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MIP 30,5

Judging marketing mix effectiveness
Neil Brooks and Lyndon Simkin
Business School, Oxford Brookes University, Oxford, UK
Abstract
Purpose – The purpose of this paper is to review the differing structural constraints between corporates and small to medium-sized enterprises (SMEs) in the area of measuring marketing effectiveness and, using the premise that an imperfect measure is better than none, demonstrate a practitioner-developed tool for “judging” marketing mix effectiveness through a case study from the automotive sector. Design/methodology/approach – The paper uses literature review, SME practitioner experience and a case study from the global automotive sector. Findings – There is no single “magic bullet” metric for measuring marketing effectiveness. Whilst multiple metrics might therefore be used, SMEs’ variances from corporates can render this approach “too difficult”. This can lead to SMEs managing their marketing without adequate planning/control, relying instead on anecdotes/myths. The case-examined practitioner tool assumes an incomplete measurement system is better than none and that the most pragmatic start-point is the marketing mix itself. It is demonstrated to deliver positive outcomes in a number of areas. Research limitations/implications – Owing to the volume of research data on measuring marketing effectiveness, the authors have focused on those metrics that they have observed more commonly in use in UK businesses. The research into the practitioner tool is based on its observed outcomes with 28 UK SMEs since 2005 and highlights a single implementation with an automotive sector firm. Practical implications – The practitioner tool offers a pragmatic starting-point in an SME environment where there might otherwise be no rational measurement of marketing effectiveness (in whole or in part) at all. Originality/value – The paper’s contribution is to question the applicability of current academic thought in the context of certain business situations, whilst offering an illustrative example of a pragmatic solution for SME practitioners. It is posited that by making use of this solution, SME owner/managers would be better equipped to understand the strategic linkages between marketing mix elements, customer groups and the outcomes of past marketing actions, leading to a more considered approach to future marketing decisions in line with business objectives. Keywords United Kingdom, Automotive industry, Small to medium-sized enterprises, Marketing mix, Marketing decision making, Performance, Measurement Paper type Case study

494
Received 20 January 2011 Revised 1 February 2012 12 April 2012 Accepted 20 April 2012

Marketing Intelligence & Planning Vol. 30 No. 5, 2012 pp. 494-514 r Emerald Group Publishing Limited 0263-4503 DOI 10.1108/02634501211251025

1. Introduction Measuring marketing effectiveness is notoriously difficult for academics and practitioners alike (Hood, 1969; Clark, 2000; Seggie et al., 2007; McDonald, 2010). The academic literature of the last 40 years suggests a number of long-standing reasons for this, all of which still exist. Marketing activity has both tangible and intangible effects. Measuring a tangible element, like sales volume, is easy (albeit retrospectively) but intangibles, like brand equity, can only be estimated at best (Ambler, 2003). Marketing activity has both short-term and long-term (future) effects. Measuring the short term is relatively straightforward, but measuring (estimating) the future is an inexact science that relies on many assumptions that are open to manipulation (Ambler, 2003). Similarly, history impacts on marketing effectiveness – expenditures tend to be accounted for annually, whereas the influence of those

expenditures is cumulative, thus a change in sales volume in one year could be partly a residual echo from previous years’ activity (Sheth et al., 2009). Marketing operates within a volatile and uncontrollable external environment that includes its customers, competitors and legislators. Thus measureable effects on business performance can be experienced that are not directly attributable to the firm’s own activities (Sheth and Sisodia, 1995a; Rust et al., 2004a). Equally, marketing operates within an internal environment which is subject to constraint and change. Strong marketing plans are informed by, and operate within, the confines of the firm’s strategy thus low marketing effectiveness could be the result of poor strategic direction rather than poor marketing (Sheth et al., 2009). Similarly, short-term executive decisions regarding marketing resources/budgets could lead to sub-optimal effectiveness. There is corporate confusion between marketing’s total business process and what the marketing department does. Agreeing exactly what to measure the effectiveness of is an essential starting point for any assessment process (Clark, 2000). When it comes to available metrics for measuring marketing performance and/or effectiveness, marketers have a wide choice. In reviewing the literature, the authors have uncovered more than 250 different metrics that could wholly or partly contribute to a marketing effectiveness measure, including an observed link with organisational emotional intelligence (Nwokah and Ahiauzu, 2009). Furthermore, Pont and Shaw (2003) concluded that the operational selection of metrics from this pool was more arbitrary than scientific and exhibited a clear preference for the subjective. Bonoma and Clark’s view (1988, cited in Ambler et al., 2001) that, “perhaps no other concept in marketing’s short history has proven as stubbornly resistant to conceptualisation, definition, or application as that of marketing performance” remains true. Yet, to practice marketing without any rational means of effectiveness measurement would be reckless and wealth destroying (Ehrbar, 1999). Without measurement, current programmes, new initiatives and targeted improvements cannot be validated, so even the use of imperfect measures is better than none (Sheth and Sisodia, 1995b). This paper considers the structural constraints commonly facing small- to medium-sized enterprises (SMEs) (below 250 employees) that are not so prevalent in larger enterprises (Gilmore et al., 2001) and proposes a practitioner-developed tool for “judging” marketing mix effectiveness as a pragmatic alternative to continued “haphazard” small-firm marketing (Siu and Kirby, 1998; Gilmore et al., 2001). It begins with differing corporate/SME ease of use issues for marketing effectiveness measures then reviews prominently discussed “formal” effectiveness measures examining their applicability to the SME situation. This is followed by an anecdotal case example from the automotive sector by way of illustrating the tool’s usage, concluding with known limitations of the proposed tool and suggesting additional research to add further robustness, potentially making it self-service for smallbusiness owner/managers. The contribution that this paper makes is to question the applicability of current academic thought in the context of certain business situations, whilst offering an illustrative example of a pragmatic solution for SME practitioners. It is posited that by making use of this solution, SME owner/managers would be better equipped to understand the strategic linkages between marketing mix elements, customer groups and the outcomes of past marketing actions, leading to a more considered approach to future marketing decisions in line with business objectives.

