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European Journal of Business and Management                                                   www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011

                     Current industry approaches towards
                           Marketing ROI an Empirical study
                                   Saurabh Mishra (Corresponding author)
                             Lecturer: Indian Institute of Information Technology
                                         Post Box: 211012, Allahabad
                                      E-mail: saurabhmishra@iiita.ac.in


                                              Madhvendra Mishra
                        Assistant professor: Indian institute of information technology
                                         Post Box: 211012, Allahabad
                                       E-mail: madhavendra@iiita.ac.in
Abstract
 This paper is designed to understand current status of marketing measurement and accountability against
marketing investment in today’s competitive scenario and what are the standard methods are available to
measure marketing performance measurement in financial aspects, as well as paper suggests a process for
developing links between promotional marketing and its financial outcome.
Key words: ROI, Marketing Promotion, Metrics, Branding, BTL.


1: Introduction
Marketing ROI has been major concern for academician as well as for managers as increasing cost and
competition has made them thinking towards marketing performance measurement. Twenty to twenty-five
percent of the expenditures of many organizations are related to marketing. This makes it target interest of
senior management and of board members. Earlier Marketing investment were being considered as a
marketing spend not as an investment the reason is being there were no focus towards marketing
measurement either financial or no financial. Business organizations are now trying to justify marketing
spend as if it “could not deliver outcome so it should not be there and we should be more accountable
towards it” as this said by Marketing Manager of one of the leading telecom company operating in Asia.
Business organization is made for profit and thus it should be financially accountable (Srivastav et al.1998;
Lamberti & Noci 2010; Ambler & Roberts 2005; Ringham 2005; Berger et al.2006). In marketing there has
been lot of investment over years but it’s still difficult justify it in the balance sheet of the company. In this
paper we are exploring existing adapted approaches towards marketing ROI by one of the leading Indian
Telecom company (the first Indian private telecom operator to launch 3G services in India) operating in
India. We have considered Telecom Territory of central Indian state for our study with Subscriber Base 31
Million, Annual Growth 0.95%.
In past Market share and customer satisfaction, Brand awareness has been manipulated and also have been
presented by various marketing executives resulting severe financial losses to firm. This has in turn
motivated business organizations to make marketing more financially accountable.
It is evident that earlier there was no accountability on the part of ‘marketing activity’ like Sponsherships,
Branding, Advertising, Sales promotion etc. but now organization has started thinking towards marketing
accountability seriously. Major problem faced is that marketing does not having any common method or
standard to measure financial marketing outcome as there is difference in approaches and operation of
business organizations.

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European Journal of Business and Management                                                www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011
Marketing functions always tried to justify their efforts by saying that brand awareness has been increased
and reflecting same on non financial outcomes like brand index, brand equity and talking about increased
brand awareness, but this has not been made them more liable or accountable that is why marketing
function executives are loosing their credibility and are unable to give any financial outcome which is
significant in today’s world. Intangible promises have been made but still it was not calculated to prove
them, only 17% of marketers could succeed to measure real outcome or return on their marketing
investment and they are having comprehensive method or system to measure MROI (Stewart 2009).
Increasing competition and huge investment forced marketing to give financial outcome of their investment
rather intangible outcome like increased brand awareness, product awareness. Most of the business
organization did not or could only measure short term return on the marketing activity.
In this paper try to find out what are the approaches are adopted by marketing executives to manage
marketing action and to make it more financially accountable. What kind of marketing activity they have
and how they are involved to manage return on investment at local or territory level. Following are the
objective of the paper:
        To assess marketing activities adopted by the company.
        To evaluate the Marketing Promotional ROI measurement approaches adopted by the company.
         To evaluate financial implications of the methods and approaches adopted by the company as
         above.
2. Literature Review
It has been major concern among all the CEOs and top executive about marketing performance
measurement and ability to measure marketing performance. It is found that ability to measure marketing
performance effects marketing functions as well performance of the CEOS of the company (Sullivan 2009;
Rust et al. 2004). “Pressure is being place on marketing to justify their expenditure and translate them into
likely financial outcome, which is the language of business firm” (DW.Stewart 2008). In 2002 a study of
marketing executives for ROI said that it was biggest challenge in front of marketing executives to find out
return on investment (ROI) or how to measure ROI against marketing activities(Accenture's Insight Driven
Marketing report 2001).The study listed the four most prevalent metrics that marketers use: Response Rate
(79%), Revenue Growth (78%), Customer Retention (69%), and Profit Generation (69%).The question
arises whether these achievements are due to marketing promotional efforts or by other marketing
functions. As the sales and service team both claims credit for the same for which marketing could have
claim. So it is difficult to find out whether an increased sale is due to the promotional effort or due to the
effort of sales team or by customer care team or efforts of channel partners.
90% of marketing executives wants to measure marketing ROI and 80% out of them are not having any
method to measure. It is the biggest challenge for marketing executive managers and is matter of concern
for them to justify their marketing investment so that further budget could get approve and could justify
their role in the organization. The current tools are not capable enough to calculate marketing ROI and
marketers are forced to apply it as they are not having any universal method to measure marketing ROI
(Philip Kotler 2004) .ROI is the critical measures for marketing, but Maximizing ROI does not mean
maximizing profit (Lenskold 2009) ROI tools helps management in making decision at corporate,
marketing and at campaign level. Companies have been observed to focus more on short term goal or ROI
not for long term ROI as it is very critical to measure the ROI for long term impact like customer
satisfaction, brand building, corporate image & customer satisfaction, even these are also very important
activities which help to gain profit in long term.ROI can be calculated in simplest form:


