How Financial and Non Financial Metrics can be Used for Quantify the Effectiveness of Marketing Campaign - Coursework Example

FINANCIAL AND NON FINANCIAL METRICS CAN BE USED FOR QUANTIFYING THE EFFECTIVENESS OF MARKETING CAMPAIGN (MARKETING ANALYTICS) EFFECTIVENESS OF MARKETING CAMPAIGNS Importance of marketing campaign is clearly understood by the marketing departments; however owing to the increased pressure from the economic and global financial crises, the marketing campaign budgets are threatened to be slashed unless clear evidence of positive contribution of such campaign to the customer and financial portfolio of the organisation is proved. On the other hand, there is also a constant tussle between the two extremes of quantitative or financial evidence of performance and the qualitative or non-financial measures for assessing the campaigns performance. The case studies of B&K Distributors and DuPont-NASCAR Marketing have been used for extraction idea about the most viable source of understanding of the marketing budget investment. ROLE OF MARKETING CAMPAIGN ANALYTICS Marketing campaigns in the modern world are critically dependent on the integrated elements in the planned campaign. The marketing campaigns undergo constant adaption for integrating the changing customer requires and behaviours. As a matter of fact customers are being influenced by a wide array of factors and sources. The process of adaption to the customers’ constant changing behaviours and preferences requires that campaigns constantly assess the performance of their initiative to attract customers. According to Brea (2012), analytics of the marketing campaign has three main components. First, the business story that requires defining the type of the customers which are being targeted by the business with the marketing campaign. This section determines the action-ability and relevance that are critical for the business. Second is the customer story. The customer story implies defining all about the linkage of the marketing activities with the customers. This in comprehensive details identifies the connections of the marketing activity with the customers as well as areas where still the potential of further customer connection is present. Finally, the testing and learning plan requires determining the due quality and quantity of data required and preparing a thoughtful data for the required level of response. All three components are interconnected as follows: (Brea, 2012) Importantly, all of these are data driven responses and marketer are required to extract the data that carries insight about the market using various techniques (Winston, 2014). Their response to all these questions form marketing campaign based on the analytics that guide the future direction to marketing department. FINANCIAL METRICS The financial metrics that can be employed for assessing the performance of the marketing campaign included Return of Marketing Investment (ROMI), Increase in Profit, Net Present Values (NPV), Internal Rate of Return (IRR) and Customer Life Time Value (CLTV) etc. Verhoef and Leeflang (2009) assert the idea of financial metrics and state that influence of marketing department in the organisation is positively associated with the financial performance of the firm. The role of customer connectedness did not prove to gain an impact to marketing department in the organization Importance and role of the financial metrics for the effectiveness of the marketing campaign can be clearly assessed from the B&K Distributors. The company integrated marketing and communication tool for building its access to the potential customers. The use of the financial measures revealed clear future potential. For example, the growth potential was estimated to increase at 6% as compared to the inflation rate of 3%. Similarly, increased fixed cost for the IT system integration; as also justified with 1% as compared to the 3% of the other channels investment (Jeffery and Anfield, 2006). Hence, in the similar format the cost of the entire project is assessed against the revenue or at least cost savings. This empirical evidence provides sound basis for the decision making in alignment with the main objective of the business which revolves around profitability. In no contradiction to this fact that empirical evidence provide concrete grounds to justify the marketing campaign investment, the question lies in understanding the different between the overall marketing effectiveness than simply measuring financial benefit. According to Wyner (2008), understanding of the difference between mere ROMI (and other financial measures) and marketing effectiveness is critical. The victory of achieving the desired financial saving or net income would be hollow victory if the overall objectives set forth for the marketing are not met (Wyner, 2008). The case of the B&K Distributors has apparently managed to win numerical case draft of the communication campaign. On the other hand, marketing campaign could not trigger purchase intention among its customers to select B&K Distributors despite being possibility and accessibility. It was mentioned that one of the reasons for this inability was limited personnel capacity of the B&K to reach out customers (Jeffery and Anfield, 2006). Hence, the financial measures have declared clear potential to reach out customers; but are silent on effectiveness of the campaign to generate sales lead by successfully passing through the customer decision making funnel. Financial measures generated in response to the marketing campaigns have often been contrasting. For example, Apple’s campaign to reduce the price of Apple’s new cell phone by USD 200 led to the negative financial measure in terms of stock price (or shareholders’ value). The event led the price of Apple stock to slide down by five percent (Information Week, 2007). On the other hand, the financial impact and measure if taken in terms of share price value then share price of General Motors increased to 2.4% on GM’s announcement of extended warranties in 2006 (Chon, 2006). Hence, financial measures often lack to predict the intangible and non- empirically measurable value that comes along the marketing objectives. NON-FINANCIAL METRICS Non financial metrics, as name signifies, are those metrics that does not provide the empirical ground for the effectiveness of the marketing campaign. Some of the metrics include value of the branding, customer loyalty, customer satisfaction, comparative marketing activities and overall performance of the marketing campaign. All these non-financial metrics have an increasingly important role in the business today. For example, Liang, Wang, & Farquhar (2009) assessed the impact of the customers’ perception, trust, and loyalty on the financial performance