This document discusses approaches for measuring marketing productivity, including marketing metrics and marketing-mix modeling. It describes four key tools for measuring marketing plan performance: sales analysis, market share analysis, marketing expense-to-sales analysis, and financial analysis. Sales analysis involves measuring actual sales against goals. Market share analysis examines a company's performance compared to competitors. Marketing expense-to-sales analysis analyzes key expense ratios. Financial analysis reviews financial ratios to understand performance. Marketing-mix modeling sees the 4Ps (product, price, place, promotion) financially and analyzes the effects of different marketing activities.

1. Part 2: Capturing Market Insights> Measuring Marketing Productivity> Forecasting and Demand MeasurementClass Presentation | Session 6 | 25 Aug 2010

2. Measuring Marketing ProductivityConceptAccountability of Marketing programs & Marketing ManagementMarketers should:Be able to justify the marketing expendituresunderstand and analyze “financials” of their activitiesReview and analyze all kind of financial data particularly related to their activitiesMG 220 Marketing Management2

3. Measuring Marketing ProductivityApproaches2 Key Approaches:Marketing MetricsMarketing-Mix ModelingMG 220 Marketing Management3

4. Measuring Marketing ProductivityMarketing MetricsMarketing Metrics is the set of measures that helps firms to quantify, compare and interpret their marketing performanceUsed by marketers to design programsUsed by top management to decide on allocationsMG 220 Marketing Management4

5. Measuring Marketing ProductivityMeasuring Marketing Plan PerformanceFour key tools used:Sales AnalysisMarket Share AnalysisMarketing Expense-to-sales AnalysisFinancial AnalysisMG 220 Marketing Management5

6. Measuring Marketing ProductivityMeasuring Marketing Plan Performance1. SALES ANALYSISConsists of measuring and evaluating actual sales in relation to goalsSales Variance Analysis measures relative contribution of different factors to a gap in sales performanceMicrosales Analysis looks at specific products, territories that failed to produce results MG 220 Marketing Management6

7. Measuring Marketing ProductivityMeasuring Marketing Plan Performance2. MARKET SHARE ANALYSISHow well company is performing compared to competitorsOverall Market Shareis the company’s sales expressed as a percentage of total market salesServed Market Shareis the company’s sales expressed as a percentage of total sales in served marketServed Market: All buyers and who are able and willing to buy its product (generally a part of total market, because this is only for company’s product)Served Market Share is always greater than OverallMG 220 Marketing Management7

8. Measuring Marketing ProductivityMeasuring Marketing Plan Performance2. MARKET SHARE ANALYSIS (…contd)Relative Market Shareis the company’s market share compared to its largest competitorIf <100: company is followerIf 100: tie as market leaderIf >100: company is market leaderLimitations in Market Share AnalysisOutside factors affect everyone equally?Company’s performance against overall average of its competitorsNew firm entering => dec. in market share (its not bad performance)If market share is engineered to focus away from unprofitable segmentsanomaliesMG 220 Marketing Management8

9. Measuring Marketing ProductivityMeasuring Marketing Plan Performance3. MARKETING EXPENSE-TO-SALES ANALYSISKey ratio to be analyzedVery important to see its variance, cause and effect etc.MG 220 Marketing Management9

10. Measuring Marketing ProductivityMeasuring Marketing Plan Performance4. Financial AnalysisFinancial ratios should be reviewed to understand where the performance is coming fromMG 220 Marketing Management10

11. Measuring Marketing ProductivityMarketing-Mix ModelingSee the 4Ps FinanciallyReview all data related to 4Ps and understand effects of different marketing activitiesNon-financial activity to be done primarily by marketing teamMG 220 Marketing Management11

12. Forecast and Demand MeasurementConceptReview concepts related to demand in more depthFocus on analysis and forecastingMG 220 Marketing Management12

13. QUIZ # 1 | 23 Aug 2010RESULTSMG 220 Marketing Management13

14. Part 2: Capturing Market Insights> Forecasting and Demand Measurement> Review of Part 2Class Presentation | Session 7 | 25 Aug 2010