Measuring Marketing Performance - Assignment Example

Measuring Marketing Performance The report discusses the three marketing performance measures and analyzes the metrics used to evaluate themeasures. Direct and scarcity marketing and their impact on net marketing contribution in short run have been discussed. Analysis of NMC in introductory and late-growth stage has been done. Introduction Marketing performance measurement is a term that is used by marketers to show the improvement and analysis of the marketing effectiveness and efficiency. If the marketing strategies, metrics, and activities are aligned with business goal then marketing performance will be efficient and effective. The purpose of measuring marketing performance is to optimize the return on investment and maximize the effectiveness of marketing.The assessment of relationship among business performance and marketing activities called marketing performance measurement (O’Sullivan and Abela, 2007). Three Measures of Marketing Performance Measures of marketing performance are the provocative question and have become an important topic than ever before. Different marketers have different approaches of measuring marketing performance depends upon the nature of an enterprise. For example, people measure marketing performance by calculating the number of leads they produce, through the number of opportunities, revenue performance quality, by calculating total customers acquisition cost, and through the revenue they generate from marketing program. Each course of action has some challenges and this task has too. Challenges that are present in measuring the performance are not having enough skills and data, poor systems and inability to obtain information from sales (Conlon, 2013). The purpose of marketing is to enhance the financial stability of the organization. There is not a single measure that is best for measuring marketing performance but three very famous measures of marketing performance are return on investment, comparison of marketing cost with result, and brand knowledge. Marketing Return on Sale:Marketing return on sale is an important measure of marketing performance and determines that how efficient the firm is. It provides the deeper understanding of impact that organization has on its profits due to marketing strategies. It is a percent of net sale attributable to the net marketing contribution. The higher marketing return on sale of current year as compare to prior year describe the positive performance of marketing (Ambler, Kokkinaki, &Puntoni, 2004). Compare the Cost of Marketing Activities with Results:Marketers use the revenues - that are the result of marketing program - as a measure of marketing performance. For example marketing programs like direct mailing and advertising develop contacts and some contacts has higher value as compare to others that depends on the number of responses. Marketing department compare the cost spent on each contact with the value of the result. If marketing program results in increasing numbers of orders and generates greater revenue on per order then the marketing performance will be considered good (Srinivasan &Hanssens, 2009). Brand Knowledge: Marketing department is liable to make people understand that why the brand exists in market, how it is different from others, and what values it can deliver. If the brand is well recognized and customers recall it at the time of buying that cause to increase the sale and shows the effectiveness of marketing performance (Ambler, 2000). MetricsUsed to Evaluate the Measures Matrices that organizations use to evaluate the measures of marketing performance include brand awareness. The brand’s preference against the competitors’ brand is evaluated. Brand awareness is the metrics that reflects the future purchases. Brand awareness is considered as important because the higher the brand awareness of the brand, the company can charge premium price from the consumer. In addition to this, a renowned brand will give a good impression to the consumer and thus, it will help the company in building trust and reliability in the minds of the consumers. Thus, brand awareness is very important in terms of evaluating the performance of the marketing campaigns and strategies used by the company. Marketing strategies lead to creating brand awareness, and if the marketing strategies do not lead to improving the brand awareness then it means that the organization’s marketing performance is not adequate. For instance, if a new entrant company such as Huawei introduces smartphone in the competitive market of smartphone industry, then the company has to invest a lot on building brand awareness. If the marketing campaigns of the company are able to built a name in the market and encourage consumers to create brand awareness then it can be said that the campaigns is successful. Moreover, once some kind of brand awareness is created and people get aware that Huawei is one of the companies that offers smartphones then it will help the company in encouraging consumers. However, if the company is not able to engage the consumers and create brand awareness then the marketing campaigns will be considered as fail. Another metrics that are used to evaluate measures are product satisfaction and intentions of purchase. There is a correlation among brand metrics and future sales. If the products or services of a brand are satisfactory and the consumers have intentions to purchase the product, then they are likely to lead to purchase the product or service. However, if the product is able to meet the needs of the consumers satisfactorily, then consumers would not be willing to buy. Thus, it is another important aspect of measuring the performance of the marketing campaigns and strategies of the company. If the scenario of Huawei is considered again for this metrics and assumed that the company is successful in creating brand awareness. By creating brand awareness, the company has been successful in engaging consumers and attracting them to look at different smartphone products of Huawei. However, if the product quality, specifications, and features are not able to satisfy the consumers and they are not according to the needs of the consumers then this may not lead to sales. Thus, it is important that the product strategy should be formulated considering the needs and wants of the consumers. So, when consumers have intentions to buy the product, then would purchase it. Otherwise, the marketing performance or campaign can be considered as failed. Another measurement of marketing performance is effectiveness metrics through this metrics marketing performance is measure and it describes the cost of marketing campaigns and programs (Ambler, 2000). Ambler (2000) emphasized on making the marketing campaigns effective, and these programs can only be effective if it leads to higher sales ultimately. Thus, the focus of every marketing campaign directly or indirectly is to encourage consumers to buy the product or service. If the consumers are attracted in buying the product or service, then it will be considered as a successful marketing campaign. Returns on the marketing campaign can be one of the measures to analyze and evaluate how effective the marketing campaign is. So, if the same case of Huawei is considered, then the marketing campaigns should lead to higher sales. The returns on investment or cost on the marketing