1-1 McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved C H A P T E R THIRTEEN Measuring and Delivering Marketing Performance 13

1-2 Exhibit 13.2 The Performance Measurement Process Setting standards of performance Specifying the necessary feedback data Obtaining the needed data Evaluating feedback data—explaining gap between actual and given standards of performance Taking corrective action

1-3 Measure of performance  Profitability analysis  Requires analysts to 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  Full costing

1-4 Measure of performance (continued)  Indirect costs  Involve certain fixed joint costs that cannot be linked directly to a single unit of analysis  Direct costing  Involves the use of contribution accounting  Customer satisfaction  Understanding and measuring the criteria used by customers  Using face-to-face approaches

1-5 Decisions for Strategic Monitoring Systems  Identifying key variables  Tracking and monitoring  Strategy reassessment

1-6 Identifying Key Variables  Concerned with external forces  Concerned with effects of certain actions taken by the firm to implement the strategy

1-7 Tracking and Monitoring  Use strategic plan as an early-warning system  Monitor industry sales regularly  Examine relevancy, accuracy, and cost of obtaining needed measures

1-8 Strategy Reassessment  Takes place at periodic intervals  Quarterly or  Annually  Setting triggers to signal the need to reassess viability of the firm’s strategy

1-9 Questions which 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?

1-10 Questions Used to Measure Marketing Performance  Who needs what information?  Sales analysis  Products  End-user customers  Channel intermediaries  Sales territories  Order size  When and how often is it needed?  Key criteria  Timeliness  Store payroll expense

1-11 Questions Used to Measure Marketing Performance (continued)  In what media and in what formats should it be provided?  Advances in information technology made possible the measurement and reporting  What contingencies should be planned for?  Strategies and action plans plans are based on sets of assumptions

1-12 Exhibit The Contingency Planning Process Identifying critical assumptions about the future Determining probability of each critical assumption’s being right Rank ordering of critical assumptions Tracking/monitoring of action plan Setting triggers to contingency plan Setting triggers to activate contingency plan Specifying alternative response options

1-13 Types of Audits  Marketing environment audit  Requires an analysis of the firm’s present and future environment  Identifies significant trends  Objectives and strategy audit  Calls for an assessment of the internal factors  Planning and control system audit  Evaluates firm’s new development procedures

1-14 Types of Audits (continued)  Organization audit  Deals with firm’s overall structure:  Organization of marketing department  Extent of synergy between the various marketing units  Marketing productivity audit  Evaluates the profitability of the company’s:  Individual products  Markets  Key accounts

1-15 Types of Audits (continued)  Marketing functions audit  Examines the marketing-mix elements  Ethical audit  Evaluates the extent to which the company engages in ethical and socially responsible marketing  Product manager audit  Seeks to determine whether product managers are channeling their efforts in the best ways possible