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

Business / Marketing Minor

Marketing FundamentalsM21439

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

CoreStrategy

InternallyConsistent

Derived to Achieve Product Market

Objectives

Creates a Competitive Advantage

Incurs AcceptableRisk

Resource and ManageriallySupportable

Clearly Defines Target Customers and their Needs

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


The Marketing

Control Process


Evaluating Performance

• Methods of Evaluating Performance– Sales Analysis

• Sales Measurements– Marketing Cost Analysis– Performance Measures


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

OperationalAnalysis

Financial Analysis

Human Resource Analysis

Market Analysis

Sales & Distribution 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.


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


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

Primary Research

Internal External Qualitative Quantitative

DepthInterviews

DuoInterviews

FocusGroups

CaseStudies

Face-to-Face Surveys

Postal Survey

Experiment

Test Market

TelephoneSurvey

Omnibus Survey Syndicated Survey

Panels

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


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.


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.


Measures of Profitability

Two basic measures of profitability are:

- Return On Assets (profits/assets)

- Asset Turnover


Performance Measures Reflecting Long-Term Profitability


Customer Satisfaction /Brand Loyalty

Product / Service Quality

Brand / Firm Associations

Relative Cost

New Product Activity

Manager / Employee Capability and Performance

CURRENTPERFORMANCE

LONG TERMPROFITS

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.


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.


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.


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.


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?


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.


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.


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?


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?


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

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

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