                        [Net Present Value of Profits & Expenses] - Investment
            ROI =
                                              Investment


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European Journal of Business and Management                                              www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011
Here investment represents marketing expense & NPV profit & expenses is resulting flow of profit and
expense. As per by Lenskold (2004) ROI can be measured & justifying by considering theses three
components:


       Customer life time value.
       Total number of customer.
       Marketing Expenses.


Customer life time value is net present profit generated from the customer against the marketing investment
and it captures buying behavior of the customer which can be valuable measurements for the marketing
investment.


 Total number of customer is number of customer retained or added or generated due to marketing
activities. This is basically lead generated from the marketing activities or number of customer interacted
on that basis we can calculate number of sale generated and customer added. Theses customer interaction
could help to compare the outcome with other marketing activities, through which it is an easy to know the
impact of these marketing activities. With help of customer life time value and number of customer we can
calculate cost per sale and lead generated and converted and can make benchmark for performance
improvement.



 The improved CRM technology & businesses intelligence help marketers to make data more accessible.
By using CRM technology marketers may focus more on highest value customer which in case miss
opportunity with other customer segment which in case there would be increase average customer life time
value but decrease no of customer which would again lead ROI analysis less profitable.


In today’s world there is lot of marketing investment is happening and everybody is concerned about the
return on that, apart from other investment it critical to measure return on marketing investment.ROI is
matter of concern for all the marketers since last decades; Marketing ROI can be defined as amount of
profit against amount of resource. A paper by Hawthorne (2004) argues that marketer should either look at
MER (Media efficiency rate) or profit margin against investment to know about the MROI.
It is evident that most of the marketing ROI has been calculated for short term (Which gives immediate
result against investment) like sponshership, promotions & discounts & not for long term (Which do not
yield financial return immediately rather takes months and year). Marketing investment can be either in
offline environment or in online environment. As technology has been changing over decades most of the
marketers are focusing in online marketing activities like website promotions etc. In 1990 BMW had
started its promotion in online business environment assuring that they would expect ROI against these
expenses. They developed a tracking system & find out the number of hits on the web site (reported as over
9 million hits in the first few months) but the question arose whether hits means conversion or something
else and could not meet the financial gain (Rob Dub 2004).William Duffy (2004) Managing director and
partner of marketing analytic services, Burlington says that it is easy to calculate MROI by adding all
media campaign cost and comparing it with profit margin & revenue earned which is associated with
product or services.
Bill Murphy (2004) says that MROI can be calculated by counting response rate, purchase made by the
respondent and leads converted & lead generated against the investment for the campaign. This can only
calculate the profit earned during the campaign. what about the others who were not visited but come to
know during walking or roaming and planned to buy in future? Which is exactly due to the campaign?

