Sunday, 22 July 2007

Marketing metrics 3 of 3

Rust, Ambler, Carpenter, Kumar & Srivastava (2004) consider measures to be used at the strategic and tactical level by what they call the ‘marketing productivity chain’. Here a model is used that shows how marketing activities, such as a loyalty program, or new product introduction (with a known cost) generate impacts that ripple through the organisation moving from initial impact on customer, and effects on Brand Equity (Aaker 1991, Kapferer 2004) and Customer Equity (Rust, Zeithaml, Lemon 2000) eventually onto impact of the company’s value.

The authors explain how measures in the Customer Impact area are primarily concerned with the measurement of perception and judgements, much of Brand Equity assessment is again qualitative and perceptual involving psychological association and projective techniques that lead to assessments of what is termed ‘Brand Personality’ (Aaker 1997). Here the brand is ‘psychologically profiled’ against 5 key personality types:
• Sincerity
• Excitement
• Competence
• Sophistication
• Ruggedness

However commercial organisations Interbrand and Financial World combine data on market leadership, stability, internationality, levels of protection, and local operating conditions to create a brand equity league table. To qualify for a place in the Interbrand league table each brand must:
• have 1/3 of its earnings outside its home country
• be recognised outside its core base of customers
• have publicly available marketing and financial data
This eliminates heavyweights such as Visa, Wal Mart, Mars, CNN. Parent companies are not ranked.
The methodology used is:
• Determine Company as brand or product as brand
• Project next five years earnings and sales
• Deduct operating costs, taxes, and charge for capital employed
• Remove intangibles such as patents / management strength ratings
• Determine Brand Strength through:
 Market leadership
 Stability and Global Reach
• Generate a ‘discount rate’ and apply to brand earnings to get net present value, that is taken as an indicator a brands true worth.

Market impact models utilise mainly quantitative models to measure the effects of marketing expenditure over time. This is a vast area of statistical specialism covering such things as the sales and profit impacts of short-term promotions, advertising campaign effectiveness and such like, of which the Dirichlet Model that measures repeat purchase and cannabilisation, developed by Chatfield and Goodhardt in 1975 is a prime example.

The typical mix of general marketing measures used to a lesser or greater extent in business today are listed as follows and should involve competitor benchmarking, they encompass the key areas of:
• Sales and Profitability
• Health of Brand and Company Reputation
• Health of Customer Base
Suggested by Clark (2001)
• Consumer Behaviour
• Intermediate Trade Customer
• Competitors
• Accounting
• Innovativeness
Suggested by Ambler (2000), Ambler Kokkinaki Puntoni (2004)

Against which Ambler and Kokkinaki’s survey utilised by The Marketing Society provides a helpful list of commonly used metrics. This was an international survey of best practice that took place in the UK, USA, Australia, China, Scandanavia, and Spain:

Consumer / End User Thoughts Feelings
Perceived Quality / Esteem
Consumer Satisfaction
Relevance to consumer
Image / Personality/ Identity
Perceived differentiation
Commitment/ Purchase intent
Other attitudes e.g. liking
Brand/ Product knowledge
End User Behaviour
Total number of customers
Number of new customers
Loyalty/ Retention
Price sensitivity / elasticity
Purchasing on promotion
# new products per consumer
# leads generated / inquiries
Conversions (leads/ sales)
# customer complaints
Trade Customer
Distribution / availability
Customer Satisfaction
# of complaints
Relative to Competitor
Market Share
Relative Price
Loyalty Share
Relative Customer Satisfaction
Relative perceived quality
Share of Voice
# of new products in period
Revenue of new products
Margin of new products
% Discount
Gross Margins
Marketing Spend
Profit/ Profitability
Shareholder Value (EVA / ROI)

Metrics 1
Metrics 2

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