Judging marketing mix effectiveness 495

2004b. intermittent or no reliable multi-year data are independently kept on marketing activity other than financial information. Gilmore et al.. Agreed marketing plans can be diluted by “events”. Specifically focusing on the situation facing SMEs (or similarly sized independent business units of corporates). 2001. p. Limited. Issues with existing metrics compounded by a lack of data and knowledge/experience can leave SMEs in a difficult position. By couching their views in complex technical terms they can easily sway marketers from considering new measurement options – consider this for example. say 20. p. 2003. Measurement concerns apply equally to both large and smaller organisations. but there are issues that predominate in each type of organisation. The level of market orientation that the firm exhibits. “Clearly managers are capable of assessing multiple dimensions regarding performance. Whilst these changes could have happened due to marketing activity.MIP 30. whilst highly influential on organisational performance (Akdeniz et al. then. At the end of the measuring period. The question. . they could equally occur through the customer’s own activity or generic market conditions. 2010).. 2003). is whether they are assessing the right dimensions for their business”. All too often only anecdotal data are available. This includes a lack of both internal non-financial data as well as external (market) data. 2003). p. Ambler et al. 220). Simpson et al. Marketing metrics have their own difficulties with measurement and with so many available it is no wonder that many marketers adhere to what they know. thus they tend to select metrics that reflect that partiality – often restricting measurement to what is “easily measured” rather than what is most “useful to measure”. And firms tend to achieve what they measure (Ambler. “a principal components multinomial logit regression model for estimating the Markov brand-switching matrix” (Rust et al. 1998... it is hard to separate the actual aggregated results from what might have been achieved should the original marketing plan have been fully executed. 2006): . it can be seen that they may have a number of structural difficulties in managing marketing metrics that do not as readily face their corporate cousins (Gilmore et al. p. .. whereas SMEs may need only five or six” (Ambler. will naturally direct the choice of effectiveness measures. 123) – one that would perhaps be consigned to the rapidly growing “too difficult pile” that exists on every marketing manager’s desk. with too much in large organisations and too little in SMEs (Ambler. 21). easily “swamping” any marketing contribution to financial results. but ‘Just In Case’ marketing”. According to the anonymous CEO quoted in Sheth and Sisodia (1995b. . the firm’s management ability/readiness to handle multiple metrics could be different – “larger firms can handle more. To quote Clark (2000. p. “Many firms today practice ‘Just In Time’ manufacturing. 108).5 496 2. diverting management and staff focus. (2001. 7) make the case that managers can be swayed by “time. Corporation vs SME – implications for metric usage SMEs tend towards a somewhat haphazard way of managing their marketing activity (Siu and Kirby. 2001) which includes how they measure (if at all) effectiveness. Marketing academics do not always help. Revenues can be skewed by one or two large customer changes. financial constraints and environmental uncertainty to take a partial view of their environment”. Similarly. metrics because they have more to draw on. Data availability/quality is an obvious area.

marketing can only be effective in the window of operations permitted (cf. Whilst some sympathy accrues to the owner-manager as she/he must exhibit a broad range of skills and knowledge to solve problems that impact every aspect of their business (Giroux. p. 2010). A rapid start/stop mentality is commonly applied to “discretionary” spend which disrupts marketing activity and thus measurability. should they exist. . . Thus all that is available to the marketing practitioner is typically qualitative data. “SME marketing is likely to be haphazard. However. reactive. loose. whole avenues of marketing options may be defined as “no go” areas entirely due to the owner-manager’s prejudice. repeatability and comprehension by non-marketers. Smaller organisations may have a tendency to focus on operational rather than strategic marketing activities. According to Gilmore et al. Organisational culture operates in all firms. spontaneous. Judging marketing mix effectiveness 497 . This is especially true the smaller the firm gets with financial reserves to support continued marketing in “hard times” getting harder to allocate. the result is that. except through reference to industry norms or specific competitor case examples. very small firms often adopt a pragmatic approach to judging marketing decisions and the effectiveness of previous activity because sophisticated data gathering and analysis are relatively expensive. Meanwhile. some generalisations can be drawn in advance. 2003) a method of systemising a pragmatic way of judging historic. This extends to their marketing communications inasmuch as a focus on product rather than building customer relationship value can been observed (Gabrielli and Balboni.. 2001). in smaller organisations the culture is closely set by the long-standing owner/manager and their personal experiences/prejudices. combined with observational data that can be analysed within the context of perceived industry norms (Gilmore et al. it can be difficult to “prove” the effectiveness of certain marketing approaches that might be recommended for the future.. current and potential marketing effectiveness is needed that applies to very small firms. Taken to an extreme. but also works within an environment of resource . Siu and Kirby. Smaller firms tend to keep less non-financial data than larger firms and often rely heavily on their innate “knowledge” of their customers.. 6). (2001. unstructured. Given that marketing is almost always a better strategy than merely selling (Ambler. In response. where making monthly/quarterly sales is a matter of survival. 2006). competitors and market meaning. 2009). so the choice of activity favours those with more immediate (more tangible) effects. Within these restrictions. often of an anecdotal nature. Whilst these gating factors need to be specifically understood on a firm-by-firm basis. built upon and conforming to industry norms”. The firm’s management may not feel it can afford to wait “years” to see the value of the long-term marketing effects. marketing decisions are often coloured by a lack of specialist marketing expertise within the firm and the specific way that the owner-manager runs his/her business – a condition referred to by Welsh and White (1981) as “resource poverty”. This situation creates a need for an approach to judging marketing effectiveness within SMEs that not only provides a level of formalisation. informal. so that there is a general lack of objective data that relates marketing activity to business performance (Simpson et al. 1998). And a key requirement for this is to work within the available data and business culture.

