Download Market-Based Management

Market-Based
Management, 4th
edition
Market-Based Management
and Financial Performance
Chapter Sixteen
Market-Based Management
and Financial Performance
Chapter Sixteen
– Market-Based Management, Financial
Performance, and Shareholder Value
– Customers and Shareholder Value
– Customer-Focused Strategies and
Shareholder Value
16-2
How to Overwhelm Customers
and Shareholders
16-3
Customer Satisfaction and
Shareholder Value
16-4
Marketing Strategies
and Profitability
How are marketbased net profits
derived?
16-5
Customer-Focused Marketing
Strategies and Profitability
•
Customer Volume Strategies
1. Attract new customers to grow market share
2. Grow the market demand by bringing more customers into
the market
3. Enter new markets to create new sources of customer
volume
•
How is Customer Volume Calculated?
•
How do Customer Volume Strategies affect Total
Contribution, Net Marketing Contribution, and Profit?
16-6
Customer-Focused Marketing
Strategies and Profitability
• Customer Margin Strategies
1. Grow revenue per customer by product-line extensions
or by adding services
2. Increase margin per customer with improved valueadding products and services
3. Lower variable sales and transaction costs
4. Eliminate undesirable customers
• How is Customer Margin Calculated?
• How do Customer Volume Strategies affect
Total Contribution, Net Marketing
Contribution, and Profit?
16-7
Marketing Strategies and
Assets
• How do Marketing Strategies affect
assets?
1. Accounts Receivable
2. Investment in Inventory
3. Investment in Fixed Assets
16-8
Return Measures of
Profitability
• How does Net Marketing Contribution affect
Net Profits?
– Return on Sales (ROS)
• Net Profit/Sales
– Return on Assets (ROA)
• Net Profit/Assets
– Return on Equity (ROE)
• Net Profit/Equity
16-9
Measures of Shareholder
Value
• How does Market-Based Management
affect Shareholder Value?
– Earnings per share (EPS)
– Price Earnings Ratio (PE)
– Economic Profit (EP)
16-10
Market-Based Management
and Shareholder Value
16-11
Takeaways/Review
• Customer Satisfaction and Shareholder Value
• Market-Based Management and Shareholder Value
• Customer-Focused Marketing Strategies and
effects on profits, assets, and shareholder value
16-12
Marketing Performance
Tools
Marketing Profitability and Financial Performance
Sales
Return on
Revenues
Sales
$4,000
Gross
7.8%
Profit
Gross
$1,000
Return
Margin
25.0%
on Assets
Net Marketing
Total
8.9%
Assets
Contribution
Marketing
$3,500
$640
Return on
Expenses
9%
Operating
Owners'
Equity
Equity
13.6%
$2,300
Return on
Invested
Liabilities
Capital
Capital
$1,200
14.2%
$2,200
Income
Operating
Total
$520
Expenses
3%
Net
Income
Economic
Cap. Times
Cost of
and Taxes
Interest
$312
Profit
Cost of Cap.
Capital
40%
$48
$264
12%
Earnings
No. Shares
• Marketing ROS 18%
Per Share
(millions)
• Marketing ROI 122%
$1.70
184
Marketing Profitability Metrics
• NMC per Share $3.48
16-13