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European Journal of Business and Management                                                  www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011
Anne Klein (2003) says that Marketing ROI is best tool to find out best place to invest in marketing. It is
difficult to calculate ROI as it is very difficult to track (Anne Klein 2003). MROI start from your campaign
and need to track response around the campaign. Once tracking system is developed well to know about the
response in terms of revenue or in terms of awareness then the next step is to calculate the following
variables:
1: Expense of the program,
2: Revenue generated
3: Profit earned
4: Contribution Margin.
ROI can be calculated in form of Percentage, Ratio or as a Breakeven/Pay back method which all are the
financial methods of calculation of MROI. It is noted previously that marketing activities has both long
term as well short term gains while business organization could only calculate short term gains not long
term gain (Seggie et al.2007). As long term gain gives more wealth for business organizations and
marketing has to think towards long term gain calculation rather shorter one. It is not easy to calculate
brand image or loyalty of customer which do not change in shorter period as yields financial outcome later
by increasing customer retention and acquisition (Mark Solcansky 2010).David Stewart (2009) argues in
his research paper that the marketing ROI has been major concern for each and every business organization
as well as for academician. There has not been yet developed any standard methods or metrics to calculate
marketing ROI .David finds in his study that each and every organization have its own method of
calculating marketing ROI or return on Marketing investment, but in most of the cases 70% of Marketing
officers could measure to short term impact of marketing activity not for result which is expected to after
some period of time. He also categorized marketing ROI basically two categories:
1: Short term performance evaluation.
2: Long term performance evaluation.
Short term effect of marketing activity can be generated with help of promotional campaign like price
discount or on spot sale which can be calculated either in case of long term impact of marketing like
Branding; Float activity etc.It is not easy to calculate as such campaign as they cannot yield result instantly.
The question arises again for the organizations that from which point they should start to calculate ROI for
such campaign as organization are not having any bottom line or start point to calculate the ROI.


From the table 1 of the concept matrix we can understand that number of research and studies has been
done in the area of Marketing ROI and Marketing performance measurement, it is suggested that numerous
methods and approaches has been defined to make marketing more financially accountable.




It is evident that calculating Marketing ROI has been major concern of business organization and they are
not having any standard methods to calculate the same .Even some tried well to calculate ROI of their
investment but with limitations of long term effect of marketing investment. Some of the organizations
focuses more on financial return on the marketing investment some consider financial as well non financial
aspect of return. From financial points of view ROI of marketing should yield some financial input to the
business organization not the non financial aspects of the marketing out come because ROI is the
23
   language of the finance and finance talks about monetary gain to their cash flow. Marketing investment
has two dimensional outcomes one is primary out come and other is secondary out come. Authors and
researchers have tried to calculate marketing ROI either by considering intermediary or directly, by using
various concepts like Customer life value, Customer equity, Shareholder value & other matrix like Balance
score card and through experimental designs.

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European Journal of Business and Management                                                 www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011
3. Research Methodology
Case Study Approach: Explanatory Case study methodology has been adopted to examine and verify the
current status of marketing approaches towards calculating marketing ROI.
Company in Consideration: The Company in consideration is one of the leading telecom company of the
Asia. It has received a license to operate GSM telecom services in 19 of India's 22 telecom territory-and has
also been allotted spectrum in 18 telecom territory. Of these, it has already rolled out services in all the 18
territory that it received spectrum in India-.Today company serves over 84 million customers in more than
450,000 towns and villages across the country, Cellular operator association of India (COAI) and Telecom
regularity authority of India (TRAI), with a bouquet of telephony services encompassing Mobile Services,
Wireless Desktop Phones, Public Booth Telephony and Wire line Services. Company is operating in 5
clusters in territory under consideration. Each territory is having Marketing and communication executives
who are accountable for marketing activities of the territory. Marketing organization chart is explained in
figure1.
Budget is allocated from the corporate office of the business organization on quarterly basis and budget
allocation are based on the basis of territory performance the territory in consideration was not performing
well as it was one of the least profitable territory among all the territory as marketing and Communication
executives were in extreme pressure towards investment and against return. Company is operating through
165 distributors and 13394 retailers, total sales force team are having 70 sales persons and five marketing
executives, details are in table 2 and table 3.
Responsibility of Marketing and communication Executives of Company in Consideration:
     Promotion of the Brand & Product.
     To ensure the proper utilization of the branding material and also the placement of the branding
      items, so that it reaches the target segment.
     To handle agencies for various tasks.
     Organizing the cluster wide BTL activity by identifying location, costing, and advertisement and
      below the line support.
     Actively involved in media negotiation and planning.
     Devising & implementing pre & post marketing activities for successful launching of new products.
     Ensuring Maximum return on Investment against Marketing and communication activities.


