Chapter 15

EVALUATING MARKETING EFFORTSChapter 15

HaroonHajarAsmaeIaroslava Smirnova Id4626382Hasan

PRESENTED BY

Why Evaluate EffortsWhat is the success of a Marketing Effort?Generating more Leads?What about unsuccessful Leads?Conversion ratio of Leads?Marketing Cost per order?

Tektronix has 19 versions of Leads defined in their Measurement System

Chapter 15: EVALUATING MARKETING EFFORTS3CONTROL SYSTEMSProcess of ControlMeasureperformanceCompareperformanceto standardReplicate causeof highperformanceEliminate causeof lowperformanceBelowStandard?AboveStandard?

Chapter 15: EVALUATING MARKETING EFFORTS4CONTROL SYSTEMSMeasures Actual vs Planned PerformanceSensor - The Measuring ToolStandard The Goal To Achieve

TOLERANCE RANGE Range of Acceptable Performance

Measures Productivity & Profits byTypes Of ProductsCustomersTerritories

Measures other Key Marketing Variables such as:Customer Satisfaction

Chapter 15: EVALUATING MARKETING EFFORTSDIMENSIONS OF CONTROLMicroMacroInputRegional Sales Office ExpenseTrade Show BudgetProduct X Development CostTotal Selling ExpensesPromotion BudgetTotal R&D BudgetOutputRegional Sales Office RevenueLeads from Trade ShowsSales for Product XTotal RevenueCorporate PositionTotal Division Revenue

Chapter 15: EVALUATING MARKETING EFFORTSCONTROL OF INPUT & OUTPUT VARIABLES INPUT VARIABLES

Price Product R&DAdvertisingPromotion Distribution Marketing Research Marketing Administration

SET BY BUDGETACTIONPHASE

THEMARKETINGPROGRAMMARKETREACTION

THEMARKET

OUTPUT VARIABLES

Sales Market Share Profit Communication results Distribution results Buyer attitudes and behavior COMPARED TO PERFORMANCE STANDARDSChapter 15: EVALUATING MARKETING EFFORTSTHE BALANCE SCORECARD FinancialNet incomeProfit marginReturn on investmentReturn on assets managedCustomerRevenue per customerAccount shareCustomer satisfactionIntent to repurchaseInternal Processes

Employee satisfactionData availabilityNew product development cycleCredit approval cycle Learning Growth

Completed training programs New patents obtainedNew products introduced Vision & Strategy

Chapter 15: EVALUATING MARKETING EFFORTS8CONTROL AND THE NATURE OF DATA Marketing control is the gathering, evaluation, and use of information regarding marketing processes.The first step is to gather information, or to collect data

Chapter 15: EVALUATING MARKETING EFFORTSCAUSES OF VARIANCETinkeringMaking changes within a process in order to make the process more productive, by either reducing defects or increasing volume.

SystematicChanging systems and creating a new tolerance ExternalOperates in an environment that has an impact on the systems effectivenessMarketing managers do not have control over external factorsRandom Variances caused by uncontrollable and unidentified causes Must recognize a certain degree of randomness in every system Occur because of changes to the processNot due to the process but due to other factors

Chapter 15: EVALUATING MARKETING EFFORTSTOOLS OF CONTROLDespite of any job, having the right tools makes it much easier

Getting the job done right requires the knowledge and the tools

Chapter 15: EVALUATING MARKETING EFFORTSTYPES OF TOOLS IN CONTROL SYSTEMSStandard setting process

Measurement tools

Tools used to search for causes of variance

Chapter 15: EVALUATING MARKETING EFFORTS

OUTPUT AND INPUT TOOLS OF CONTROLStandardSetting ProcessProsConCommentBenchmarkingCan learn and improveHard to find someone willing to let you benchmarkCan use industry association measuresQuotas andTargetsEasy to establishCan be difficult to account for varianceConsider sources of variance when settingBudgets andPricing PlansEasy to establishLack of flexibility can lead to missed opportunitiesCreate systems for opportunity evaluation

