2. LEARNING OBJECTIVES Understand the concept of a marketing dashboard and how it improves marketing planning in a firm Explain return on marketing investment (ROMI), including cautions about its use Identify other relevant marketing metrics and how they are applied Develop detailed action plans in support of the overall marketing plan Decide on an appropriate combination of forecasting approaches Prepare a marketing budget Provide controls and contingency plans Conduct a marketing audit 19-2
3. THE MARKETING DASHBOARD A comprehensive system providing managers with up-to-the minute information necessary to run their operation. Including data on actual sales versus forecast, progress on marketing plan objectives, distribution channel effectiveness, sales force productivity, brand equity evolution, etc. 19-3
5. Elements of a Marketing Dashboard Goals and Objectives Initiative ROI and Resource Allocation Brand and Customer Asset Evolution Skills Process Tools Diagnostic Insight Predictive Value Efficiency and Effectiveness 19-5
6. Potential Pitfalls in Marketing Dashboards Over-reliance on “inside-out” measurement. Too many tactical metrics; not enough strategic insight. Forgetting to market the dashboard internally. 19-6
7. RETURN ON MARKETING INVESTMENT (ROMI) Investment decisions in marketing must consider four basic elements: 19-7
8. Cautions about Over-reliance on ROMI Temper the interpretation of ROMI results with review of other appropriate metrics. ROMI was originally designed for comparing capital projects. 19-8
9. Cautions about Over-reliance on ROMI Other commonly expressed objections: Typically marketing expenditures are not treated as an investment in a company’s accounting system. ROMI requires the profit to be divided by expenditure. ROMI is maximized during the period when profits are still growing. 19-9
10. Cautions about Over-reliance on ROMI Other commonly expressed objections: Calculating ROMI requires knowing what would have happened if the incremental expenditure hadn’t taken place. When executives discuss ROMI with different metrics in mind, confusion results and the value of the metric degrades. ROMI by nature ignores the effect of the marketing assets of the firm and tends to lead managers toward a more short-term decision perspective. 19-10
11. A SAMPLING OF OTHER MARKETING METRICS Market Share The percentage of a market accounted for by a specific product, product line, or brand. Penetration A measure of brand or category popularity. 19-11
12. A SAMPLING OF OTHER MARKETING METRICS Margin on Sales The difference between selling price and cost. Cannibalization Rate Cannibalization is the reduction in sales of a firm’s existing products due to the introduction of a new product. 19-12
13. A SAMPLING OF OTHER MARKETING METRICS Customer Lifetime Value (CLV) The dollar value of a customer relationship based on the present value of the projected future cash flows. Sales Force Effectiveness By analyzing sales force performance, marketing managers can make changes to optimize sales going forward. 19-13
14. A SAMPLING OF OTHER MARKETING METRICS Supply Chain Metrics Measures of important indicators of a firm’s success in its supply chain. Promotions and Pass-Through Of the promotional value provided by a manufacturer to its distributors and retailers. 19-14
15. A SAMPLING OF OTHER MARKETING METRICS Cost Per Thousand Impressions (CPM) Rates The cost per thousand advertising impressions. Click-through Rates Quantifies the advertising “presence” that a specific product or brand enjoys. 19-15
16. DEVELOPING EFFECTIVE ACTION PLANS In a marketing plan, every strategy must include an implementation element. 19-16
20. FORECASTING FOR MARKETING PLANNING Selecting the Appropriate Forecasting Method(s) Which forecasting method(s) should be used and how accurate is the forecast likely to be? Bottom line, no single method of forecasting is likely to be superior under all conditions. 19-20
21. THE MARKETING BUDGET Four principal methods of preparing a marketing plan budget: 19-21
22. CONTROLS AND CONTINGENCY PLANNING Tips for Effective Control Controls should involve only the minimum amount of information needed to give a reliable picture of events. Controls should monitor only meaningful activities and results. Controls should be timely. Controls should be long term and short term. Controls should pinpoint exceptions. Controls should be used to reward meeting or exceeding standards rather than to punish failure to meet standards. 19-22
23. THE MARKETING AUDIT A marketing manager may wish to initiate a marketing audit when any of the following conditions are present: The firm is about to undergo a major re-branding initiative. Evidence exists of significant marketing inefficiencies and poor ROMI and other metrics. A new creative agency is coming on board. A recent change has occurred in top management. Marketing has undergone a reorganization within the firm. 19-23
