Chapter Two Marketing Performance and Marketing Profitability

2-2Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Performance and Marketing Profitability Financial vs. market-based performance Marketing performance metrics Profit impact of marketing performance metrics Profit impact of marketing strategies Benchmarking marketing profitability

2-3Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall The Need for Metrics Figure 2-1 The Need for Marketing Performance and Probability Metrics

2-4Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Financial vs. Market-Based Performance Financial (Internal) Performance How is it evaluated? –Sales Revenues –Return on Sales –Gross and Net Profit –Assets –Return on Assets Market-Based (External) Performance How is it evaluated? –Market and Sales Growth –Market Share –Customer Retention and Acquisition –Customer Satisfaction –Relative Product/Service Quality

2-5Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Financial vs. Market-Based Performance Metrics Figure 2-5 Financial vs. Marketing Performance Metrics

2-6Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Performance Metrics Figure 2-6 Marketing Performance Metrics — Profit Impact

2-7Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Profitability What is marketing profitability? –Net Marketing Contribution (NMC) How is it measured? Gross Profit – Marketing Expenses OR Sales Revenue x % Gross Profit – Marketing Expense

2-8Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Profitability Figure 2-8 Santa Fe Sportswear Profits and Marketing Profitability

2-9Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Profitability and Performance Metrics Marketing ROI NMC x 100% Marketing Expenses OR Marketing ROS Marketing Expenses (% of Sales) Marketing ROS NMC x 100% Sales OR Gross Profit (% of Sales) – Marketing Expenses (% of Sales)

2-10Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Profitability Metrics Figure 2-10 Marketing Profitability Metrics

2-11Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Strategies and Marketing Profitability Figure 2-15 Market Strategies and Marketing Profitability

2-12Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Market-Based Business Distinguishing Practices –Tracks market-based measures of marketing performance –Measures marketing profits by product, market, or both –Organizes around markets rather than products

2-13Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Marketing Metrics Must Be Central to Business Decision Making Figure 2-20 Profit Impact of Marketing Performance and Profitability

2-14Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Review Financial vs. market-based performance Marketing performance metrics Profit impact of marketing performance metrics Profit impact of marketing strategies Benchmarking marketing profitability

2-15Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall