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Unformatted text preview: 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Boundless Marketing Introduction to Marketing Evaluating Marketing Performance … 1/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing The Importance of Evaluating Marketing Performance Evaluating marketing performance guides future marketing initiatives and helps a company achieve its goals. LEARNING OBJECTIVES Review the importance of performance evaluation from a marketing perspective KEY TAKEAWAYS Key Points Ideally, marketing performance measurement should be a logical extension of the planning and budgeting exercise that happens before a company’s scal year. Marketing performance metrics or key performance indicators (KPIs) are useful not only for marketing professionals but also for non-marketing executives. Determining what areas of the marketing mix to modify, as well as whether company goods, services, and ideas meet customer and stakeholder needs, are some of the primary reasons why companies evaluate the marketing performance. Key Terms bottom line: The nal balance; the amount of money or pro t left after everything has been tallied. … 2/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing key performance indicators: considered industry jargon for a type of performance measurement, KPIs are commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged. return on investment: Return on investment (ROI) is one way of considering pro ts in relation to capital invested. Why Evaluate the Performance of Marketing The intangible bene ts of marketing – improving and enhancing brand awareness; educating customers and prospects about product bene ts; and strengthening stakeholder relationships – make measuring its nancial impact a perplexing and challenging process. Ideally, marketing performance measurement should be a logical extension of the planning and budgeting exercise that happens before a company’s scal year. The goals that are set should be both measurable and applicable to every marketing role within an organization. Companies employ various methodologies to measure marketing performance and ensure they meet those performance goals. Business Report: Evaluating marketing performance helps companies plan and budget for the next scal year. … 3/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Importance of Marketing Performance Metrics Marketing performance metrics or key performance indicators (KPIs) are useful not only for marketing professionals, but also for non-marketing executives. From the chief executive o cer to the vice president of sales, the senior management team needs marketing KPIs to gauge how marketing activities and spending impact the company’s bottom line. This is particularly important since companies are prone to reduce marketing budgets during economic downturns, downsizing, and mergers. As marketers face more and more pressure to show a return on investment (ROI) on their activities, marketing performance metrics help measure the degree to which marketing spending contributes to pro ts. It also highlights how marketing contributes to, and complements, initiatives in other areas of the organization, such as sales and customer service. Other reasons why companies evaluate marketing performance include: Monitoring marketing’s progress towards its annual goals Determining what areas of the marketing mix – product, price, place, and promotion – need modi cation or improvement to increase some aspect of performance Assessing whether company goods, services, and ideas meet customer and stakeholder needs Establishing marketing performance metrics is integral to helping brands satisfy customers, establishing a clear company image, being proactive in the market, and fully incorporating marketing into the company’s overall business strategy. Marketing Performance Metrics Marketing metrics are numeric data that allow marketers to evaluate their performance against organizational goals. … 4/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing LEARNING OBJECTIVES Summarize how marketing metrics impacts company operations and goals KEY TAKEAWAYS Key Points Marketing metrics have di erent elements of measurement, including net sales billed, number of product or design registrations, and brand surveys to measure brand awareness. By monitoring and analyzing marketing performance metrics, brands can increase their competitive intelligence, assess their market strengths and weaknesses, and make calculated budgetary decisions across the marketing mix. Return on marketing investment (ROMI),marketing return on investment (ROI) and return-on-marketingobjective (ROMO) are examples of marketing performance metrics used by major brands to prioritize and allocate marketing investments. Key Terms analytics: the discovery and communication of meaningful patterns in data, which rely on the simultaneous application of statistics, computer programming, and operations research to quantify performance. contribution margin: cost-volume-pro t analysis, a form of management accounting; the marginal pro t per unit sale … 5/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Marketing Performance Metrics As companies seek to run leaner and more e cient businesses, more marketing professionals are tasked to demonstrate how marketing generates revenue and contributes to companies’ business goals. Marketing metrics provide frameworks that public relations specialists, brand managers and marketing directors can use to evaluate marketing performance, as well as back their marketing plans and strategies. The numeric data allow marketers to not only justify their e orts, but also highlight the direct relationship between marketing and larger organizational goals. Marketing metrics have di erent elements Analytical Tools: Quantitative metrics and analysis help marketers make more accurate decisions and predict risks associated with decisions. of measurement, including net sales billed, number of product or design registrations, and brand surveys to measure brand awareness. By collecting and analyzing marketing metrics, brands can build their marketing performance in the following ways: Increasing competitive intelligence and anticipating competitor reactions to new marketing strategies More accurately assessing company marketing assets such as brand equity and its level of e ectiveness among target audiences Building a knowledge base of current and historic data that help drive marketing mix decisions and steer the company through rapidly changing market conditions Entities such as the Marketing Accountability Standards Board have developed formal processes for connecting marketing activities to the nancial performance of organizations. Moreover, industry experts have developed various metrics – notably, return on marketing investment (ROMI) – to help marketers measure the performance of activities across … 6/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing the marketing mix. The purpose of metrics such as ROMI is to measure the degree to which marketing spending contributes to pro ts. How ROMI Works Return on marketing investment is one of the most di cult organizational aspects to measure. ROMI, a relatively new metric, is marketing contribution attributable to marketing (net of marketing spending), divided by the marketing “invested” or risked. ROMI is based on the calculation: [Incremental Revenue Attributable to Marketing * Contribution Margin (%) – Marketing Spending] / Marketing Spending ($) There are two forms of the ROMI metric: short-term ROMI and long-term ROMI. Short-term ROMI measures revenue such as market share, contribution margin or other desired outputs for every marketing dollar spent. This metric is best used to determine marketing e ectiveness and steer investments from less productive to more productive activities. In a similar way, long-term ROMI can be used to determine other less tangible aspects of marketing e ectiveness such as increased brand awareness or consumer motives. However, long-term ROMI is often criticized as a “silo-in-the-making”. Long-term ROMI creates a challenge for brands unfamiliar with using business analytics together with marketing analytics to determine resource allocation decisions. Despite this challenge, long-term ROMI can be a sophisticated measure for prioritizing investments and allocating marketing and other resources within an established framework. Other Marketing Performance Metrics Marketing return on investment (ROI) is another term that refers to measuring company sales and pro ts. Author Rex Briggs also introduced the term “ROMO” for return-on-marketing-objective. This re ects the idea that marketing campaigns may have a range of objectives, where the return is not immediate sales or pro ts. For example, a marketing campaign may aim to change the perception of a brand. Nevertheless, in … 7/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing most cases, a simple determination of revenue per dollar spent for each marketing activity can be su cient to help make important decisions to improve the entire marketing mix. Methods for Evaluating Marketing Performance KPIs, ROMI, and Accountable Marketing are all metrics that are used to track marketing performance. LEARNING OBJECTIVES Illustrate the purpose and characteristics of marketing performance evaluation methods KEY TAKEAWAYS Key Points When evaluating marketing performance, companies should measure marketing outcomes from the consumers ‘ points of view, include all marketing activities, measure across a continuous time period, and meet statistical and technical criteria required of all measurement systems. To accurately measure the e ectiveness of marketing activities, KPIs must be integrated within the business and management of the company. To ensure meaningful comparisons among activities, companies should employ a common scale, and measurement error must be quanti ed so that managers can react to changes in conditions. Key Terms … 8/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Advertising Research Foundation: The ARF is an association where practitioners from every avenue of advertising—agency, academia, marketer, media, and research—gather to exchange ideas and research strategies. return on investment: Return on investment (ROI) is one way of considering pro ts in relation to capital invested. key performance indicators: considered industry jargon for a type of performance measurement, KPIs are commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged. Evaluating Marketing Performance Organizations use various methods to evaluate marketing key performance indicators (KPIs) or metrics. Marketing Performance Measurement, Marketing Performance Management, Marketing Return on Investment (ROI), Return on Marketing Investment (ROMI), and Accountable Marketing are all metrics that companies use to connect marketing performance to the nancial performance of the organization. … 9/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing Marketing Performance: Using an established methodology to evaluate marketing e ectiveness helps companies measure performance and assess business needs. In order for marketing KPIs to be integrated within the business and management of the enterprise, and ensure consistency and reliability across the marketing mix, they must meet these minimum requirements: Measure marketing outcomes from the consumers’ points of view Include all marketing activities Be repeated over time Meet statistical and technical criteria required of all measurement systems Consistency is Key Marketing materials can be designed to inform, portray products and services attractively, and in uence purchasing behavior. The methods for evaluating the performance of, and responses to, these materials range from simple calculations measuring return on investment, to tallying the number of visits to a website. Since marketing campaigns are typically integrated across all channels (e.g., print, email, and social media), these -… 10/11 10/9/2019 Evaluating Marketing Performance | Boundless Marketing channels are measured together to understand the overall e ect on target markets. To ensure meaningful comparisons among activities, brands, markets, and time periods, organizations may employ a common scale to analyze performance metrics. Using di erent measurements to evaluate di erent communications activities, competitors, and markets does not allow direct comparison and results in lost synergies. Companies using formalized methodologies continually gather and monitor marketing data to understand where the marketing plan is strong and where it needs improvement. Long-term observation also brings true insight about unanticipated changes and “red ags” in the data. All measurement systems should take into account accuracy, repeatability, reproducibility, bias, data shifts, and data drifts. Measurement error must be quanti ed so that managers can react to changes in conditions, but not to changes due to measurement variation. Independent organizations such as the Advertising Research Foundation evaluate the validity of commonly used measurement systems to produce standards and best practices for evaluating marketing and advertising data. Previous Next -… 11/11 ...
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