Chapter 15

EVALUATING
MARKETING EFFORTS

PRESENTED BY
Haroon
Hajar
Asmae
Iaroslava Smirnova
Hasan

Id4626382

Why Evaluate Efforts

What is the success of a Marketing Effort?
Generating more Leads?
What about unsuccessful Leads?
Conversion ratio of Leads?
Marketing Cost per order?

Tektronix has 19 versions of Leads defined in their

Measurement System

Chapter 15: EVALUATING

MARKETING EFFORTS

CONTROL SYSTEMS

Measure
performance

Compare
performance
to standard

Process of Control

Chapter 15: EVALUATING

MARKETING EFFORTS

e
Abov ard?
d
Stan
Below
Stan
da

rd?

Replicate cause
of high
performance

Eliminate cause
of low
performance

CONTROL SYSTEMS
Measures Actual vs Planned Performance
Sensor - The Measuring Tool
Standard The Goal To Achieve
TOLERANCE RANGE Range of Acceptable Performance

Measures Productivity & Profits by

Types Of Products
Customers
Territories

Measures other Key Marketing Variables such as:

Customer Satisfaction

Chapter 15: EVALUATING

MARKETING EFFORTS

DIMENSIONS OF CONTROL
Input

Output

Micro

Macro

Regional Sales Office Expense

Total Selling Expenses

Regional Sales Office Revenue

Total Revenue

Trade Show Budget

Product X Development Cost

Leads from Trade Shows

Sales for Product X

Chapter 15: EVALUATING

MARKETING EFFORTS

Promotion Budget
Total R&D Budget

Corporate Position
Total Division Revenue

CONTROL OF INPUT & OUTPUT

VARIABLES
INPUT
VARIABLES
Price
Product R&D
Advertising
Promotion
Distribution
Marketing
Research
Marketing
Administration

ACTION
PHASE

THE
MARKETING
PROGRAM

SET
BY
BUDGET

Chapter 15: EVALUATING

MARKET
REACTION

THE
MARKET

OUTPUT
VARIABLES

Sales
Market Share
Profit
Communication
results
Distribution
results
Buyer
attitudes
and
behavior
COMPARED TO
PERFORMANCE
STANDARDS

THE BALANCE SCORECARD

Financial
Net income
Profit margin
Return on investment
Return on assets managed

Internal Processes
Employee satisfaction
Data availability
New product development
cycle
Credit approval cycle

Chapter 15: EVALUATING

MARKETING EFFORTS

Customer
Revenue per customer
Account share
Customer satisfaction
Intent to repurchase

Vision &
Strategy

Learning Growth

Completed training programs

New patents obtained
New products introduced

CONTROL AND THE

NATURE OF DATA
Marketing control is the gathering,

evaluation, and use of information

regarding marketing processes.
The first step is to gather information, or to
collect data

Chapter 15: EVALUATING

MARKETING EFFORTS

CAUSES OF VARIANCE
Occur
because
of
changes
to the
process
Not due
to the
process
but due
to other
factors

Tinkering

Making changes within a process in

order to make the process more
productive, by either reducing defects
or increasing volume.

Systematic

Changing systems and creating a new

tolerance

External

Operates in an environment that has

an impact on the systems
effectiveness
Marketing managers do not have
control over external factors

Random

Variances caused by uncontrollable

and unidentified causes
Must recognize a certain degree of
randomness in every system

Chapter 15: EVALUATING

MARKETING EFFORTS

TOOLS OF CONTROL
Despite of any job, having the right tools

makes it much easier

Getting the job done right requires the

knowledge and the tools

Chapter 15: EVALUATING

MARKETING EFFORTS

TYPES OF TOOLS IN CONTROL

SYSTEMS
Standard setting process
Measurement tools
Tools used to search for causes of variance

