Business / Marketing Minor Marketing Fundamentals M21439 Session 8: Measuring the Effectiveness of Marketing Plans

Key Concepts Internal marketing framework Evaluation of performance methods Areas for operational analysis Various measurement tools

The Internal Marketing Framework Source: Reprinted by permission from Nigel F. Piercy, Market-Led Strategic Change. Copyright © 1992.

Implementing Marketing Activities –Motivating Marketing Personnel –Communicating within the Marketing Unit –Co-ordinating Marketing Activities Copyright © Houghton Mifflin Company. All rights reserved. Dibb/Simkin/Pride/Ferrell MARKETING, 4th Edn.

Marketing Implementation Approaches to Marketing Implementation (continued) –Total Quality Management Empowered Employees Continuous Quality Improvement Quality Improvement Teams Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4 th ed, USA:Houghton Mifflin

Testing Core Strategy Core Strategy Internally Consistent Derived to Achieve Product Market Objectives Creates a Competitive Advantage Incurs Acceptable Risk Resource and Managerially Supportable Clearly Defines Target Customers and their Needs Source: Jobber,D. & Fahy,J.(2003) Foundations of Marketing UK:McGraw-Hill, p.288

Controlling Marketing Activities –Establishing Performance Standards –Evaluating Actual Performance –Taking Corrective Action –Requirements for an Effective Control Process –Problems in Controlling Marketing Activities Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4 th ed, USA:Houghton Mifflin

The Marketing Control Process Copyright © Houghton Mifflin Company. All rights reserved. Dibb/Simkin/Pride/Ferrell MARKETING, 4th Edn.

Evaluating Performance Methods of Evaluating Performance –Sales Analysis Sales Measurements –Marketing Cost Analysis –Performance Measures Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4 th ed, USA:Houghton Mifflin

Measuring Planning Activities Measurements can be broken down into three broad areas: - Quantity : How much was achieved? How much should have been achieved? - Quality : How good was that which was achieved? How good was it meant to be? - Cost : How much did the achievement cost? How much was it planned to cost? Source: Fifield,P.(1998) Marketing Strategy 2 nd ed, UK:Butterworth Heinemann,p.279

Five Distinct Areas of Operation for Analysis Operational Analysis Financial Analysis Human Resource Analysis Market Analysis Sales & Distribution Analysis Physical Resources Analysis Source: Fifield,P.(1998) Marketing Strategy 2 nd ed, UK:Butterworth Heinemann,p.279

Measurement Measurement is the only activity that will demonstrate the effectiveness of the marketing programme. Source: Bayne,K.M. (1997) The Internet Marketing Plan USA:Wiley,p.341

Choice of Measurement Method Demonstrating increased sales is one form of measurement and tracking positive media coverage is another … The choice of measurement methods relates to the original goals. Source: Bayne,K.M. (1997) The Internet Marketing Plan USA:Wiley,p.341

Examples of Measurements Sales generated Primary research e.g. key messages to key publics Press clippings – number and what said Editorial mentions Readership retention Hits on internet sites – domain sites and countries Source: Bayne,K.M. (1997) The Internet Marketing Plan USA:Wiley,p.341

Defining the Market In order to conduct an evaluation of effectiveness the market or submarket boundaries need to be specified. The level of analysis will depend on the organisational unit and strategic decisions involved. Source: Aaker,D.A. (1998) Strategic Market Management 5 th ed, USA:Wiley, p.43

Categorising Market Research Data Secondary Research Primary Research InternalExternalQualitativeQuantitative Depth Interviews Duo Interviews Focus Groups Case Studies Face-to-Face Surveys Postal Survey Experiment Test Market Telephone Survey Omnibus Survey Syndicated Survey Panels Source: Pickton,D. & Broderick,A. (2001) Integrated Marketing Communications UK:Prentice Hall, p.349

Methods of Evaluating Performance –Sales Analysis Sales Measurements –Marketing Cost Analysis –Performance Measures Copyright © Houghton Mifflin Company. All rights reserved. Dibb/Simkin/Pride/Ferrell MARKETING, 4th Edn.

Internal Analysis Internal Analysis often starts with an analysis of current financials, measures of sales and profitability. Changes in either can signal a change in the market viability of a product line and the ability to produce competitively. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.117

Sales & Market Share A sensitive measure of how customers regard a product or service can be sales or market share. It is however necessary to separate changes in sales that are caused by tactical actions from those that represent fundamental changes in the value delivered to the customer, it is therefore important to couple an analysis of sales or share with an analysis of customer satisfaction. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.117

Profitability Profits are important indicators of business performance. They provide the basis for the internally or externally generated capital needed to pursue growth strategies, to replace obsolete plant and equipment and to absorb market risk. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.118

Measures of Profitability Two basic measures of profitability are: - Return On Assets (profits/assets) - Asset Turnover Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.118

Performance Measures Reflecting Long-Term Profitability Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122 Customer Satisfaction / Brand Loyalty Product / Service Quality Brand / Firm Associations Relative Cost New Product Activity Manager / Employee Capability and Performance CURRENT PERFORMANCE LONG TERM PROFITS

Customer Satisfaction / Brand Loyalty Measurement of customer satisfaction and brand loyalty are much more sensitive than measures of sales and market share. They also have diagnostic value as well. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Guidelines for Measuring Satisfaction & Loyalty 1.Problems and causes of dissatisfaction that may motivate customers to change brands/firms should be identified. 2.Often the most sensitive and insightful information comes from those who have decided to leave a brand or firm. Thus exit interviews can be productive. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Guidelines for Measuring Satisfaction & Loyalty – cont. 3.There is a big difference between a brand or firm being liked and the absence of dissatisfaction. The size and intensity of the customer group that likes a brand/firm should be known. 4.Measures should be tracked over time and compared with those of competitors. Relative comparisons and changes are most important. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Product & Service Quality A product/service and its components should be critically and objectively compared both with the competition and with customer expectations and needs. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Product & Service Quality – Useful Questions 1.How good value is it ? 2.Can it really deliver superior performance ? 3.How does it compare with competitor offerings? 4.How will it compare with competitor offerings in the future given competitive innovations? Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Brand / Firm Associations What do customers think about the organisation – what is it’s perceived quality? Perceived quality may be very different that actual quality and such associations can be key strategic assets (positive or negative) for a brand or organisation. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Relative Costs A careful cost analysis of product/service and its components, which can be critical when a strategy is dependent on achieving a cost advantage or cost parity,involves tearing down competitors’ products and analysing their systems in detail. Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.123

New Product Activity Does the R&D operation generate a stream of new product concepts? Is the process from product concept to new product introduction well managed? Is there a track record of successful new products that have affected the product performance profile and market position? Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Manager / Employee Capability & Performance Are the human resources in place to support current and future strategies? Do those who are added to the organisation match its needs in terms of types and quality or are there gaps that are not being filled? Source: Aaker,D.A.(1998) Strategic Market Management 5 th ed, USA:Wiley, p.122

Evaluation EFFICIENCY - doing things right EFFECTIVENESS - doing the right thing ECONOMY - doing things within a specified budget Source: Pickton,D. & Broderick,A. (2001) Integrated Marketing Communications UK:Prentice Hall, p.367