15-13SET OUTPUT AND INPUT STANDARDS Of Performance That Can Be Observed And Measured

DEVELOP MEASUREMENT TOOLS Such As Marketing Audits, Customer Satisfaction Measures And Accounting Systems

CREATE SEARCH TOOLS Such As Reporting Systems And Information Systems To Find Variance And Its CausesTHREE TOOLS FOR BETTER CONTROL OF SYSTEM PERFORMANCE

Chapter 15: EVALUATING MARKETING EFFORTS MEASUREMENT TOOLS

Measurement Tools Pro Con CommentSources of DataMarketingAuditsComplete processreviewDifficultand time- consumingMost beneficial when done regularly but not frequentlyObservation and survey in the field by the auditorsCustomer Satisfaction MeasurementCan be a predictor of future salesChallenge tofind what orwho caused (dis)satisfac-tionUsed as ameasure of performanceSurveys of customers, including decision makers and usersAccountingSystemsEnables allocation of fixed costsHard to applyto specific customersUse a variety to understand customer and product profitabilityTransaction systems such as accounts receivable, shipping, and manufacturing15-15ACCOUNTING SYSTEMS Accounting Systems measure financial performance

Objective: to understand how costs are allocated so that the true profitability of any particular area, product, or market can be determined. 3 approaches to cost allocation: Full CostingContribution analysisActivity-based costing COSTS REVENUE

Chapter 15: EVALUATING MARKETING EFFORTS16FULL COSTING

Chapter 15: EVALUATING MARKETING EFFORTSRevenue ( after returns) $ 1,050Less costs of good sold 400Less selling expenses158Less administrative expenses285Less research & development110Income before taxes $ 97Sales office sales 2 products.Sales Team #2 Sales Team #1 Product A Product B CONTRIBUTION ANALYSISContribution Margins with Three Sales Offices

Chapter 15: EVALUATING MARKETING EFFORTSContribution analysis allocates costs based on incremental costs along each step of the marketing process.

Contribution costing is a form of value added, in that costs are added as they occur along the supply chain and profit ( or contribution) can be calculated at any point in the supply chain CONTRIBUTION ANALYSIS

Chapter 15: EVALUATING MARKETING EFFORTS

Contribution Margins with Three Sales Offices ACTIVITY-BASED COST ACCOUNTINGABC allocates fixed costs to products or other units ( such as sales office) according to the activity that creates or drives the cost.

Allocating revenue to the show program enables manager to estimate the profit ( or contribution) of the program, information needed to make decision concerning future marketing investments.

Chapter 15: EVALUATING MARKETING EFFORTSWHICH ACCOUNTING SYSTEM IS BETTER?

Chapter 15: EVALUATING MARKETING EFFORTSDepends on many factors: Objectives (e.g. to evaluate the overall sales office and treat that office as a profit center contribution approach)

Who is using information?

Accounting is the service function in the firm; it provides decision makers ( sales managers, product managers with the information they need to make marketing decisions. All of the aboveOften combined with experimentation for more powerful decision-makingCan lead to incremental, rather than innovative, thinkingCan inform forecasts, as well as explain past successStatistical AnalysisMarketing systems that track source of saleUsed more frequently with CRM systemsHard to control for all potential causesEstablishes cause and effectExperimentationInterviews of people involvedLook forunderlying principles of success or failureCan be hard to apply learning to new situationsMethod of organizational learningCase AnalysisSurveys, transaction systems, and third-party sources such as Dun & BradstreetIncreasing use of data warehouseslets managers access data directlyDifficult to get data into a formateveryone can useSelf-serve reportingInformation SystemsSalespeople, trade show managers, other marketing managers, as well as transaction systemsCompanies are moving to real-time systems like dashboardsCan get tradition-boundMethod of information sharing across work-groupsReporting SystemsSources of DataCommentConProSearch Tools SEARCH TOOLS FOR IDENTIFYING VARIANCE

15-22THANK YOU FOR YOUR ATTENTION