3.1 Marketing Activity & Frequency
Marketing and communication executives were involved in planning and implementing following activity
even these activities were below the line in nature (BTL), BTL communications is used by the
organizations to build brand as well as to create awareness amongst the consumer or in market, gives the
marketer the ability to tailor their messaging in a more personal manner to the audience. BTL promotions
are highly measurable, giving marketers valuable insights into their return-on-investment.
In the table 4 it is clearly mentioned that for which activity they could be able to measure ROI or they have
some method or process to calculate ROI against theses activity. We can also understand that they have
some methods to measure ROI for all the five major marketing activity but they are not having any
methods to calculate ROI for wall painting as it find that there is no contact points to come to know about
the effect of wall painting done by the marketing as well as which in turn creates more brand awareness
than on spot sale or lead generation.
4. Measurement Methods
4.1 Float activity outcome & its measurement process diagram



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European Journal of Business and Management                                                www.iiste.org
        ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
        Vol 3, No.6, 2011

        Float activity: It is a program comprising a series of marketing events that companies organize at multiple
        locations to generate interest regarding a subject that they want to promote .It includes Branded Mobile van
        with promoters and marketing collaterals.
        Objective:
        1: Generate Lead-Hot, Cold & Mild Lead generation and conversion of these generated lead.
        2: Creating Brand and Product awareness.


                                                                   Revenue generated
                                                                   through on spot sale
                                       On spot sale
              Float activity                                       Revenue generated               Revenue Generation
                                       Brand awareness
                                                                   through lead conversion
                                       Lead generated
                                                                   Revenue generated
                                                                   through brand awareness


        4.1.1 ROI calculations for Float/Canopy/Stall activity
                                         {Revenue generated through on spot sale+ Revenue generated through
        lead conversion+ Revenue generated through brand awareness (Incremental sale during the activity
        +Incremental sale for the duration of one month once activity stopped) at Distributor point / Spend on Float
        activity}
         This is the method which is used by marketers to calculate ROI on marketing spend, but this method is
        applicable only for the product specific activity like for Prepaid and Post paid products.
        4.2 ROI calculations for Signage installation/ In store
        Signage/In store: It is any kind of visual graphics created to display information about the product as well
        as about the brand and installed at retailers point or inside the retail space.
        Objective:
        1: Increasing Brand visibility.
        2: Increasing Brand awareness.
        3: Increasing Retailers participation and retailers association.
        TV scrolling is sliding text, images across a display. "Scrolling", as such, does not change the layout of the
        text or pictures, or but incrementally moves the user's view across what is apparently a larger image that is
        not wholly seen.

                                                                     Revenue generated at
                                                                     Point of Purchase
Signage installation/ In          Brand awareness
                                                                     Revenue generated                Revenue Generation
store/TV Scroll
                                  Retailer’s participation           through brand awareness

                                                                     Increased Retailers
                                                                     participation




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European Journal of Business and Management                                               www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011
 4.2.1 ROI calculations for Signage installation/ In store/TV Scroll
                           {Average incremental sale generated for two months after signage installation at
Distributor point / Total investment on Signage installation} + Incremental Retailers Participation (Non
financial but as the number of retailers will added in Distribution network revenue will grow)
4.3 ROI calculations for Wall painting