Chapter 15: EVALUATING

MARKETING EFFORTS

OUTPUT AND INPUT TOOLS

OF CONTROL
Standard
Setting Process

Pros

Con

Comment

Benchmarking

Can learn and Hard to find

improve
someone willing to
let you benchmark

Can use
industry
association
measures

Quotas and
Targets

Easy to
establish

Can be difficult to
account for
variance

Consider
sources of
variance when
setting

Budgets and
Pricing Plans

Easy to
establish

Lack of flexibility
can lead to missed
opportunities

Create systems
for opportunity
evaluation
15-13

THREE TOOLS FOR BETTER

CONTROL OF SYSTEM
PERFORMANCE

SET OUTPUT AND INPUT STANDARDS Of

Performance That Can Be Observed And
Measured

DEVELOP MEASUREMENT TOOLS Such As

Marketing Audits, Customer Satisfaction
Measures And Accounting Systems

CREATE SEARCH TOOLS Such As

Reporting Systems And Information
Systems To Find Variance And Its Causes

Chapter 15: EVALUATING

MARKETING EFFORTS

MEASUREMENT TOOLS
Measurement
Tools

Comment

Sources of Data

Difficult
and timeconsuming

Most beneficial
when done
regularly but not
frequently

Observation and
survey in the
field by the
auditors

Customer
Can be a
Satisfaction
predictor of
Measurement future sales

Challenge to
find what or
who caused
(dis)satisfaction

Used as a
measure of
performance

Surveys of
customers,
including
decision makers
and users

Accounting
Systems

Hard to apply
to specific
customers

Use a variety to
understand
customer and
product
profitability

Transaction
systems such as
accounts
receivable,
shipping, and
manufacturing

Marketing
Audits

Pro
Complete
process
review

Enables
allocation of
fixed costs

Con

15-15

ACCOUNTING SYSTEMS
Accounting Systems measure financial
performance
COSTS

REVENUE

Objective: to understand how costs are allocated so

that the true profitability of any particular area,
product, or market can be determined.

3 approaches to cost allocation:

Full Costing
Contribution analysis
Activity-based costing

Chapter 15: EVALUATING

MARKETING EFFORTS

FULL COSTING
Sales
Team #1

Sales office sales 2

products.
Product
A

Product
B

Revenue ( after
returns)

$ 1,050

Less costs of good

sold

400

Less selling
expenses

158

Less administrative
expenses

285

Less research &

development
Chapter 15: EVALUATING
MARKETING EFFORTS
Income before taxes

110
$ 97

Sales
Team #2

CONTRIBUTION ANALYSIS
Contribution analysis allocates costs based on
incremental costs along each step of the
marketing process.
Contribution costing is a form of value added, in
that costs are added as they occur along the
supply chain and profit ( or contribution) can be
calculated at any point in the supply chain
Contribution Margins with Three
Sales Offices
Chapter 15: EVALUATING
MARKETING EFFORTS

CONTRIBUTION ANALYSIS
Contribution Margins with Three
Sales Offices

Chapter 15: EVALUATING

ACTIVITY-BASED COST
ACCOUNTING
ABC allocates fixed costs to products or

other units ( such as sales office)

according to the activity that creates or
drives the cost.
Allocating revenue to the show program

enables manager to estimate the profit

( or contribution) of the program,
information needed to make decision
concerning future marketing investments.
Chapter 15: EVALUATING
MARKETING EFFORTS

WHICH ACCOUNTING
SYSTEM IS BETTER?
Depends on many factors:
Objectives (e.g. to evaluate the overall sales office and treat
that office as a profit center
contribution approach)
Who is using information?
Accounting is the service function in the firm; it provides
decision makers ( sales managers, product managers with the
information they need to make marketing decisions.

Chapter 15: EVALUATING

MARKETING EFFORTS

SEARCH TOOLS FOR IDENTIFYING VARIA

Search Tools

Pro

Con

Comment

Sources of Data

Reporting
Systems

Method of
information
sharing across
work-groups

Can get
traditionbound

Companies are
moving to real-time
systems like
dashboards

Salespeople, trade show

managers, other marketing
managers, as well as
transaction systems

Information
Systems

Self-serve
reporting

Increasing use of
data warehouses
lets managers access
data directly

Surveys, transaction
systems, and third-party
sources such as Dun &
Bradstreet

Case Analysis

Method of
organizational
learning

Experimentation

Establishes
Hard to control
cause and effect for all potential
causes
Can lead to
Can inform
incremental,
forecasts, as
well as explain rather than
innovative,
past success
thinking

Statistical
Analysis

Difficult to get
data into a
format
everyone can
use
Can be hard to
apply learning
to new
situations

Look for
Interviews of people
underlying
involved
principles of success
or failure
Used more
Marketing systems that
frequently with
track source of sale
CRM systems
Often combined with All of the above
experimentation for
more powerful
decision-making

15-22

THANK YOU FOR YOUR

ATTENTION