The Information Edge

Information is Power, But Only if it is Used.

A Newsletter from Custom Decision Support Inc. & Lieb Associates Vol. 8, Summer 2005

In this newsletter we continue our discussion of the means of providing pervasive marketplace awareness. We focus on three key issues: (1) developing marketing strategies through the use of Value Mapping, (2) getting affordable marketing research and (3) using video technology within the business environment.

The Strategic Value Map

In our last Information Edge Newsletter Vol. 7 we discussed "Obtaining a Pervasive Marketplace Awareness". A key purpose for obtaining marketplace intelligence is the development of effective competitive marketing strategy. Those strategies can be based on two key elements, the perceived relative value of the competing products and their price. The marketing strategy then focuses on changing the perceived value of the offerings and its price.

The Value Map is a strategic positioning tool to examine the relationship between targeted price and average relative perceived value. Below is a typical Value Map including bubbles indicating the sales volume.

Estimating product value is always difficult and uncertain. There are multiple ways of measuring and estimating value. For the construction of these maps typically some relative estimate is made, usually based on the concept of utility, or the weighed average of the products comparative performance on a list of criteria.

Bradley T. Gale pioneered the use of an upward sloping trend line to provide a base for comparison of value and costs. This has been referred to as the "Fair Price Line", with the implication that prices should tend to that reference. However, there does not appear to be any justification for this assertion. Alternatively, John B. Frey has suggested a grid on the Value Map indicating five strategic regions:   

Jack Frey's proposal was based on the analysis of the PIMS database of 3,000 businesses and used a qualitative measure of value. The PIMS analysis also allowed computing the frequency and average performance of businesses in each of these regions as indicated below:

Pricing Strategy

Cash Return on Investment

Percent of Businesses
















A detailed description of this work and much more based on the PIMS database is located on our website.

This strategic analysis, however, still doesn't provide the full picture regarding price. In Information Edge Newsletter Vol. 5, No. 2 we discussed computing the optimum price range based on research data. These price ranges are intended to delivery acceptable earnings and depend on costs, competitive prices but most importantly customer price sensitivity. These ranges are imposed on the Value Map for the firm's products. These are the green bars around products B and E, on the following map.

More details on how static and dynamic Value Maps are constructed and the alternative approaches can be found in the Value Methods section of our Advanced Business and Research Methods Notes.

The Strategic Edge

Affordable Marketing Surveys

As noted above, in our last Information Edge Newsletter we discussed the need for gaining a Prevalent Marketplace Awareness". That rests on the ability to obtain adequate and timely marketing research. Unfortunately marketing and survey research activities are often the last activity funded and the first activity cut from budgets. This is partially due to the perception that it is necessarily an expensive process.

For survey research to be readily available it must be affordable. The research process needs to be designed with cost control in mind. All marketing research design is a balance between costs, breadth and accuracy. Many analytical survey methods have focused on obtaining the most accurate information feasible. However, for the purposes of business development, particularly early in the process, accuracy is relative but costs are not. The balance must be toward making these activities affordable.

We have found that following eleven principles has allowed us to develop effective and affordable new business development quantitative survey tools. The objective of these principles is to obtain the maximum useable data from the reduced number of well-targeted respondents. However, following these principles requires careful selection of the methods, procedures and most importantly of respondents.

We have developed a number of highly effective analytical survey techniques targeted toward quantitative research. Most of the techniques have been used in combination to produce a broader picture of the market forces and help management teams develop effective marketing strategies. However, they need to be customized to the specific characteristics of the businesses and the markets. These techniques include: (1) Compositional Conjoint for measurement of perceived value of features and claims, (2) Choice Testing to capture competitive pricing, (3) Concept Testing, (4) Constant Sum Measurement of importance, and (5) Profiling to capture buyer behavior. Detailed discussion of these methods can be found in our Advanced Business and Research Methods Notes.

Techno -Tips

Exploiting Video Technology


The Techno-Tip column consists of suggestions and comments for data analysis. It is intended to help analysts and managers directly involved in the analysis of business data.

In the last newsletter we proposed that video was the new "Killer Application." What has happen over the past couple of years has only confirmed that belief. Video technology has become more affordable and powerful. Locally prepared business video is ready for prime time.

We suspect that in-house prepared video is likely to replace many business presentations particularly driven by globalization and the need for asynchronous meetings. The costs of in-house training and education should be greatly reduced with these technologies. And finally but not least, it should offer a new effective and compelling tool for customized sales and marketing.