such as advertising. trends in marketing effectiveness measures continue to shift with some metrics becoming more popular and others going out of fashion. and indeed can jump “backwards” with changes in senior management. 3. 498 (2) (3) (4) (5) . from short term to long term – many marketing activities. A key observation is the recognition that reliance on financial measures alone is insufficient (Lehn and Makhija. p. everything that counts cannot necessarily be counted”. (2007. Using formal marketing effectiveness measures – what are the options? In his 2003 book. with Ambler (2003) quoting financial services firm Skandia as having had 117 at one time.MIP 30. successively more complicated schemes dramatically increase the burden on managers attempting to measure performance in the world. Ambler notes a five-stage evolution process in the thinking of firms about marketing assessment and asserts that firms do not always follow all five stages linearly. this leads to the question of which metrics. This then begs the question of which existent measures are most applicable and/or usable y or indeed if any existent measures can apply realistically.g. should an organisation adopt? Albert Einstein famously encapsulated the problem concisely when he said “Everything that can be counted does not necessarily count. from macro to micro data – the causes of changes in macro measures. With the number of available metrics exceeding 250.5 and data poverty. deliver long-term sales/awareness benefits that are not accrued in short-term performance measures. 720). “The trend toward multidimensional measures has arguably been wonderful for researchers and horrible for practitioners. e. p. a number of significant customers defecting to competitors. Research by Seggie et al. from independent metrics to causal chains – understanding the causal relationships between measureable marketing activities and profitability (or other corporate goals) will lead to improved decision-making and increased predictive accuracy. 1999). Reports of firms with more than 100 measures in use are legendary. Yet. [y] figuring out which of many measures are ‘really important’ may drive the conscientious manager to despair”. such as a fall in market share. A notion echoed by Clark (1999. 1996) occurs early in the evolution process and is therefore commonplace today leading to a situation where many organisations are using a mix of metrics with little commonality (comparability) between them (Ehrbar. would not be visible without related micro data. and in which combinations. Marketing and the Bottom Line. from backward looking to forward looking – assessments of historic performance are poor indicators of future performance when competitive differences occur over time. 836) concluded that existent marketing metrics needed systematic reexamination and went on to formulate seven measurement themes to guide the evolution of “better measures”: (1) from non-financial to financial – greater understanding of the measure can be engendered within the organisation through using a common financial language. [y] unfortunately.

focusing on the SME situation. is still the case in SMEs. However. that measuring marketing effectiveness remains stubbornly resistant to definition and application. The tool uses what information is available within the firm along with a limited number of customer interviews. especially where budget setting or employee performance dependence is involved. No matter how small the firm. They have been selected based on the volume of academic discussion uncovered. 2001). (2007) then ranked six popular metrics against these criteria to see if any was the single overriding metric. 1995b). 4. The tool has been informally “trialled” with 28 small firms operating within a variety of B2B industry sectors since 2005. that fosters a more considered approach to future marketing decision making. However. A focus on the marketing mix rather than the total marketing process has provisionally been deemed an acceptably pragmatic compromise in order to better match the common SME view of what marketing is (Siu and Kirby.. 1998). just because measuring the effectiveness of marketing decisions is difficult it should not justify doing it (Sheth and Sisodia. Table II is a striking visual confirmation that Bonoma and Clark’s (1988) view. with very encouraging results. Unsurprisingly. This can lead to a very difficult situation for an SME manager when deciding how best to proceed. a competitive review. as it does to the level of insightfulness gained from the metrics themselves. Participating firms were approached during the normal course of marketing consultancy by one of the authors and a marketing effectiveness audit using the tool .(6) from absolute to relative – relative performance measures allow managers to contrast performance against competitors. there is a predominance of metrics that express themselves either financially or numerically. Large organisations will almost certainly use a number of these metrics rather than rely on a single indicator of marketing effectiveness. (7) Judging marketing mix effectiveness 499 Seggie et al. but none emerged in this role. “Judging” marketing mix effectiveness – a case example To combat a continuation in the haphazard nature of very small-firm marketing (Gilmore et al. expertise and confidence will abound. combined with the practitioner’s understanding of industry norms. especially in a very small firm where a lack of data. conclusions can be drawn about just how practical each of these marketing effectiveness measures are in potential usage. time. It seems that the selection of which metrics to use may well owe as much to the organisation’s ability to accurately gather the data. as well as observed usage within firms. given the historical antecedents of marketing performance measurement. work within the practical constraints of the SME under review and to deliver recommendations that are more easily understood and implementable. and from subjective to objective – objective measures are more trusted within organisations. which is a superior indicator of actual marketing effectiveness. a pragmatic tool for “judging” historic marketing mix effectiveness has been developed that allows common ground to be set between the marketing practitioner and the business management. Table II summarises some of the largely anecdotally sourced usability issues that each of the reviewed marketing metrics potentially presents to an SME. The specific marketing effectiveness measures reviewed in the preparation of this paper are listed in Table I.