                 Wall Painting            Brand Awareness               Revenue Generation




4.3.1 Wall Painting
Wall painting is another commercial advertising, which is manifested on the street walls or on the highways
to increase brand visibility and brand awareness.
From above diagram we can understand that ROI can be calculated for wall painting but there is no contact
point to calculate revenue generation source as executives does not know from where to start to calculate
ROI as in case of wall painting most of the wall paintings done at Highways and or Links highway so that
case it is difficult to calculate ROI as it becomes more of mass advertising rather focused one, so they are
not having any standards or method to calculate ROI for wall painting. On other Hand executive see it
primarily as a promotional tool for brand awareness than revenue generation because it does not pay much
attention of marketing officers because it has only 2% of total budget allocation for this activity as it is
having lower investment compare to other investment, secondary is that they are not having any method as
discussed above to calculate ROI for wall painting activity.
4.4 ROI calculation for Stall activity
Stall Activity and Canopy: A booth, cubicle, or stand used by a vendor, as at a market. A stall is designed
after taking into account the image that you want to create of your brand in trade fair to display their
products at the event. Informative banners and posters should be pasted, so that a visitor can get a basic
idea of the product at display.


                                                      Revenue generation
                                                      through lead conversion
                           Brand awareness
Stall Activity
                                                      Revenue generation
                           Lead Generation                                               Revenue Generation
Canopy                                                through spontaneous sale
activity                   On spot sale
                                                      Revenue generation
Stall                                                 through brand awareness
activity calculation for Stall/Canopy
 4.4.1 ROI
                                 {Revenue generated through on spot sale+ Revenue generated through
lead conversion+ Revenue generated through brand awareness (Incremental sale during the activity
+Incremental sale for the duration of one month once activity stopped) at Distributor point / Marketing
spend on stall activity/Canopy activity}
Canopyare the methods of calculation at territory level which is calculated for each clusters of their
 These
activity territory, as we can understand from below mentioned table 5 that all the marketing activity
 respective
 which is planned and implemented by the Marketing and communication executives have measurement
 methods except for wall painting and duration in consideration for each marketing activity is differ from
Stall
 other one.
activity
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European Journal of Business and Management                                                www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011

                              Frame work mentioned in figure 2, has been drawn on the basis of the method
in consideration and which is very much similar to conceptual frame work given by David Stewart (2009)
& Ronal T Rust (2004) for financial outcome of marketing performance. Linking marketing investment to
shareholder value & Return on marketing using customer equity respectively .In previous researches which
has been made were focusing towards financial outcome of marketing using different approaches as said
earlier but the major concern was still practical applicability of these approaches as how come researchers
or academician can insure that the incremental sale or increase in shareholders’ value or customer equity is
result of these marketing actions as it is necessary to differentiate the outcome respective to each marketing
actions.
Due to complexity in the marketing operations it is very difficult to distinguish the outcome with the series
of the activity, even David Stewart (2009) tried to overcome these complexities by giving an idea of
making some base line.
                 ROI (Territory1+ Territory 2+……..Territory N) = ROI for the Organization
The concept of calculating ROI at cluster and territory level will resolve the problem of base line and data
complexity associated while calculating at large label as it is traceable and even a small change in the
customer retention or acquisition can be recorded. This approach is more of bottom up approach as it is
better to start calculating at micro level rather macro level.




5: Findings
Following findings can be drawn:
        Financially linked marketing initiative is in consideration for the company in consideration.
        Short term evaluation of Marketing ROI.
        Outcome for wall painting was difficult to calculate as majority of wall paintings were in major
         districts road and it was difficult to create a base line for the same at cluster level.
        Change in consumer behavior and consumer retention and attraction was noticeable during and
         after the activity.
        Which marketing action has better impact on the consumer could see at cluster level, which further
         helps to marketing to invest more in.
6: Managerial Implications
 As discussed with marketing executives of the leading telecom company following implications have been
found while calculating marketing performance measurement:


                 Budgeting is measure major issues and company is focusing more on cost cutting rather spending
                 more which has directed marketing towards being more financially accountable, earlier budget
                 were allocated annually basis and end of the year manipulations have been made to justify outcome
 Budgeting       of the marketing initiatives.
                 “Quarterly budgets needs to justify within given time frame the time period given to us is not
                 sufficient to yield longer effect of marketing performance”


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European Journal of Business and Management                                                www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011
                No standards methods are available through which ROI can be calculated for distinct marketing
 Available      activity as in case of wall painting we have seen marketing executives are so much confused about
 Methods        the outcome.