New compression technologies have become widely available and have enabled effective Internet use of video. This is a major change since it offers an effective means to distribute in-house video through company Intranets as well as broader distribution to customers.. As an example, we have been using 20-minute videos as part of an on-line graduate course. The resulting compressed files are approximately 8 Mbytes. Yes, that is eight megabytes using the latest version of Microsoft's video editor. With this compression technology, Microsoft Media Player displays the video as a stream. That is, shortly after the file and application is initiated, it starts playing with little delay even using dial-up connections. This results in the total loading and viewing time is practically the same.

The costs for video software and equipment have been falling. The Microsoft video editor, Window Movie Maker 2 is available free from their web site. Though more capable editors are available and needed for advanced video preparation, the simpler editors are fully capable of producing in-house productions. These basic editors are intuitive and fairly easy to use. Digital camcorders have never been less expensive and have increased capabilities. They are smaller than ever and are also getting easier use.

The only missing elements today are the skills of potential users and their creativity to exploit the technology. The tools to develop truly professional looking video, as previously mentioned, are also available. Both Adobe Premier and Apple's Final Cut Pro are capable of producing truly professional quality video and can be run using available personal computers.

From our perspective, we believe strongly in the use of video and encourage our readers to explore its potential. In this case, the early adopters, we believe, will get a major competitive advantage from its application. This technology is likely to rapidly become the "industry standard" for communications and time is a "wasting."


The Curse of the Panacea

There seems to be an almost inherent desire of business management or maybe of humanity for the universal tool or approach that will solve all problems. These are usually the "new" methods or doctrines that are sweeping the business community. I refer to this phenomenon as "The Curse of the Panacea". Their apparent "magical" ability to solve all of the problems of the day is promoted by the largest and most prestigious consulting firms. They are routinely declared the "Best Practice" for everything. Inevitably they are proven expensive and inappropriate for many important tasks. But to no real avail, since by that time a new panacea has been found and promoted.

What is really tragic is that these tools are often very useful for those applications that they were originally designed for. By finding them less than perfect they are discarded.. Some of these approaches have become "management themes of the month," including Total Quality Management, Marketing Orientation, as well as the various management theories.

Recently, we have encountered this situation with marketing research methods. Survey and marketing research have been as prone to "The Curse" as other management areas. In the past, new tools like "Full Profile Conjoint", "Correspondence Analysis", Latent Class Clustering, and now "Choice Based Conjoint" have all been promoted as the newest and best universal solution.

"Choice Based Conjoint" is a relatively new perceived feature value measuring technique, promoted by Sawtooth Software. This tool in various forms is highly effective when used appropriately for the measurement of the impact of features on consumer purchases and for the evaluation of moderately large numbers of claims for consumer products. It is expensive since it uses a highly split sample. This technique only measures aggregated responses not individual value measurements. While Sawtooth Software does provide procedures to estimate segments and even individual values, these are heroic methods and therefore should only be used for exploratory purposes. This technique is clearly not optimum for primary segmentation and pricing studies where it has been promoted.

Needless to say, there are no truly universal procedures. This is true in marketing research, as it is true for all things. The selection of methods should be a balance of the needs of the research, costs and the nature of the market. The trick is to have a broad range of tools available and then to select the most appropriate. Promotion and newness do not assure the best tools.

What's New

It has been quite a while since oure last newsletter. We have been busy with a whole lot of things. I have fully recovered from all broken bones and am in pretty good shape. My wife and I have our second grandchild, which requires significant time and effort particularly since they are living across the continent. Age isn't all that bad.

We have been continuously revising the website with much more material on the consulting business and upgrades in the research notes and workbooks. Specifically we have expanded the Research Methods notes with the publication of an introductory chapter. This is the ninth and last chapter of the notes and is available on the web site. This chapter is intended to tie together the design of marketing and survey research with the business needs. I have been using it with my Villanova University graduate students. I hope you will find it useful.

As mentioned in our opening article, we have finished the editing of Jack Frey's notes and have published them on our website. Jack and a couple of his colleagues had prepared over 135 articles examining the nature of business performance mostly using the PIMS database. The PIMS database had been compiled over the last three decades and consists of detailed characteristics of over 3000 businesses. These articles provide statistical views of the drivers of business performance. The final document is fairly long (over 700 pages). It is available as an adobe acrobat file at:

We are starting to develop a set of notes on general principles of strategy. We hope to be able to glean useful listens from Jack's work and others.

Gene Lieb (Editor and President)

E-Mail at