2004b. Reviewed marketing effectiveness measures Quantitative Qualitative Hybrida Brand equity (Keller. Clark. Ambler... 2003. 2003. Rust et al.. 1991.... 2002.. 1979. Rust et al. 1999. Sheth. whilst it is often ultimately calculated as a numeric index. 2004b. Rust et al.. 2002. Ambler. 2001. 1996. Dias and Ryals. 2008. 2004.MIP 30. Berger et al. Rust et al. Reinartz and Kuma. Sheth. Clark.. Aaker. 2007. Clark. 2009) Discounted cash flow (Shapiro. Aaker. 1999. 2003..- Notes:aThe hybrid classification is for measures that are made up of multiple metrics that transcend the other categories. 2004b) Return on investment (Hayman and Schultz. 2008. 2003.. Berger et al. 1996. 1996. 2003... Rust et al. Ailawadi et al. Bell et al.. Yoo et al. 2004a. 2009) Perceived quality (Aaker. Seggie et al. Kuhn et al.. Rust et al. 2003) . 2007) General direction of historical evolution . Rust et al.. Thomas. 2004a. 2003. 2007) Customer satisfactionb (Kotler. Schumacher. 2009) Brand awareness (Pappu et al. Ambler. 2001. 1996. 2004. 1998. 2005. 2000. Clark. Rust et al.. 1999.5 500 Financial Market share (Aaker. 2008) Customer equity (Lemon et al.... Barwise and Farley. 2002. Ehrbar. 2008) Customer satisfactionb (Kotler. 2000. Lages et al.. Ailawadi et al.. 2002. Schultz. 2007. 1991. 2009) Customer loyalty (retention) (Srivastava et al.bCustomer satisfaction has been classified in both the quantitative and qualitative categories because. Davis et al. Oliveira-Castro et al.. Ittner and Larcker.. Bennett and Rundle-Thiele.. Ambler. Wu and Lo. 2004b. 1999. Sheth et al.. Clark. 2000.. 2008) Brand valuation (Srivastava et al.. 2009.. Seggie et al. Berger et al. Ittner and Larcker. the information sources are heavily founded in qualitative data Table I. 2003.. 2004b. 2000. Barwise and Farley.. Seggie et al.. Sheth et al.. 1998. 2002. Yoo et al.. 2007) Economic value add (Lehn and Makhija. 2004. 1998. 1999. 1999. 1996. Ailawadi et al. Yoo et al.. 2003. 2003) Customer lifetime value ( Jain and Singh. Esch et al. 2009) Price premium (relative price) (Aaker. 2005.. 2002. Ambler. 2006. 1999... 1996. D’Esopo and Almquist.. Netemeyer et al. 1998. 2002... Ambler... 1993. Ambler. 2000.

This may benefit the firm in the short term. even if aggregated over a number of segment groupings.000s of customers. especially in an owner-managed situation where it might be negligible. so to calculate CLV. the lion’s share of revenue may come from relatively few customers. but would increase the dependence on the current customer base thus increasing risk from a single or multiple customer loss (continued) Table II. thus there maybe no support for specifically calculating it Many small firms have 100s or 1. may be too onerous Judging marketing mix effectiveness 501 The technical jargon involved is misplaced in a small firm and may not gain management support Economic value add Where the equity capital is very low. therefore little faith in the ROI calculation Short-term management thinking limits the scope of potential returns to months/single years thus unbalancing the ratio with an investment which may well have a multi-year effect on brand equity Brand valuation This is considered of questionable relevance to non-niche SMEs and often dismissed as “out of our league” The process of collecting/analysing the data is considered too onerous for the firm and the result has little practical usage Discounted cash flow (DCF) Considered too difficult or not considered at all Setting the risk/future assumptions may be beyond the “comfort/experience zone” of many small-firm managers The internal/external data required for the assumptions does not exist (or is inconsistent) and not thought valuable enough to acquire Customer lifetime value (CLV) This can be a valuable metric to firms with a few. whilst internal data are not always kept in a useful format (especially if the firm has different products/services in different market segments) Customer satisfaction In an SME. therefore hard to solve the equation Often cynical view of potential returns from marketing (based on weak/inconsistent usage of marketing tools in the past). relatively large. Practical issues with marketing metrics within SMEs . so customer satisfaction processes in the firm could be heavily skewed to keeping the “few” happy (at the expense of the many). EVA is not insightful Does not identify which areas of value-add were from “marketing” per se and which from other activities that the firm naturally undertakes Changes in customer buying can have a big effect on net income which can be temporary and not related to any specific marketing activity Quantitative measures Market share External market data is typically hard/ expensive to collect and not always accurate.Financial measures Return on investment (ROI) No track record in forecasting the likely returns of marketing activities. customers providing the base data has been collected in the past and is easily available – which typically it is not The relative CLV of customers is often seen as intuitive knowledge within the business (based on anecdote and aggregated impression – neither of which is accurate).

