Chap019

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Chap019

  1. 1. 19<br />The Marketing Dashboard: Metrics for Measuring Marketing Performance<br />Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved<br />McGraw-Hill/Irwin<br />
  2. 2. LEARNING OBJECTIVES<br />Understand the concept of a marketing dashboard and how it improves marketing planning in a firm<br />Explain return on marketing investment (ROMI), including cautions about its use<br />Identify other relevant marketing metrics and how they are applied<br />Develop detailed action plans in support of the overall marketing plan<br />Decide on an appropriate combination of forecasting approaches<br />Prepare a marketing budget<br />Provide controls and contingency plans<br />Conduct a marketing audit<br />19-2<br />
  3. 3. THE MARKETING DASHBOARD<br />A comprehensive system providing managers with up-to-the minute information necessary to run their operation. <br />Including data on actual sales versus forecast, progress on marketing plan objectives, distribution channel effectiveness, sales force productivity, brand equity evolution, etc.<br />19-3<br />
  4. 4. Key benefits of a marketing dashboard<br />19-4<br />
  5. 5. Elements of a Marketing Dashboard<br />Goals and Objectives <br />Initiative ROI and Resource Allocation <br />Brand and Customer Asset Evolution <br />Skills<br />Process <br />Tools <br />Diagnostic Insight <br />Predictive Value <br />Efficiency and Effectiveness <br />19-5<br />
  6. 6. Potential Pitfalls in Marketing Dashboards<br />Over-reliance on “inside-out” measurement. <br />Too many tactical metrics; not enough strategic insight. <br />Forgetting to market the dashboard internally. <br />19-6<br />
  7. 7. RETURN ON MARKETING INVESTMENT (ROMI)<br />Investment decisions in marketing must consider four basic elements:<br />19-7<br />
  8. 8. Cautions about Over-reliance on ROMI<br />Temper the interpretation of ROMI results with review of other appropriate metrics. <br />ROMI was originally designed for comparing capital projects.<br />19-8<br />
  9. 9. Cautions about Over-reliance on ROMI<br />Other commonly expressed objections:<br />Typically marketing expenditures are not treated as an investment in a company’s accounting system.<br />ROMI requires the profit to be divided by expenditure.<br />ROMI is maximized during the period when profits are still growing. <br />19-9<br />
  10. 10. Cautions about Over-reliance on ROMI<br />Other commonly expressed objections:<br />Calculating ROMI requires knowing what would have happened if the incremental expenditure hadn’t taken place.<br />When executives discuss ROMI with different metrics in mind, confusion results and the value of the metric degrades.<br />ROMI by nature ignores the effect of the marketing assets of the firm and tends to lead managers toward a more short-term decision perspective.<br />19-10<br />
  11. 11. A SAMPLING OF OTHER MARKETING METRICS<br />Market Share <br />The percentage of a market accounted for by a specific product, product line, or brand. <br />Penetration<br />A measure of brand or category popularity. <br />19-11<br />
  12. 12. A SAMPLING OF OTHER MARKETING METRICS<br />Margin on Sales<br />The difference between selling price and cost.<br />Cannibalization Rate<br />Cannibalization is the reduction in sales of a firm’s existing products due to the introduction of a new product.<br />19-12<br />
  13. 13. A SAMPLING OF OTHER MARKETING METRICS<br />Customer Lifetime Value (CLV)<br />The dollar value of a customer relationship based on the present value of the projected future cash flows.<br />Sales Force Effectiveness<br />By analyzing sales force performance, marketing managers can make changes to optimize sales going forward.<br />19-13<br />
  14. 14. A SAMPLING OF OTHER MARKETING METRICS<br />Supply Chain Metrics<br /> Measures of important indicators of a firm’s success in its supply chain.<br />Promotions and Pass-Through<br />Of the promotional value provided by a manufacturer to its distributors and retailers.<br />19-14<br />
  15. 15. A SAMPLING OF OTHER MARKETING METRICS<br />Cost Per Thousand Impressions (CPM) Rates<br />The cost per thousand advertising impressions.<br />Click-through Rates<br />Quantifies the advertising “presence” that a specific product or brand enjoys.<br />19-15<br />
  16. 16. DEVELOPING EFFECTIVE ACTION PLANS<br />In a marketing plan, every strategy must include an implementation element. <br />19-16<br />
  17. 17. Format for Developing Action Plans<br />EXHIBIT 19.3 <br />19-17<br />
  18. 18. FORECASTING FOR MARKETING PLANNING<br />Subjective Methods of Forecasting<br />19-18<br />
  19. 19. FORECASTING FOR MARKETING PLANNING<br />Objective Methods of Forecasting<br />19-19<br />
  20. 20. FORECASTING FOR MARKETING PLANNING<br />Selecting the Appropriate Forecasting Method(s)<br />Which forecasting method(s) should be used and how accurate is the forecast likely to be?<br />Bottom line, no single method of forecasting is likely to be superior under all conditions.<br />19-20<br />
  21. 21. THE MARKETING BUDGET <br />Four principal methods of preparing a marketing plan budget:<br />19-21<br />
  22. 22. CONTROLS AND CONTINGENCY PLANNING<br />Tips for Effective Control<br />Controls should involve only the minimum amount of information needed to give a reliable picture of events. <br />Controls should monitor only meaningful activities and results. <br />Controls should be timely.  <br />Controls should be long term and short term. <br />Controls should pinpoint exceptions.  <br />Controls should be used to reward meeting or exceeding standards rather than to punish failure to meet standards. <br />19-22<br />
  23. 23. THE MARKETING AUDIT<br />A marketing manager may wish to initiate a marketing audit when any of the following conditions are present:<br />The firm is about to undergo a major re-branding initiative.<br />Evidence exists of significant marketing inefficiencies and poor ROMI and other metrics.<br />A new creative agency is coming on board.<br />A recent change has occurred in top management.<br />Marketing has undergone a reorganization within the firm.<br />19-23<br />
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