campaign would be the measure to evaluate the performance of the marketing campaigns. If the ROI is low, then it can be said that the company is not successful in its marketing campaign. On the other hand, if ROI of the company is high, then marketing campaign is successful in encouraging consumers to buy the product. Part 2: Marketing strategies can be important in creating brand awareness and in encouraging and attracting the consumers. Marketing strategies can also be important in reminding the consumer about the existence of the company. Therefore, the objective of the marketing campaign can be different and it depends on the stage of the company. If the company is in the initial stage, then it will use marketing campaigns to create awareness. Similarly, if it is in the late stage, then it will use marketing to remind the consumers about the product. Net marketing contribution is a marketing profit and it has three most important elements from that it has been composedand that are marketing and sales expenses, sales, percentage of gross margin. The formula of NMC is sales multiply with percent gross margin minis marketing and sales expenses (Best, 2012). Net marketing contribution can have several impacts on the consumer. Marketing in the short-run can lead to increasing brand awareness, reminding the consumer about the product and offerings of the organization, encourage the consumer to try the product or service being offered, entice the consumer to come and analyze the offerings of the company, and the marketing campaign can have many benefits. There are many types of marketing strategies but in this report, two marketing strategies direct marketing and scarcity marketing have been discussed in order to see their effect on Net marketing contribution. Direct marketing allows organizations to reach their customers straightly and having direct interaction. Direct marketing has become a primary concern of marketers because it allows personalization. Direct marketing enables marketers to do marketing at lower cost through it marketers are able to have confidential relations with their customers. Direct marketing includes direct-mailing, trade shows, telephonic conversation, and video chatting with preferred customers and these activities may complement personal selling efforts. It allows being a well-planned advertiser and marketing programs that are well organized reduce the selling cost and increases the net marketing contribution in short run even because direct marketing creates quick response that helps marketers to analyze those customers who should not be targeted and in such way marketers reduces the cost of marketing (Hansen, 2009). Scarcity marketing strategy is a concept in which customers are told that there is a shortage of product and it is available for short time therefore in order to have that product or brand they have to act fast. Such strategies motivate people to buy thing in bulk because they have fear that brand may not available for long time. This technique is being utilized since many years.The best example of scarcity marketing is the Disney vault films. Disney started to issue limited edition of their films and informed customers that these films are available in market for fewer time and they should purchase these films faster before they are not available. The result of this strategy is that people buy these films faster because they know that the latest version will not be in the market until Disney issues it again. Apple is another company that can be placed as an example of scarcity marketing. This strategy allows marketers to have greater net marketing contribution in short run because people act faster due to the fear of not having product in market for long time. Therefore, it can be said that both strategies has positive impact on net marketing contribution. At introduction stage, marketing department requires heavy amount of money because the department has to create awareness of brand among people. At introductory stage, sales will be lower until consumers turn into aware of brand. Some firms announce their brand without introducing them in such cases fear of failure is increased. At this stage, the advertising cost is high due to the rapid creation of awareness. These high costs and lower sales cause to have negative marketing contribution at introductory stage. For instance, if the same case discussed in the part I is analyzed. If a new company such as Huawei enters in the market, then it has to invest a lot in creating brand awareness. Because consumers are aware that renowned smartphones are offered by big companies such as Samsung, Apple and HTC. Thus, to make a mark in the industry, the company has to invest a lot in marketing campaign to create brand awareness. In contrast, at late-growth, stage customers are aware of brand; heavy advertising is not required. Once the customers are aware of brand and started asking for it sales get increased as more retailers and wholesalers become interested in buying the brand due to which revenue generation gets far above the ground. Therefore, at late-growth stage net marketing contribution is high. During this stage, the company focuses more on reminding the consumer rather than creating brand awareness. For instance, if a company such as Coca Cola comes up with a marketing campaign, then the objective is to remind the consumer and keep the product name in the mind of the consumers. This will ultimately lead to higher sales of the company. Conclusion It has been encountered that the measurement of marketing profit is done as net marketing contribution. Marketing measures helps organizations’ marketing department to set their future goals and allow them to have good business performance through the measurement of the improvement in marketing performance. It has been encountered that direct marketing and scarcity marketing strategy has positive impact on net marketing contribution. Analysis proved that net marketing contribution is negative at introductory stage and positive at late-growth stage. References: Ambler, T. (2000). Marketing metrics. Business Strategy Review, 11(2), 59-66. Ambler, T., & Roberts, J. (2006). Beware the silver metric: marketing performance measurement has to be multidimensional.  Centre of Marketing. Wp. 05-709. Ambler, T., Kokkinaki, F., &Puntoni, S. (2004). Assessing marketing performance: reasons for metrics selection. Journal of Marketing Management,20(3-4), 475-498. Best, J. R (July 20, 2012). Southwest Airlines: Positive Customer Experience Drives Customer Satisfaction. Retrieved June 12, 2014, from http://www.rogerjbest.com/mbm6/blog/tag/net-marketing-contribution/ Conlon, G (July 1, 2013), “Infographic: Measures of Marketing Performance”. Direct marketing news. Retrieved June 12, 2014, from http://www.dmnews.com/infographic-measures-of-marketing-performance/article/300208/ Hansen, A. K. (2009). The Interplay of Personal Selling and Direct Marketing: An Exploratory Study in the Pharmaceutical Industry.Retrieved June 12, 2014, from http://www.econstor.eu/bitstream/10419/24826/1/WorkingPaperHansen.pdf O'Sullivan, D., &Abela, A. V. (2007). Marketing performance measurement ability and firm performance. Journal of Marketing, 71(2), 79-93. Srinivasan, S., &Hanssens, D. M. (2009). Marketing and firm value: metrics, methods, findings, and future directions. Journal of Marketing Research, 46(3), 293-312. Read More