pricing data is relatively easy to get. Equally though. customers can be acquired through the movement of staff from one firm to another Qualitative measures Perceived quality Gathering the data.MIP 30. In this situation. thus they tend to focus to a great extent on servicing customers that already know them well and potential customers that are somehow proximal. as will their perceived motivation for staying loyal. Competitive/ technical innovations may explode or contract markets rapidly invalidating previous market share calculations The usefulness of market share can be limited for firms with low shares – “we now have 0. so measuring the extent of this can be useful in justifying the additional service costs. knowing their brand awareness percentage across the whole market would not materially affect their operational marketing choices Table II. in some markets. (continued) .09% of the market.05%” – how will this change their marketing decisions? Occasionally small firms can have a large percentage of a market. though a negative change over time might indicate remedial activities (or a new niche!) are needed Customer loyalty (retention) Financial data on customers is readily available through the accounting system. Even when gathered. small firms can deliver more a personal/ convenient service thus potentially justifying a price premium by changing the marketing mix. but in B2B markets this might be too difficult/expensive to achieve. Thus. strategy reviews and so on that are not related to the customer service received or perceived product quality. it is quite likely be part of a larger overall satisfaction survey and not specific enough to help improve quality It can be difficult to weight satisfaction results in terms of their impact on the business – should every customer vote be equal. such as a large low-cost entrant. other than through anecdotal means. can be expensive. up from 0.5 502 The extent/scope of the market can be difficult to define which makes it open to debate and possible data massaging. assessing loyalty beyond simple historic accounting data and the management’s personal relationships is typically not valued sufficiently to warrant the cost of measuring it In B2B areas. but only if they can readily capture the competitive data A sudden change in market structure. especially where specific project/contract discounts are often given rather than selling from “list price” Many small firms are price followers rather than leaders. customer loyalty can “turn down” with customer staff changes. thus they do not charge a premium. However. or rank by revenue or rank by profitability? The consequence of this decision will have a large skewing effect on the final results Being low on a supply chain makes a small business vulnerable to poor satisfaction management by higher chain firms because the end-using customer has to be satisfied with the aggregated quality and service of all chain members not just the SME’s contribution Price premium In B2C markets. knowing the exact percentage may not materially affect their marketing decisions. but customer profitability is probably not calculable on customer-specific basis as activity-based costing is not implemented Top customers may well be personally known to the firm’s management. but this is typically within a specific niche – again. could erode an SME’s price premium potential without the SME having the financial might to respond protectively Brand awareness Many SME’s have very small market shares within large markets.

as do larger organisations – thus they might not see brand equity calculations as relevant/valuable Small firms could find it hard to make specific decisions (within their budget/resource constraints) to manage for brand equity rather than enacting short-term marketing campaigns designed to raise immediate revenues. SMEs are highly vulnerable to the impact of customer sabbaticals/defections. negative quality perceptions that are not reported as faults Small firms do not “have the time” (or more accurately “set aside the time”) for quality circles and other improvement initiatives as part of the culture – they tend to firefight instead.Firms with support/maintenance service offers can measure quality through fault analysis.) and authenticates elements with customer surveys and competitor review. thus measuring brand awareness with no reliable means of changing it would be considered futile Judging marketing mix effectiveness 503 Customer equity Within SMEs this would typically be thought of as too difficult to calculate. the tool’s pragmatism has delivered the following benefits: (1) works using whatever historic information the firm has (financial. This “trial” has not been undertaken as a formal research project in any way and the following case example is offered on the basis of anecdotal evidence alone in an attempt to demonstrate that there is some potential to develop a working tool that addresses a number of the concerns expressed previously in this paper. they do not see. This research need has recently formed the basis of a newly started doctoral research project. Thus having the perceived quality data would not necessarily drive positive systemic changes Customer satisfaction Already covered above Hybrid measures Brand equity Calculating brand equity would be considered too expensive and too difficult. A rise in brand equity may well be considered a beneficial by-product of a revenue-focused activity as opposed to a goal in itself SMEs typically would not fund the primary market research to regularly gather comparable brand awareness statistics. Setting the future assumptions may be beyond the “comfort/experience zone” of many managers Relatively small changes in customer spending can represent major swings in CLV for a small firm – these cannot be predicted or easily attributed to specific marketing activity and could be more affected by general market conditions instead Whilst customer equity calculations do give strong indications of future revenue streams they assume a level of repeat purchasing and customer churn. During its use to date. Collecting and collating the volume of data needed as well as defining the calculation weightings are considered beyond the day-to-day competence of SME marketing staff SMEs typically do not give as much consideration to their brand. anecdotal. and thus cannot measure. but only if they have an IT system (and supportive processes) for logging faults and resolutions. However. thus higher risk factors are needed which would lead to a reduced attractiveness for proposed marketing initiatives Table II. its attributes and values. Much further research is required to formally test the tool’s potential more rigorously for both applicability in a range of SME sectors and cultures as well as marketing content and reliability. offered. preferring instead to rely on anecdotal sources SME’s rarely invest in the extensive and sustained advertising that might be required to drive improved brand awareness in their target markets. etc. .

