Chapter 13 Measuring and Delivering Marketing Performance

Chapter Overview Profitability Analysis Questions Used to Measure Marketing Performance The Contingency Planning Process

Exhibit 13.2 - The Performance Measurement Process

Profitability Analysis Analysts determine costs associated with specific marketing activities Limitations Objectives can best be measured in nonfinancial terms Profit is a short-term measure Profits can be affected by factors over which management has no control

Profitability Analysis Full costing: Analysts assign both direct, or variable, and indirect costs to the unit of analysis Indirect costs: Fixed joint costs that cannot be linked directly to a single unit of analysis Direct costing: Use of contribution accounting

Customer Satisfaction Understanding and measuring the criteria used by customers Using face-to-face approaches

Examples of Questions a Strategic Monitoring System Should Be Able to Answer 1. What changes in the environment have negatively affected the current strategy? 2. What changes have major competitors made in their objectives and strategies? 3. What changes have occurred in the industry in such attributes as capacity, entry barriers, and substitute products? 4. What new opportunities or threats have derived from changes in the environment, competitors’ strategies, or the nature of the industry? 5. What changes have occurred in the industry’s key success factors? 6. To what extent is the firm’s current strategy consistent with the preceding changes? Refer to Exhibit 13.9

Decisions for Strategic Monitoring Systems Identifying key variables Tracking and monitoring Strategy reassessment

Identifying Key Variables Concerned with: External forces Effects of certain actions taken by the firm to implement the strategy

Tracking and Monitoring Use strategic plan as an early-warning system Monitor industry sales regularly Examine relevancy, accuracy, and cost of obtaining needed measures

Strategy Reassessment Takes place at periodic intervals Quarterly Annually Setting triggers to signal the need to reassess viability of the firm’s strategy

Questions Used to Measure Marketing Performance Who needs what information? Sales analysis Geographical areas Product, package size, and grade Customer Channel intermediary Method of sale Order size

SEO and SEM Analysis Search engine optimization (SEO): Set of techniques that ensure a company’s web pages are ranked highly when consumers use search engine for information Search engine marketing (SEM): Buying keywords for which consumers are likely to search

Questions Used to Measure Marketing Performance When and how often is it needed? Key criteria Timeliness Store payroll expense In what media and in what format(s) should it be provided? Advances in information technology made possible the measurement and reporting

Questions Used to Measure Marketing Performance Does your system of marketing metrics measure up? Developing a set of marketing metrics as part of an overall performance measurement system is: Getting the metrics aligned with the strategy What contingencies should be planned for? Strategies and action plans are based on assumptions about the future

Exhibit 13.14 - The Contingency Planning Process

Global Marketing Monitoring Measuring the performance is difficult because of the number of countries involved: Each presenting a unique set of opportunities and threats Use of electronic data interchange and the Internet should: Simplify performance evaluation across countries

Control and planning mechanism to review total marketing efforts The Marketing Audit Control and planning mechanism to review total marketing efforts Conducted across all products and business units Covers the SBU’s: Objectives and strategy Plan of action for each product-market entry Provides an assessment of each SBU’s overall competitive position

Objectives and strategy: Calls for an assessment of the internal Types of Audits Marketing environment: Requires an analysis of the firm’s present and future environment Identifies significant trends Objectives and strategy: Calls for an assessment of the internal factors Instructor: See Exhibit 13.15

Organization: Deals with firm’s overall structure Types of Audits Planning and control system: Evaluates adequacy of the systems and the firm’s new development procedures Organization: Deals with firm’s overall structure Organization of marketing department Extent of synergy between the various marketing units

Marketing productivity: Evaluates the profitability of the company’s: Types of Audits Marketing productivity: Evaluates the profitability of the company’s: Individual products Markets Key accounts Marketing functions: Examines the marketing-mix elements

Types of Audits Ethical: Evaluates the extent to which the company engages in ethical and socially responsible marketing Product manager: Determines whether product managers are channeling their efforts in the best ways possible