospects.

Thank your customer: Often you buy something and you will never hear of that company again. You already know that acquiring new customers is much harder than selling to your existing ones. Send them thank you notes. Send them Christmas’ cards. Build a steady stream of information, they will remember you and they will feel good.


This is definitely a primer on marketing. Selling the Invisible covers so much different topics that it allows you to build a good basic understanding for marketing your service. Great book!

#17/111: The 22 Immutable Laws of Marketing

What is it about?

Al Ries and Jack Trout talk about their 22 laws for successful marketing. They explore which failures companies made in the past and how they can be fixed.

Key points?

Be first: Your brand/product should be recognized as the first and leading product in the market. If you think of Cola, you think of Coca-Cola. If you think of eco-friendly cars, you think of the Toyota Prius.

If you can’t, be different: If you came too late you should find your niche. Pepsi did so in targeting young people. You shouldn’t try to fight the No. 1 with their attributes, instead choose a new attribute which describes your product (e.g. healthiest cola).

Focus on one thing: Use one attribute. Don’t describe your product as easy, best and cheap. People probably won’t believe you.

Don’t extend your line because you can: If you have built a successful brand you shouldn’t just throw new products in new markets. A lot of people tried this and failed. If you introduce new products, focus on the these laws and make them unique.


This book is just incredible. The chapters are short, there are enough examples of how to apply these laws and situations where companies have failed to do so. I read the first edition from 1993 and the two authors made some recommendations for companies like Burger King. Surprisingly, about 10-15 years later a lot of these recommendations where finally executed. Nice!