1998). to raise prices for project work from £700 to £800 per day to more than £1. 504 (5) The tool primarily focuses on all “P”s of the marketing mix but can consider how an organisation uses segmentation.000. The tool was “operated” by the marketing practitioner throughout. market reports. especially in relation to the published reports. Approximately 75 per cent of its customers were considered to be regular repeat purchasers. even when the firm does not consider anything other than promotion to be “marketing” (Siu and Kirby. The firm’s financial aspirations were to grow revenue by 20 per cent per year. a UK SME in the global automotive sector. 4. and creates an agreed agenda for the marketing areas that will improve future effectiveness. Revenues had remained fairly flat at £900. the firm boasted a customer base of around 45 clients. Also there were a number of geographic markets that were somewhat behind the leaders in the adoption of current technologies which would require access to the type of information that firm X could provide. competitors. The firm’s service offer covered the original research and production of technology. However. Employing 20 staff along with a number of contractors. and to improve margin as a percentage of revenue from the current 9 per cent to a previous level of near 23 per cent. amongst which a large proportion of the world’s major automobile manufacturers figured highly. . system suppliers to automotive manufacturers and other interested parties. uses visual indicators to deliver a marketing mix effectiveness rank that the firm can understand.MIP 30.5 (2) (3) (4) looks at all aspects of the marketing mix. There follows an illustrative example of the tool within one of the participating firms. It separates information gathering into two areas. industry norms and practitioner knowledge (typically related to all of the non-promotional “P”s and STP). creates a jargon-free language that the practitioner and firm can use to rationally discuss/decide marketing matters.1 Background Firm X is an independent research and consulting firm focused on specific technology areas within the global automotive sector. a final marketing mix effectiveness judgement can be considered. There were a number of competitive suppliers of original research and project consulting and the onward march of technology in automobile design and production meant that there would continue to be a growing need for independent help to “unconfused” a complex technology landscape. to aid jargon-free communication it does not use that terminology. targeting and positioning (STP) as well. This is to take account of the differing availability and quality of data obtainable within and without the organisation. This example has been selected more for its convenience to be written up rather than for formally representing all of the participating firms.000 per day. as well as technical project consulting in related areas. internally sourced (typically related to promotional activities) and externally sourced from customers. Clients included major automotive manufacturers. The market for firm X’s services were typified as continuously evolving. By contrasting the internal and external information.

competitor review. The communication effectiveness ranking of firm X . the practitioner’s derived assessment for each category can be verified. as well as existing customers. Figure 1 gives an example of the categories that were used to assess how well the firm was using marketing communications to influence potential customers. using their own knowledge/experience of similar firms/industries.2 Marketing mix effectiveness assessment In November 2005 a marketing mix effectiveness assessment was undertaken. Whereas judging the effectiveness of product. because data for communications use and results are better sourced internally. Similarly the number of categories can be varied. potential customers and competitors) and is assessed using internal information provided by the firm. 2006). “Communications effectiveness” is the term used within the tool to cover how well the firm uses marketing communications tools in the context of its market (customers. Whilst the principal source of information for completing this stage is the firm itself. price and so on is better sourced externally (through customer interview. practitioner knowledge and market norms). Firm X’s current use of marketing communications was ranked poorly (at 33 per cent overall from nine of the ten categories – hence the 90 maximum “score” in Communicating the offer How well are you communicating with the market How good you are at using these activities to … Advertising Brochures/printable Direct marketing Sales force Telephone Sales promotions Press Web Exhibitions and conferences Sales channels Total (out of 90 maximum) Communicate with potential customers 1 7 5 3 0 0 3 7 8 – 34 Average 33 Score out of ten for each (appropriate) activity Communicate with existing customers 0 6 5 5 0 0 1 3 5 – 25 Percent Judging marketing mix effectiveness 505 Figure 1.4. arrive at a “score” out of 10 for how well each is used to communicate with potential and existing customers.2. The firm’s use of marketing communications is assessed separately to the other mix components (which are assessed collectively in Stage 2). The role of the practitioner is to assess the available information for each category and. The categories can be changed to suit the nature of the firm and to aid with management dialogue.1 Stage 1 – communications effectiveness ranking. typically a main focus for small-firm marketing activity (Simpson et al. 4. which is often a neglected area. provided that the “answer” at the bottom is an average of the scores expressed as a percentage.. during subsequent customer interviews and competitor research.

practitioner knowledge and market norms. Telephone – no outbound activity. Sales force – executives acted as the prime sales force for both research reports and project consulting. The prime data source for this ranking is external information from customer interviews. The ranking “scores” calculated by the practitioner were based on a wide range of input derived from structured interviews with a number of senior staff. Brochure/printable material – the firm had a range of materials available. Web – the firm’s web site was professionally designed and included a cut-down variant in an oriental language. being busy and not specifically sales trained. . Executives had not been media trained. . and was the main route for subscribing to e-mail newsletters (generating five to eight subscribers per week).MIP 30. competitor analysis. . The proxies are plotted on a 2 Â 2 matrix with cells named Defocus. Monitor or Desist. . their contribution lacked sufficient diligence and adherence to core sales processes. Sales promotions – no activity. The site had been optimised for search-engine ranking and came in Google’s top ten for a few (very specific) business-relevant phrases. including the managing director. When available the firm would take a speaking slot as this generated good interest amongst delegates and it generally achieved three to four speaking engagements per year.2 Stage 2 – offer effectiveness ranking (covering the rest of the marketing mix). they were extremely variable in content and insight. . . but little other use of direct marketing was identified. Exhibitions and conferences – the firm attended a number of public events globally mostly just as delegates. Advertising – the firm advertised only sporadically with little quantified response. but also as an exhibitor when deemed important. . Direct marketing – the firm used professionally written e-mail newsletters to announce the availability of specific reports which were known to generate a number of sales. . and rarely mentioned the firm’s prestigious customer list. . “Offer effectiveness” is the term used within the tool to address how well the firm uses the total marketing mix. The tool uses a number of easily understood concepts (described in plain English) as proxies for single or combined elements from the total marketing mix. and were headlined as follows: . however. 4. Press – the firm did release ad hoc information to the “press” but did not retain a PR agency nor a clipping service. and a member of staff from the marketing function.5 506 Figure 1).2. though it was noted that unlike many other small firms they did pay roughly equal attention to communicating with existing customers as well as potential customers. Improve and Promote to provide a visual overview of the current ranking for each. excluding marketing communications (already addressed in Stage 1) in the context of its market – that is how attractive the firm’s offer is viewed relative to customer needs and competitive propositions. However.