                Frequency of activity is another constraints for marketing to calculate ROI ,focus shifted from one
 Frequency      activity to another activity and pressure generated to justify the current activity and so on which in
 of Activity    case lacks focus towards marketing performance measurements.

 Lack of        Most of the marketing activity initiated due to pressure generated by sales team where there is
 proper         focus only activity initiation and implementation rather planning.
 planning

                Sales have been increased drastically after three or four months of the activity without any
                promotion which may in case result of earlier marketing action.
 Functional
                60% of generated lead has been converted within two or three months of the activity started & that
 issues
                is considered not as a part of MARCOM initiative and added in sales account.
                No measurements methods are available to calculate MROI of wall painting as it do not yield
                spontaneous or direct responses and marketing is not having any answer to calculate it.

7: Conclusion
From the above discussions we can understand that marketing roi has been measure concern for marketers
as increasing scrutiny of marketing activities has increased their demand. The approach in consideration of
the given company is applicable only for the companies which is having distributed territories at
operational and functional level. The measurement is based on by assuming a certain baseline in given time
frame, and which is more of giving short term conversion, longer impact of marketing actions is still
difficult to measure and which is further are of research.



References:


Anne Klein & Tracy Swartzendruber (2003), “A user’s guide to marketing ROI: White Paper”, American
Marketing Association.



Bill Murphy (2004), “ROI by Number: White Paper”, Response Magazine: Direct Response Marketing.


Don O ‘Sullivan and Abela, A.V. (2007), “Marketing performance measurement ability and firm
performance”, Journal of Marketing, Vol.71, pp.79-93.


D.W. Stewart (2009), “Linking marketing Actions to financial outcomes”, Journal of Business Research,
Vol.62, pp.636-643.
Eric Almquist and Gordon Wyner (2001), “Boost your marketing ROI with experimental design”, Harvard
Business School Publishing corporation, October, pp.5-11.



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ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011
James D. Lenskold (2009), Marketing ROI: the path to campaign, customer, and corporate profitability,
AMA.


Liane Ringham (2005), “Return on marketing investment: A practical end to end approach for linking
marketing investments to shareholder value: White Paper”, Australia: Knowledge Management.


Lucio Lamberti and Giuliano Noci (2009), “Marketing strategy and marketing performance measurement
system: Exploring the relationship”, European Management Journal, Vol.28, pp.139-152.


Mark Solcansky and Iveta Simberova (2010), “Measurement of marketing effectiveness”, Economics and
management, pp.755-759.


Paul D. Berger, Naras Eechambadi, Morris George, Donald R. Lehmann, Ross Rizley and Rajkumar
Venkatesan (2006), “From Customer Lifetime Value to Shareholder Value: Theory, Empirical Evidence,
and Issues for Future Research”, Journal of Service Research, vol.2, pp.156-167.


Philip Kotler (2004), "A three-part plan for upgrading your marketing department for new challenges",
Journal of Strategy & Leadership, Vol. 32, pp.4 - 9


Rob Duboff (2006), “Resisting Gravity: White Paper,” American Marketing Association.


Robert S.Kaplan and David P.Norton (2007), “Using the balance score card as a strategic management
system”, Harvard Business review, (July/August), pp.1-14.


Rust RT, Roland T.,Lemon,Katherine N. and Zeithaml,Valarie A.(2004), “ Return on Marketing using
Customer Equity to Focus Marketing Strategy”, Journal of marketing,Vol.68,No.1,pp.109-27.


Srivastava, Rajendra K., Tasadduq A. Shervani, and Liam Fahey (1998), “Market-Based Assets and
Shareholder Value: A Framework for Analysis”, Journal of Marketing, Vol.62, pp.2-18.


Steve Blundell (2001), “Measuring the ROI of your marketing strategy”, Accenture’s Insight Driven
Marketing report.


Steven H. Seggie, E Cavusgil and S Phelanetl (2007), “Measurement of return on marketing investment: A
conceptual framework and the future of marketing metrics”, Industrial Marketing Management, Vol.36,
pp.834-841.


Timothy Hawthorne (2004), “Measuring return on investment (ROI) can be tricky, but it’s an important
step in any direct campaign: White Paper”, Response Magazine: Direct Response Marketing.




