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
• 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 4th ed, USA:Houghton Mifflin
Testing Core Strategy
Clearly Defines Target
Customers and their Needs
Creates a
Competitive
Advantage
Internally
Consistent
Derived to Achieve
Product Market
Objectives
Core
Strategy
Incurs Acceptable
Risk
Resource and Managerially
Supportable
Source: Jobber,D. & Fahy,J.(2003) Foundations of Marketing UK:McGraw-Hill, p.288
Controlling Marketing Activities
• 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 4th 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 4th 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 2nd ed, UK:Butterworth Heinemann,p.279
Five Distinct Areas of Operation
for Analysis
Market
Analysis
Sales &
Distribution Analysis
Financial
Analysis
Operational
Analysis
Human Resource
Analysis
Physical Resources
Analysis
Source: Fifield,P.(1998) Marketing Strategy 2nd 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 5th ed, USA:Wiley, p.43
Categorising Market Research Data
Secondary
Research
Internal
External
Depth
Interviews
Focus
Groups
Duo
Interviews
Case
Studies
Primary
Research
Qualitative
Quantitative
Face-to-Face
Surveys
Experiment
Postal Survey
Test Market
Omnibus Survey
Syndicated Survey
Panels
Telephone
Survey
Source: Pickton,D. & Broderick,A. (2001) Integrated Marketing Communications UK:Prentice Hall, p.349
Methods of Evaluating Performance
• 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 5th 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 5th 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 5th 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 5th ed, USA:Wiley, p.118
Performance Measures Reflecting
Long-Term Profitability
Customer Satisfaction /
Brand Loyalty
Product / Service Quality
Brand / Firm Associations
Relative Cost
CURRENT
PERFORMANCE
LONG TERM
PROFITS
New Product Activity
Manager / Employee
Capability and Performance
Source: Aaker,D.A.(1998) Strategic Market Management 5th ed, USA:Wiley, p.122
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 5th 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 5th 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 5th 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 5th 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 5th 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 5th 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 5th 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 5th 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 5th 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