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Measuring performance: The marketing perspective (Current challenges…
Measuring performance: The marketing
perspective
Introduction
Why is assessing marketing performance important for companies?
Difficulties in assessing marketing performance
Marketing productivity
Industry-level studies
Marketing as distribution
Researches that compare marketing productivity to that of manufacturing
The main conclusions
Labor productivity of distribution grew far more slowly than manufacturing productivity
Most of the cost of finished goods came from distributive activities, but that distributors themselves remained less profitable than manufacturing firms
Firm-level studies
The goal of studies is to provide guidance to marketing managers regarding how to most effectively allocate their marketing resources
Charles Sevin’s Marketing Productivity Analysis (1965)
Feder (1965): way of better allocating marketing
Goodman (1970, 1972): advocacy of establishing the position of “marketing controller” within firms
Buzzell and Chussil
(1985) and Day and Fahey (1988): NPV
Non-pecuniary measures of output
Market share was a strong predictor of cash flow
and profitability
Quality of services as marketing productivity measure
Adaptability or innovativeness of a firm’s marketing
Refocusing on good marketing inputs: activities and assets
Increasing interest in better specifying
“good” marketing inputs
Marketing audit: audits produce diagnostic suggestions
more than they do specific performance numbers.
Marketing skills and marketing structures
Developing good marketing assets
3.Recent innovations in performance measurement
Market orientation
Activities that develop and use intelligence
about the market
Empirical evidence on the relationship between overall business performance and market orientation is mixed
Customer satisfaction
One of the most attractive measures of business performance
Because customer satisfaction increases loyalty
Instrument of measurement is surveys of the customer base
The problem of most customers' satisfaction
No firm has a competitive advantage
Reduces the likelihood that a significant correlation between satisfaction and other performance variables will be observed
Customer loyalty
Why a loyal customer base should be an important marketing asset ?
Loyal customers are easier to retain
Firms hope to obtain
more business per loyal customer
Loyal customers may be willing to pay a price premium
Having loyal current customers may reduce the acquisition cost for new customers
Measure is the “lifetime value” of the customers
Brand equity
Strong brands allow firms
to charge price
premiums
to use brand to extend the company’s business into other product categories
to reduce perceived risk to customers
Measuring
The behavioral approach
The financial approach
Current challenges
Feedback loops
Managers continue to
rely heavily on financial measures in practice
Translating multiple measures into practice
Too many measures
Correlation between measures
Unit of analysis
Examining of marketing performance at the level of marketing programs
Evaluating of the overallcorporate marketing
Subjective versus objective measures
Reporting issues
Stakeholder incompatibility
Efficiency versus effectiveness
Efficiency is “doing things right"
Effectiveness is “doing the right things”