Chapter 18

Measuring and Delivering

Marketing Performance

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Setting Standards of Performance
● The SMART acronym (specific, measurable,
attainable, relevant, and timebound) is a useful
framework for setting performance standards
● Return on marketing investment - It is being insisted
that marketing managers do a better job of measuring
the return their marketing programs deliver on the
investment therein

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Setting Standards of Performance
● Profitability analysis - Requires that analysts
determine the costs associated with specific
marketing activities to find out the profitability of
different market segments, products, customer
accounts, and distribution channels
● Full costing: Analysts assign both direct, or variable,
and indirect costs to the unit of analysis
● Indirect costs: Involve certain fixed joint costs that
cannot be linked directly to a single unit of analysis
● Direct costing: Involves use of contribution
accounting
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Setting Standards of Performance
● Shift to activity-based costing, which bases costs on the
different tasks involved in performing a given activity
● Customer satisfaction
● Understanding and measuring the criteria used by customers
to evaluate relationship quality
● Some companies ask a simple question: How likely is it that
you would recommend us to a friend or a colleague?
● Face-to-face approaches
● Using customer relationship management data to measure
lifetime value of customers

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Specifying and Obtaining Feedback
Data
● The sales invoice or other transaction records are
the basic internal source of data because they provide
a detailed record of each transaction
● Another source involves undertaking one or more
marketing research projects to obtain needed
information
● Most expensive and time-consuming

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Taking Corrective Action
● Prescribing the needed action to correct the situation
● In most cases it is difficult to identify the cause of
the problem
● There is also the problem of delayed responses and
carryover effects

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Design Decisions For Strategic
Monitoring Systems
● Identifying key variables:
● Those concerned with external forces
● Those concerned with the effects of certain actions
taken by the firm to implement the strategy
● Tracking and monitoring: The next step is to
specify what information or measures are needed on
each of the key variables to determine whether the
implementation of the strategic plan is on schedule—
and if not, why not

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Who Needs What Information?
● Marketing performance measurement systems are
designed to ensure that the company achieves the
sales, profits, and other objectives set forth in its
marketing and strategic plans
● This information is needed by top management,
functional managers, and marketing managers

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When and How Often Is the
Information Needed?
● Timeliness is a key criterion for the development of a
marketing performance measurement system
● More commonly, managers attend to performance
information—whether for sales, margins, or expenses—
on a periodic basis, since they don’t have time or the
need to assess the performance of every item at every
minute of every day

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A Tool For Periodic Assessment Of Marketing
Performance: The Marketing Audit
● Marketing audits are growing in popularity, especially
for firms with a variety of SBUs that differ in their
market orientation
● They are a control and planning activity that involves
a comprehensive review of the firm’s or SBU’s total
marketing efforts cutting across all products and
business units
● Audits are broader in scope and cover longer time
horizons than sales and profitability analyses

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Types of Audits
● The marketing environment audit
● The objectives and strategy audit
● The unit’s planning and control system audit
● The organization audit
● The marketing productivity audit
● The marketing functions audit
● The company’s ethical audit
● The product manager audit

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