Marketing Metrics & Audits Hifni Alifahmi &

The Marketing Control Process What do we want to achieve? What is happening? Why is it happening? What should we do about it? Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan, Marketing Management: An Asian Perspective, 1996: 941. Goal Setting Performance Measurement Performance Diagnosis Corrective Action Marketing Audit Marketing Metrics Marketing Research

Types of Marketing Control Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan, Marketing Management: An Asian Perspective, 1996: 942. Type of Control Prime Responsibility Purpose of Control Approaches Annual Plan Control Top Management Middle Management To examine whether the planned results are being achieved Sales analysis Market-share analysis Sales-to-expense ratio Financial analysis Profitability Control Marketing ControllerTo examine where the company is making & losing money Profitability by: product, territory, customer, segment, trade channel, order size Efficiency Control Line & Staff Management Marketing Controller To evaluate & improve the spending efficiency and impact of marketing expenditures Efficiency of: salesforce, advertising, sales promotion, distribution Strategic Control Top Management Marketing Auditor To examine whether the company is pursuing its best opportunities with respect to markets, products, and channels Marketing-effectiveness rating instrument Marketing audit Marketing excellence review Company ethical and social responsibility review

Financial Model of RONW 12.5% Return on assets Financial leverage Return on net worth (RONW) % ==x Net profits Total assets Net worth Profits Net worth 3.2% 1.5% Net profits Net sales Total assets Profit margin Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan, Marketing Management: An Asian Perspective, 1996: 948.

Mertics is a measuring system that quantifies a trend, dynamic, or characteristic. In virtually all disciplines, practitioners use metrics to explain phenomena, diagnose causes, share findings, and project the results of the events. Illustrations: Share of Hearts, Minds, and Markets - Market Share - Relative Market Share - Awareness - Top of Mind Marketing Metrics Source: Paul W. Farris, et.al. Marketing Metrics, 2006:1, 8.

Marketing Metrics: Marketing at the Core of the Organization Share of Hearts, Minds, and Markets Product and Portfolio Management Customer Profitability Margin and Profits Marketing and Finance Advertising Media and Web Metrics Channel Management and Sales Force Pricing Strategy Promotions The Trade Sales Force LogisticsOperations Finance Advertising Agency Source: Marketing Metrics, 2006: 5.

A Marketing Audit is a comprehensive, systematic, independent, and periodic examination of a company’s –or business unit’s– marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance. Four characteristic of marketing audit: Comprehensive, Systematic, Independent, Periodic. The Marketing Audit Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan, Marketing Management: An Asian Perspective, 1996:

Components of a Marketing Audit Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan, Marketing Management: An Asian Perspective, 1996: ComponentsAspects Marketing Environment Audit Macro Environment: Demographic, Economic, Ecological, Technological, Political, Cultural Task Environment: Markets, Customers, Competitors, Distribution and Dealers, Suppliers, Facilitators & Marketing Firms, Publics Marketing Strategy Audit Business Mission, Marketing Objectives and Goals, Marketing Strategy (clear, convincing, appropriate) Marketing Organization Audit Formal Structure, Functional Efficiency, Interface Efficiency (Marketing & Manufacturing, R&D, Finance, Purchasing, Accounting, Legal, etc.) Marketing System Audit Marketing Information System, Marketing Planning System, Marketing Control, New Product Development System Marketing Productivity Audit Profitability Analysis (competitor’s products, markets, channels; should the company enter, expand, contract, or withdraw from any business segments?) Cost-Effectiveness Analysis (excessive/reducing cost) Marketing Function Audit Products, Price, Distribution, Advertising, Sales Promotion, Public Relations, and Sales Force

Marketing Strategy and analysis Target marketing process Marketing Planning program development Ultimate Consumer -Consumer -Business Promotions to final buyer Target market Resellers Purchase Belch & Belch, 2007:39 Marketing & Promotion Process Model Promotions to trade Internet/ Interactive Promotional Decisions - Advertising - Direct marketing - Interactive Marketing - Sales Promotions - Publicity and Public Relations - Personal Selling Opportunity analysis Competitive analysis Target Marketing Market Segmentation Product Decisions Pricing decisions Channel of Distributions Decisions Identifying Markets Positioning through Marketing Strategic Selecting a Target Market

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Product-Life Cycle: Characteristics & Objectives Source: Philip Kotler & Kevin Lane Keller, Marketing Management, 12e, 2006: 310. IntroductionGrowth MaturityDecline Sales Low salesRapidly rising salesPeak salesDeclining sales Costs High cost per customer Average cost per customer Low cost per customer Profits NegativeRising profitsHigh profitsDeclining profits Customers innovatorsEarly adoptersMiddle majorityLaggards Competitors FewGrowing number Stable number beginning to decline Declining number Marketing Objectives Create product awareness & trial Maximize market share Stable number beginning to decline Declining number

Product-Life Cycle Strategies Source: Philip Kotler & Kevin Lane Keller, Marketing Management, 12e, 2006: 310. IntroductionGrowth MaturityDecline Product Offer a basic product Offer product extensions, service, warranty Diversity brands and items models Phase out weak Price Charge cost-plus Price to penetrate market Price to match or best competitors’ Cut price Distribution Build selective distribution Build intensive distribution Build more intensive distribution Get selective: phase out unprofitable outlets Advertising Build product awareness among early adopters and dealers Build awareness and interest in the mass market Stress brand differences and benefits Reduce to level needed to retain hard-core loyals Sales promotion Use heavy sales promotion to entice trial Reduce to take advantage of heavy consumer demand Increase to encourage brand switching Reduce to minimal level

Product Portfolio Trajectory Analysis Source: Roger P. Kerin, Vijay Mahajan, P. Rajan Varadarajan, Contemporary Perspectives on Strategic Market Planning, 1990: 55. StarsQuestion Marks Cash CowsDogs Relative Market Share HighLow High Low Market Growth Rate New Product Introduction F G B E A C D 1x.1x10x Divestment Present Position Forecast Position of SBU 10% 20% 4% 8% 16%

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Source: Roger P. Kerin, Vijay Mahajan, P. Rajan Varadarajan, Contemporary Perspectives on Strategic Market Planning, 1990: 55. StarsQuestion Marks Cash CowsDogs Relative Market Share HighLow High Low Market Growth Rate Success Trajectories Success & Disaster Trajectory 1x.1x10x 10% 20% 4% 8% 16%

Success & Disaster Trajectory Source: Roger P. Kerin, Vijay Mahajan, P. Rajan Varadarajan, Contemporary Perspectives on Strategic Market Planning, 1990: 55. StarsQuestion Marks Cash CowsDogs Relative Market Share HighLow High Low Market Growth Rate Disaster Trajectories 1x.1x10x 10% 20% 4% 8% 16%