Download Objectives and strategy

Chapter 13
Measuring and Delivering
Marketing Performance
2
Chapter Overview
1.
Profitability Analysis
2.
Questions Used to Measure Marketing Performance
3.
The Contingency Planning Process
Exhibit 13.2 - The Performance Measurement Process
Profitability Analysis
• Analysts 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
Profitability Analysis
–
Full costing: Analysts assign both direct, or variable, and
indirect costs to the unit of analysis
• Indirect costs: Fixed joint costs that cannot be linked directly to
a single unit of analysis
• Direct costing: Use of contribution accounting
Customer Satisfaction
• Understanding and measuring the criteria used by customers
• Using face-to-face approaches
Examples of Questions 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 i
n the environment, competitors’ strategies, or the nature of the i
ndustry?
5.
What changes have occurred in the industry’s key success fact
ors?
6.
To what extent is the firm’s current strategy consistent with the
preceding changes?
Decisions for Strategic Monitoring Systems
• Identifying key variables
• Tracking and monitoring
• Strategy reassessment
Identifying Key Variables
• Concerned with:
– External forces
– Effects of certain actions taken by the firm to implement the strategy
Tracking and Monitoring
• Use strategic plan as an early-warning system
• Monitor industry sales regularly
• Examine relevancy, accuracy, and cost of obtaining needed
measures
Strategy Reassessment
• Takes place at periodic intervals
• Quarterly
• Annually
• Setting triggers to signal the need to reassess viability of the firm’s
strategy
Questions Used to Measure Marketing Performance
• Who needs what information?
– Sales analysis
•
•
•
•
•
•
Geographical areas
Product, package size, and grade
Customer
Channel intermediary
Method of sale
Order size
SEO and SEM Analysis
• Search engine optimization (SEO): Set of techniques that ensure
a company’s web pages are ranked highly when consumers use
search engine for information
• Search engine marketing (SEM): Buying keywords for which
consumers are likely to search
Questions Used to Measure Marketing Performance
• When and how often is it needed?
– Key criteria
• Timeliness
• Store payroll expense
• In what media and in what format(s) should it be provided?
– Advances in information technology made possible the measurement and
reporting
Questions Used to Measure Marketing Performance
• Does your system of marketing metrics measure up?
– Developing a set of marketing metrics as part of an overall performance
measurement system is:
• Getting the metrics aligned with the strategy
• What contingencies should be planned for?
– Strategies and action plans are based on assumptions about the future
Exhibit 13.14 - The Contingency Planning Process
Global Marketing Monitoring
• Measuring the performance is difficult because of the number of
countries involved:
– Each presenting a unique set of opportunities and threats
• Use of electronic data interchange and the Internet should:
– Simplify performance evaluation across countries
The Marketing Audit
• Control and planning mechanism to review total marketing efforts
• Conducted across all products and business units
• Covers the SBU’s:
– Objectives and strategy
– Plan of action for each product-market entry
• Provides an assessment of each SBU’s overall competitive position
Types of Audits
• Marketing environment: Requires an analysis of the firm’s present
and future environment
– Identifies significant trends
• Objectives and strategy: Calls for an assessment of the internal
factors
Types of Audits
• Planning and control system: Evaluates adequacy of the systems
and the firm’s new development procedures
• Organization: Deals with firm’s overall structure
– Organization of marketing department
– Extent of synergy between the various marketing units
Types of Audits
• Marketing productivity: Evaluates the profitability of the company’s:
– Individual products
– Markets
– Key accounts
• Marketing functions: Examines the marketing-mix elements
Types of Audits
• Ethical: Evaluates the extent to which the company engages in
ethical and socially responsible marketing
• Product manager: Determines whether product managers are
channeling their efforts in the best ways possible