of the organisation and established positive relationship. Most importantly, the result of the similar study states that effectiveness of these measures translates into repurchase intention which in turn brings financial benefit to the firm (Liang, Wang, & Farquhar, 2009). The case of DuPont NASCAR marketing has clear implications. The case did not provide any apparent empirical evidence or ground to justify investment. However, the marketing campaign was highly effectives as it succeeded in winning the customers’ attention at large. For example, comment of the Sally Clausen posted on the website of NASCAR.com revealed the long term impact of DuPont marketing. This customer awareness generates indirect success and financial benefit to the brand (Jeffery, 2007). The impact can be understood from the results established in the study of Trusov, Bucklin, & Pauwels (2008), which states that word of mouth has 20 and 30 times higher elasticity as compared to the marketing and media appearance respectively. The similar study further states that referral carryover effect of the word-of-mouth is much larger when compared to the traditional marketing actions (Villanueva, Yoo, & Hanssens, 2008). The concern of the organisation from every aspect is the financial benefit. For the purpose, organisations do not necessarily rely on the financial measures only. The case of DuPont NASCAR marketing has also reported such evidence where financial benefit is reported; though not in the form of the financial measures. The customer example of the ken Odem, CEO of the Aeropres which was leading propellant manufacturer and distribution company turn into a NASCAR fan as a result of comprehensively planned campaigns of DuPont. (Jeffery, 2007) Moreover, the clearly generated financial impact was the doubled size of the Aeropres business with the DuPont during 2001 to 2006 (Jeffery, 2007). This financial benefit is just one case to mention. Moreover, the strategy of the plan to serve the customers of the high clients is also important to develop strong bonding with the customer which ultimately translates into the financial benefit. The clients of the DuPont would in turn develop the positive attitude towards the company as one who cares for their (customers’) customers. It can be inferred as a result of phenomenon using which the social cause related marketing gains benefit. Studies reveal that customers develop positive attitude towards the companies investing in social cause and develop the purchase intention for such organisations. Moreover, study also established that this trend is higher among women as compared to men (Ross III, Stutts, & Patterson, 2011). The statistics of the NASCAR fans have also increased the percentage of women. This in turn can generate greater number of women decision makers in the client base of the DuPont as women might give extra consideration to the products of DuPont on the basis of loyalty (Jeffery, 2007). CONCLUSION The objective of the effective marketing campaign is to win the customer preference over competitor. However, this is only single objective working behind the real marketing objectives that brings success to the organisation in gaining competitive edge. The successful marketing campaign’s effectiveness must be gauged in all possible ways that result in customers spending least time in consideration every time need is identified. Therefore, the combination of financial and non-financial measures shall be employed for measuring the effectiveness of the marketing campaigns. The non-financial measures to be used to identify and govern the factors and trends that lead to required pattern of buying behaviour, while on the other hand, the financial measures to evaluate the overall financial benefit. For example, Softer Side of Sears campaign had positive financial measure based results. The campaign also resulted in the driving the traffic to stores; however, the lack of effective merchandising resulted in customers’ disappointment and the campaign failed (Wyner, 2008). This implies that marketing campaign shall be defined as a wholly coordinated strategy in accordance to the three components defined in the analytics model presented initially. This would require the marketers to measure non-financial measures that are often concerned with driving and governing the behaviour while the using financial measures for the development of the empirical evidences. Moreover, while financial metrics provided direct evaluation grounds, the strength and role of gaining non-financials metrics can be gauged using surveys etc. Hence, the focus shall remain towards achieving the marketing objectives and not the selection of measures only. LIST OF REFERENCES Brea, C. (2012). Pragmalytics: practical approaches to marketing analytics in the digital age. USA: iUniverse Chon, G. (2006). GM Ups the Ante in Warranty war. Available from http://online.wsj.com/news/articles/SB115755049294755067 [Accessed 1 February 2014] Information Week. (2007). Apple Stock Tumbles Adter iPhone Fiasco. Available from http://www.informationweek.com/news/showArticle.jhtml?articleID=201804925 [Accessed 1 February 2014] Jeffery, M. (2007). DuPont – NASCAR marketing. Kellogg School of Management Jeffery, M., and Anfield, J. (2006). B&K distributors: calculating return on investment for a web based customer portal. Kellogg School of Management Liang, C. J., Wang, W. H., & Farquhar, J. D. (2009). The influence of customer perceptions on financial performance in financial services. International Journal of Bank Marketing, vol. 27, no. 2, pp. 129-149. Ross III, J. K., Stutts, M. A., & Patterson, L. (2011). Tactical considerations for the effective use of cause-related marketing. Journal of Applied Business Research (JABR), vol. 7, no. 2, pp. 58-65. Trusov, M., Bucklin, R. E., & Pauwels, K. H. (2008). Effects of word-of-mouth versus traditional marketing: findings from an internet social networking site. Robert H. Smith School Research Paper No. RHS, 06-065. Available from http://164.67.163.139/Documents/areas/fac/marketing/bucklin_effects.pdf [Accessed 1 February 2014] Verhoef, P. C., & Leeflang, P. S. (2009). Understanding the marketing departments influence within the firm. Journal of Marketing, vol. 73, no. 2, pp. 14-37. Villanueva, J., Yoo, S., & Hanssens, D. M. (2008). The impact of marketing-induced versus word-of-mouth customer acquisition on customer equity growth. Journal of marketing Research, vol. 45, no. 1, pp. 48-59. Winston, W. L. (2014). Marketing Analytics: Data-Driven Techniques with Microsoft Excel. John Wiley & Sons. Wyner, G. (2008). Marketing effectiveness: it’s more than just ROI. Available from http://www.cips.org/Documents/Membership/MillwardBrown_MarketingEffects_Feb08.pdf [Accessed 1 February 2014] Read More