three-four customer telephone interviews would typically be conducted. stage of the tool calls for the consolidation of the communications effectiveness and offer The offer and its delivery How the market views the offer High Completeness of offer Ease of purchase Judging marketing mix effectiveness 507 Defocus Relative competitive strength Promote Independence Image/brand reputation Customer care Proximity to customer Offer quality Offer features and functions Price Customer relationship depth Monitor or desist Improve Figure 2. Firm X’s market offer and the way that it was delivered was ranked quite highly based on a mix of internally and externally sourced data. although an example of the choices for firm X is provided in Figure 2. but circumstances at each firm need consideration. direct contact with customers was not permitted so feedback data were sourced internally from recorded customer comment and anecdotal sales evidence. The third. competitor and other market research is performed by the marketing practitioner based on published secondary data (web sites. the practitioner is recommended to select no more than ten proxies. in using this tool with other participating firms. and final.2. Customers are nominated by the firm but requested to offer a representative mix. The practitioner’s decision at this point can either positively or adversely affect the usability and insightfulness of the ranking tool. industry reports. In the specific case of firm X.). The practitioner’s competitive research/knowledge should be used to “sanity check” the customer feedback. but also to ensure useful communication with the organisation subsequently. so appropriate care must be taken. To aid in the visual communication of the final assessment.3 Stage 3 – marketing mix effectiveness rank.The position of each proxy is calculated according to horizontally – how important it is to customers in their purchasing decisions and vertically – how much better (or worse) the customers feel that firm’s offer is than competitors in respect to that factor (the central horizontal line represents equality with competitors). Deciding on which proxies (and concept names) to use is important to correctly include the significant marketing mix elements as well as STP aspects. In all cases. The nature and number of proxies to be used are not prescribed by the tool. However. etc. 4. though as many as six have been delivered in some instances. The offer and delivery effectiveness ranking of firm X Low Low Importance to customers High .

The offer and delivery effectiveness ranking of firm X Wasting money Ineffective Now Room for significant improvement . and horizontally using the predominance of the Stage 2 (offer effectiveness) findings – which is quite subjective. integration with the opt-in e-mail newsletters was increased and the technology was changed to allow for immediate self-updating by firm X staff. To define the ranking. The “Possible” bubble was plotted to indicate where the ranking could be moved to within a two-year planning horizon should the current marketing weaknesses be addressed.MIP 30. Another 2 Â 2 matrix is used which. The vertical positioning reflected their somewhat low-key approach to marketing communications as a whole. Firm X’s overall marketing mix effectiveness ranking (Figure 3) put them in the “Room for significant improvement” quadrant. In addition. 4.3 Outcomes As a result of the assessment and its recommendations. a dedicated sales person was hired to reliably undertake the sales process basics ahead of introducing the executives to prospective customers when needed. It now carried many more news Marketing mix effectiveness rank The offer and its delivery Ineffective Effective Effective Squandering money Communicating the offer Fine tune for excellence Possible Figure 3. with 0 per cent at the bottom. as well as the nature of their customer successes. but the tool does not require absolute precision to make its assessment and be useful in communicating with the firm’s management because it heavily aggregates the component “scores” to arrive at the final effectiveness rank. so a few misplaced scores will have little effect. The web site and downloadable materials were significantly improved. The practitioner can then plot the “Possible” bubble to represent what the firm could achieve at a future point in time with an improved marketing programme. to aid jargon-free communication with the firm’s management. 50 per cent on the central line and 100 per cent at the top. has quadrants named somewhat emotively so as to underline their significance. a “Now” bubble is plotted by the practitioner vertically using the Stage 1 (communications effectiveness) percentage. the firm strengthened its marketing resources by hiring an experienced marketing professional to manage a small team and giving marketing more “air time” at board meetings.5 508 effectiveness findings into a single and highly visual marketing mix effectiveness “rank”. whilst the horizontal positioning reflected the competitive quality and independence of the market offer.

The tool focuses on the marketing mix. Seggie et al. 2001). The revised marketing activities undertaken by the firm proved fruitful until the global recession arrived which was particularly badly felt in the automotive sector. In addition. and setting an agenda for future marketing investment. supplemented with customer interviews and competitor review. The basic understandings and common language that was developed during the original assessment still brings value to these reviews. Since the original assessment at the end of 2005. skills deficit and cultural dogma (Gilmore et al. but with integrated linkage to their CRM system. rather than the total marketing process. The tool has been used a number of times in the last few years with small firms in B2B markets. to better match the common SME view of what marketing is. they are equally weighted in assessment.. expanding their view of what “marketing” should include. 2003). As such it exhibits some concerns which need to be addressed before being considered entirely robust: (1) Completeness concerns – for reasons already detailed. 2001). coordination and follow-up. but within that currently provides incomplete coverage of the mix elements.. for small firms. Attendance at international events was reduced for budget reasons but increased in impact through better focus.0 environments. Further development is required to provide broader and more consistent mix coverage but without compromising the usability and communicability. several years later. this research concluded that none can claim to be the single “silver bullet” metric (cf. The firm has continued with e-mail marketing as the major outbound activity. to aggregate an effectiveness judgement that SME management can accord with and thereafter plan from. 5. work within the practical constraints of specific SMEs and to deliver recommendations that are more easily understood and implementable. or sometimes even applicability. Conclusions and ongoing requirements Having reviewed a number of marketing effectiveness measures. Marketing is a major driver of new business and is delivered in a more integrated fashion thus improving its value for money and respect within the firm. thus proving one element of its residual value. the firm’s marketing activity has been reviewed twice to check on progress and fine tuning. This has lead to the case example of a pragmatic practitioner-developed tool that works with whatever data are available (factual/anecdotal). the tool does not mandate that all elements be considered and where they are. The principal issues being data paucity (Ambler. the authors assert that many metrics do not enjoy currency..items and links to popular Web 2. and formed a much more integral part of the firm’s communication strategy (although customers still cannot buy reports directly from the site [y] ). the tool focuses on the marketing mix. Judging marketing mix effectiveness 509 . The tool has evolved as a practical response to the situational problems found in small firms (Gilmore et al. 2007). For example. The firm has survived the downturn although somewhat slightly downsized. Each time it has (anecdotally) delivered well in establishing a common view amongst business management of the current effectiveness of their marketing activity. the firm worked to broaden its knowledge and influence within existing customers as well as establishing contacts with non-competitive firms who also supply existing customers and defined targets. By examining how they translate into practical usage by SMEs.

