12

Week 12

Measuring and Delivering Marketing

Performance

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
The Performance Measurement Process

Setting standards of performance

Specifying the necessary feedback data

Obtaining the needed data

Evaluating feedback data—explaining gap

between actual and given standards of
performance

Taking corrective action

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 Measure of performance

o Profitability analysis
o Requires analysts to determine costs associated
with specific marketing activities
o Limitations:
o Objectives can best be measured in nonfinancial
terms
o Profit is a short-term measure
o Profits can be affected by factors over which
management has no control
o Full costing

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Measure of performance (continued)

o Indirect costs
o Involve certain fixed joint costs that cannot be
linked directly to a single unit of analysis
o Direct costing
o Involves the use of contribution accounting
o Customer satisfaction
o Understanding and measuring the criteria used
by customers
o Using face-to-face approaches

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Decisions for Strategic Monitoring Systems

o Identifying key variables

o Tracking and monitoring
o Strategy reassessment

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Identifying Key Variables

o Concerned with external forces

o Concerned with effects of certain
actions taken by the firm to implement
the strategy

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Tracking and Monitoring

o Use strategic plan as an early-warning

system
o Monitor industry sales regularly
o Examine relevancy, accuracy, and
cost of obtaining needed measures

13-7
Strategy Reassessment

o Takes place at periodic intervals

o Quarterly or
o Annually
o Setting triggers to signal the need to
reassess viability of the firm’s strategy
o Today reassessment may take place
in shorter intervals.

13-8
Questions which a Strategic Monitoring System should
be able to Answer

1. What changes in the environment have negatively

affected the current strategy?
2. What changes have major competitors made in their
objectives and strategies?
3. What changes have occurred in the industry in such
attributes as capacity, entry barriers, and substitute
products?
4. What new opportunities or threats have derived from
changes in the environment, competitors’ strategies, or
the
nature of the industry?
5. What changes have occurred in the industry’s key
success factors?
6. To what extent is the firm’s current strategy consistent
with the preceding changes?
13-9
Questions Used to Measure Marketing Performance

o Who needs what information?

o Sales analysis
o Products
o End-user customers
o Channel intermediaries
o Sales territories
o Order size
o When and how often is it needed?
o Key criteria
o Timeliness
o Store payroll expense

13-10
The Contingency Planning Process

Identifying critical assumptions about the future

Determining probability of each critical

assumption’s being right

Rank ordering of critical assumptions

Tracking/monitoring of action plan

Setting triggers to activate contingency plan

Specifying alternative response options

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Types of Audits

o Marketing environment audit

o Requires an analysis of the firm’s present and
future environment
o Identifies significant trends
o Objectives and strategy audit
o Calls for an assessment of the internal factors
o Planning and control system audit
o Evaluates firm’s new development procedures

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Types of Audits (continued)

o Organization audit
o Deals with firm’s overall structure:
o Organization of marketing department
o Extent of synergy between the various marketing
units
o Marketing productivity audit
o Evaluates the profitability of the company’s:
o Individual products
o Markets
o Key accounts

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Types of Audits (continued)

o Marketing functions audit

o Examines the marketing-mix elements
o Ethical audit
o Evaluates the extent to which the company
engages in ethical and socially responsible
marketing
o Product manager audit
o Seeks to determine whether product managers
are channeling their efforts in the best ways
possible

13-14