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Vol 3, No.6, 2011
Tim Ambler and John Roberts (2005), “Beware the silver metric: Marketing performance measurement has
to be multidimensional”, Center for Marketing Working Paper.


William Duffy (2004), “ROI by the Numbers”, www.responsemagazine.com [accessed 16 th Feb 2011]




Appendix:




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           Table: 1



Author                                                                                                                                                   Topic                                                                                                                                                                                                                                Approaches




                                                                                                                                                                                                                                                            Marketing ROI industry specific/ Telecom

                                                                                                                                                                                                                                                                                                       Non Financial outcome of the Marketing
                                                                                                   Marketing ROI using share holder value



                                                                                                                                                                               Long term and Short term evaluation of
                                  Marketing ROI using Customer equity




                                                                                                                                                                                                                        Marketing performance measurement
                                                                                                                                              Financial outcome of Marketing




                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Return on customer (ROC)
                                                                                                                                                                                                                                                                                                                                                Markov switching Matrix
                                                                        Customer life time value




                                                                                                                                                                                                                                                                                                                                                                                                                     Marketing intermediary
                                                                                                                                                                                                                                                                                                                                                                                               Balance score card
                                                                                                                                                                                                                                                                                                                                                                          Shareholder value




                                                                                                                                                                                                                                                                                                                                                                                                                                              Budget allocation
                                                                                                                                                                                                                                                                          Companies
                                                                                                                                                                                            Marketing



Kaplan Norton et al.(1996,2001)   N                                     N                          N                                          Y                                      N                                  N                                         N                                    Y                                        N                         N                    Y                     N                        Y                   N
Srivastav et al.(1998)            N                                     Y                          N                                          Y                                      N                                  N                                         N                                    N                                        N                         N                    N                     N                        N                   N
Almquist & Wyner(2001)            N                                     N                          N                                          N                                      N                                  Y                                         N                                    N                                        N                         N                    N                     Y                        Y                   N
T Rust et al. (2004)              Y                                     N                          N                                          Y                                      N                                  Y                                         N                                    N                                        Y                         N                    N                     N                        N                   N
Ringham (2005)                    N                                     N                          Y                                          Y                                      Y                                  N                                         N                                    N                                        N                         Y                    N                     Y                        N                   N
Ambler & Roberts (2005)           N                                     N                          N                                          Y                                      N                                  Y                                         N                                    N                                        N                         N                    N                     N                        N                   Y
Paul D. Berger et al.(2006)       N                                     Y                          N                                          Y                                      N                                  Y                                         N                                    N                                        N                         Y                    N                     Y                        N                   N
Seggie et al.(2007)               N                                     Y                          N                                          Y                                      Y                                  Y                                         N                                    Y                                        N                         Y                    Y                     Y                        Y                   N
Stewart (2009)                    N                                     N                          N                                          Y                                      Y                                  Y                                         N                                    N                                        N                         N                    N                     Y                        N                   N
Lamberti & Noci (2010)            Y                                     N                          N                                          Y                                      N                                  Y                                         Y                                    N                                        N                         N                    N                     N                        Y                   N




           Table: 2


                                 No of                                                                                                      No. of
                   Cluster     Distributor                                                                                                  Retailer                                                                    Company owned Store                                                                                                                                                    Franchise
                  Cluster 1            28                                                                                                    2890                                                                                                                                                         1                                                                                                         24
                  Cluster 2            36                                                                                                    3210                                                                                                                                                         3                                                                                                         18
                  Cluster 3            38                                                                                                    3560                                                                                                                                                         4                                                                                                         16
                  Cluster 4            32                                                                                                    1800                                                                                                                                                         1                                                                                                         12
                  Cluster 5            31                                                                                                    1934                                                                                                                                                         1                                                                                                         15
                       Total      165                                                                                                       13394                                                                                                                                                      10                                                                                                           85
                                                                                                                                                                                                                        98
European Journal of Business and Management                                      www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011

