Part One

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Evaluating Marketing Efforts Session 25 April
14 BUSI 569 Business Marketing
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• Investing for Valuein Customers and Yourself
• Customer Retention and Maximization
• Evaluating Marketing Efforts

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How do we evaluate?
INFORMATION

• Questions to Answer about Information
• HOW IT IS CREATED
• HOW IT IS INTERPRETED
• HOW TIMELY IT IS
• WHO GETS IT
• HOW IT IS SHARED
• HOW IT IS ACTED UPON
• WHO IS RESPONSIBLE FOR
• TAKING ACTION

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PRINCIPLES OF CONTROL
Measure whats important
Assumptions and goals determine measures
What gets measured is what gets done
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THE PROCESS OF CONTROL SIMPLIFIED
Replicate cause of high performance
Above Standard?
Compare performance to standard
Measure performance
Eliminate cause of low performance
Below Standard?
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CONTROLLED INPUT VARIABLES LEAD TO MEASURABLE
OUTUT VARIABLES
INPUT VARIABLES Price
Product RD Advertising Promotion
Distribution Marketing Research
Marketing Administration SET
BY BUDGET
ACTION PHASE THE MARKETING PROGRAM
MARKET REACTION THE MARKET
OUTPUT VARIABLES Sales Market
Share Profit Communication results
Distribution results Buyer attitudes
and behavior COMPARED TO PERFORMANCE
STANDARDS
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THE COMPONENTS MEASURED BY THE BALANCED
SCOREBOARD
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DEALING WITH VARIANCE IN OUTCOMES
SOURCES OF VARIANCE
CHANGES BY RANDOM FACTORS
CHANGES TO PROCESS

• EXTERNAL CAUSES
• Identified uncontrollable
• causes, like the economy
• RANDOM CAUSES
• Both uncontrollable and
• unidentified causes how
• much can be attributed to
• known cause

• TINKERING VARIANCE
• Making minor
• adjustments
• SYSTEMATIC SOURCES
• Change systems to
• create new
• measures

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VARIANCE UNDERSTANDING THE CAUSES

• Tinkering Variance
• Improving the little things in an existing
  system/process
• Systematic Variance
• Out with the old, in with the new
• External Causes of Variance
• The external environment provides all kinds of
  challenges beyond management control
• Random Causes of Variance
• Not only are there uncontrollable causes, there
  are variables that cannot be identified. Things
  happen

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VARIANCE HOW DO YOU NARROW THE DIFFERENCE

Sales in 000
TINKERING Make changes within a sales territory
to narrow the range of
variance
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VARIANCE HOW DO YOU ADJUST PERFORMANCE
Each dot represents salesperson performance. A
new product brings higher levels of sales.
Systematic Change Create new systems with a new
range of performance standards
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VARIANCE HOW DO YOU ADJUST FOREXTERNAL
ENVIRONMENTAL ACTIVITIES
Each dot is a salespersons performance. The
range is due to seasonality of customers
purchases
EXTERNAL CAUSES OF VARIANCE Create a response
to changes caused by things beyond your control
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THREE TOOLS FOR BETTER CONTROL OF SYSTEM
PERFORMANCE

• SET 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
  Causes

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CRITICAL TO DECISION MAKINGALLOCATING COSTS

• OBJECTIVE INCREASE CONTROL OVER EXPENSES
  AND INCREASE PROFITS

Contribution AnalysisTo work best, all
incremental costs have to be identifiable and
allocatable
Full Costing To work best, must allocate every
cost to a specific product/cost center
Activity-Based Cost AccountingTo work best, all
revenues and expenses have to be allocated to
each activity
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BETTER PERFORMANCEOUTPUT AND INPUT TOOLS OF
CONTROL
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BETTER PERFORMANCE THREE MEASUREMENT TOOLS
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BETTER PERFORMANCE FIVE SEARCH TOOLS FOR
IDENTIFYING VARIANCE
Sources of Data
Comment
Con
Pro
Search Tools
Salespeople, trade show managers, other marketing
managers, as well as transaction systems
Companies are moving to real-time systems like
dashboards
Reporting Systems
Can get tradition-bound
Method of information sharing across work-groups
Information Systems
Surveys, transaction systems, and third-party
sources such as Dun Bradstreet
Increasing use of data warehouses lets managers
access data directly
Difficult to get data into a format everyone can
use
Self-serve reporting
Interviews of people involved
Look for underlying principles of success or
failure
Can be hard to apply learning to new situations
Method of organizational learning
Case Analysis
Marketing systems that track source of sale
Used more frequently with CRM systems
Hard to control for all potential causes
Establishes cause and effect
Experimentation
All of the above
Often combined with experimentation for more
powerful decision-making
Can lead to incremental, rather than innovative,
thinking
Can inform forecasts, as well as explain past
success
Statistical Analysis
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KEYS TO THE MARKETING AUDIT
Conducting an evaluation of a firms marketing
activities and its environment will include
reviewing its

• External Environment
• Marketing Strategy
• Level of Marketing Orientation
• Marketing Systems and Processes
• Marketing Functionality
• Marketing Productivity

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THE REALITY TREE PROCESS FOR DETERMINING
PROBLEMS FOCUS ON OUTCOMES