Measuring performance: the marketing perspective (current challenges (3…
Measuring performance: the marketing perspective
marketing as distribution (whether it made the positive contribution to the economy)
most common output variables: services provided, dollar sales, units shipped, and value added.
most common input measures:man hours, capital, and number of persons employed
how to most effectively allocate their marketing resources (e.g., advertising,promotion) to maximize financial return
measures of output: profit, sales (unit and value),
market share, and cash flow.
most common inputs: marketing
expense, investment, and number of employees
1.3.non-monetary measures of output
Unit market share as an output variable (strong predictor of cash flow and profitability)
Adaptability or innovativeness of a firm’s marketing
the percentage of sales accounted for by new products, or the number of successful new product launches in a given period.
Quality of services provided
Data envelopment analysis
2.good marketing inputs
asset as a “value-producing resource” for the firm
evalution of marketing assets outside the scope of financial evalution except as goodwill
can be divided into relational and intellectual
systematically evaluate the activities and assets a firm uses in marketing
marketing needs to focus more on developing long-term relationships with profitable customers.
3.1.Market orientation perspective
The market knowledge developed should be an important
asset to future marketing efforts.
components included: systematic gathering,
analysis, dissemination, and use of market information
Empirical evidence on the relationship between business performance and market orientation is mixed:positive, mixed, or no relationship at all
3.2. Customer satisfaction
importan tbenchmarks in many industries, plausible
measures in a balanced scorecard
how well the consumption experience meets or exceeds
existing customers expectations
by surveys of the customer base.
satisfaction ratings are difficult
3.3. Customer loyalty
whether customers stay a customer of the firm over
important marketing asset
marketing costs for these customers should be lower
Loyal customers may be willing to pay a price premium.
reduce the acquisition cost for new customers through positive wordof-mouth.
calculate life-time value of the customers
the revenue generated from a customer in each time period
the cost of serving/retaining that customer in each time period
the length of the customer’s relationship with the firm
Good marketing should produce customer bases with high lifetime values
allow firms to charge price
premiums over unbranded or poorly branded products
can be used to
extend the company’s business into other product categories
reduce perceived risk to customers and investors
two approach to measure the strength
behavioral (customer response to marketinf of the brand,
financial (define the financial value of the brand to firms and their investors)
behavioral and financial approaches to brand equity are at present not well-integrated
activitiies create assets and outcomes, and also are created by them
managers and other stakeholders
managers continue to
rely heavily on financial measures in practice
managers compare their results to the expectations
performance cannot be summarized
in a single measure
unit of analysis
examine marketing performance at the level of marketing programs
evaluate overall corporate marketing
3.efficiency vs effectiveness
efficience - doing things right
effectiveness- doing the right things
take into account the goals of the desicion makers
4.advices for managers
1.systematically collect data on measures applying to your industry.
3.develop measures by market segment (provide powerful management insights)
track these data to develop leading indicators