the tool heavily aggregates to arrive at the final effectiveness rank. This has communication benefits. the tool’s pragmatism has repeatedly demonstrated sufficient benefits to outweigh its limitations and it therefore makes a significant contribution to solving the practical problem of assessing marketing mix effectiveness in SMEs where there might otherwise be no assessment made at all. Equally. much of the analysis and “scoring” are subjectively controlled by the practitioner. The ability to draw an industry norm chart (an average of competitors) would be a helpful addition to scope the extent and urgency of remedial actions.5 (2) 510 (3) Environmental concerns – the operating environment of the tool is often defined by its lack of numerical and/or objective historic data (Simpson et al. In mitigation. Improved communication – the scaling of the final rank position and the potential future rank position could be better aligned to tangible results. relative weightings made available and relative competitive strengths viewable against objective norms. whereas it would be more realistic to use relative weightings according to different industry characteristics.. the fact that previous marketing may not been conducted by a marketing professional will affect results and thus management’s view of it. thus a few misplaced “scores” will have little material effect. but a continuous bias would distort the results. Similarly. (4) Despite these concerns the tool makes a valuable addition to the B2B SME practitioner’s toolkit by fostering the development of a mutually acceptable framework for judging past marketing mix effectiveness which in turn lays the ground for future marketing planning on a more holistic rather than ad hoc or “gut-feel” basis. Monitored use by a wider community of practitioners will help refine/improve usability and ultimately the acceptability of this as a practical tool. the tool uses very simple presentation grids. SME owner/managers will be better equipped to understand the strategic linkages between marketing mix elements. where customer interviews can be conducted by telephone and in some depth. thus aiding a clearer cost-benefit view of potential marketing changes. which does mean that precision is exchanged for an overall “impression”. Practitioner acceptability and usability – to date the tool has only been used by this paper’s authors.MIP 30. 2006) and the various personality factors that owners/managers exhibit. The tool could be further enhanced by addressing the following areas of research. Presentational concerns – to avoid complex or jargon-ridden charts. the selection of factors could be pre-populated by industry type if suitable benchmark data were available. this has not been tested thus far. such as sales growth percentages or returns on investment bandings. Industry benchmark data – if suitable benchmark data were available then the tool could be “calibrated” such that Stages 1 and 2 factors were more rigorously pre-defined. the tool currently weights factors in each stage equally. The tool has only been exercised in B2B markets so far. but can mask more subtle implications. Testing in B2C markets – the tool allows for customer feedback to be acquired through survey questionnaires where telephone interviews are not practical – however. customer groups and the outcomes of past . Analytical concerns – due to the lack of objective data. Nevertheless. the firm does not really have a way to “see” how they compare with competitors. By making use of this tool. Whilst competitive factors are considered by the practitioner. In addition.

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DipM FCIM. Journal of Industrial & Business Marketing. where he was Director of the MSc in Marketing & Strategy and versions of Warwick’s MBA Programme.com/reprints .MIP 30. Raytheon and IKEA. GfK. he has authored numerous books. Services Industries Journal. He is also co-chair of the Academy of Marketing’s Special Interest Group in Market Segmentation. OMEGA and the International Journal of Advertising. is an Associate Lecturer in the Business School of Oxford Brookes University and at the Business School of Brunel University.5 514 About the authors Neil Brooks. In addition to many journal articles. Journal of Strategic Marketing. plus he is a recognised High Court expert witness in cases of marketing and business planning litigation. Journal of Marketing Management. including Marketing: Concepts and Strategies. He is consultant to many blue chip corporations. Industrial Marketing Management. as well as running his own marketing consultancy business focused on small business in the home counties of the UK.uk Lyndon Simkin is Professor of Strategic Marketing at Oxford Brookes University. including the European Journal of Marketing.ac. Neil Brooks is the corresponding author and can be contacted at: nbrooks@brookes.com Or visit our web site for further details: www. Fujitsu. Market Segmentation Success and Marketing Essentials. He has published in many journals. Previously he was at Warwick Business School. To purchase reprints of this article please e-mail: reprints@emeraldinsight. including EDF Energy. His research interests are directed towards understanding and improving the practical application of marketing theory in a small business context. he had over 20 years’ experience as a marketing practitioner working in senior positions with multi-national organisations in the IT and high-technology sectors. Before his involvement with Oxford Brookes University.emeraldinsight. Marketing Planning.

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