Table: 3


            No. of Marketing Executives
Cluster             Employed               No. of Sales man Employed      No. of Promoter Employed
Cluster 1                    1                            13                         6
Cluster 2                    1                            18                         8
Cluster 3                    1                            18                         8
Cluster 4                    1                            10                         6
Cluster 5                    1                            11                         6
 Total                       5                            70                        34


Table: 4


 Sr. no.    Marketing activity       Frequency                 ROI Measures
 1          Float activity           Once in a month           Yes
 2          Canopy Activity          Twice in a month          Yes
 3          Signage installation     Once in six months        Yes
 4          Wall painting            once in year              No
 5          In store                 Once in year              Yes
 6          TV Scrolling             Once in six month         Yes
 7          Stall activity           Depends on availability   Yes




                                                 99
European Journal of Business and Management                                        www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.6, 2011

Table: 5

                                                   Secondary out   Calculation time      Measurement methods
Sr.no.       Activity       Primarily out come           come          period                 availability

                            On spot sale, Brand                    During activity
                             awareness, Lead            Revenue      One Month
  1        Float activity       generated           generation       For 15 Days                   Yes
             Signage         Brand awareness,
            Installation         Retailers              Revenue
  2           In store         participation        generation       Two month                     Yes
                                                        Revenue
  3        Wall Painting    Brand Awareness         Generation           NA                        NO
           Stall Activity   On spot sale, Brand                      One month
                             awareness, Lead            Revenue
  4          Canopy             generated           generation       One month                     Yes
                                                        Revenue
  5         TV Scroll        Brand awareness        generation      Two months                     Yes




                                                  100

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7.saurabh mishra -86-100

  • 1. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Current industry approaches towards Marketing ROI an Empirical study Saurabh Mishra (Corresponding author) Lecturer: Indian Institute of Information Technology Post Box: 211012, Allahabad E-mail: saurabhmishra@iiita.ac.in Madhvendra Mishra Assistant professor: Indian institute of information technology Post Box: 211012, Allahabad E-mail: madhavendra@iiita.ac.in Abstract This paper is designed to understand current status of marketing measurement and accountability against marketing investment in today’s competitive scenario and what are the standard methods are available to measure marketing performance measurement in financial aspects, as well as paper suggests a process for developing links between promotional marketing and its financial outcome. Key words: ROI, Marketing Promotion, Metrics, Branding, BTL. 1: Introduction Marketing ROI has been major concern for academician as well as for managers as increasing cost and competition has made them thinking towards marketing performance measurement. Twenty to twenty-five percent of the expenditures of many organizations are related to marketing. This makes it target interest of senior management and of board members. Earlier Marketing investment were being considered as a marketing spend not as an investment the reason is being there were no focus towards marketing measurement either financial or no financial. Business organizations are now trying to justify marketing spend as if it “could not deliver outcome so it should not be there and we should be more accountable towards it” as this said by Marketing Manager of one of the leading telecom company operating in Asia. Business organization is made for profit and thus it should be financially accountable (Srivastav et al.1998; Lamberti & Noci 2010; Ambler & Roberts 2005; Ringham 2005; Berger et al.2006). In marketing there has been lot of investment over years but it’s still difficult justify it in the balance sheet of the company. In this paper we are exploring existing adapted approaches towards marketing ROI by one of the leading Indian Telecom company (the first Indian private telecom operator to launch 3G services in India) operating in India. We have considered Telecom Territory of central Indian state for our study with Subscriber Base 31 Million, Annual Growth 0.95%. In past Market share and customer satisfaction, Brand awareness has been manipulated and also have been presented by various marketing executives resulting severe financial losses to firm. This has in turn motivated business organizations to make marketing more financially accountable. It is evident that earlier there was no accountability on the part of ‘marketing activity’ like Sponsherships, Branding, Advertising, Sales promotion etc. but now organization has started thinking towards marketing accountability seriously. Major problem faced is that marketing does not having any common method or standard to measure financial marketing outcome as there is difference in approaches and operation of business organizations. 86
  • 2. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Marketing functions always tried to justify their efforts by saying that brand awareness has been increased and reflecting same on non financial outcomes like brand index, brand equity and talking about increased brand awareness, but this has not been made them more liable or accountable that is why marketing function executives are loosing their credibility and are unable to give any financial outcome which is significant in today’s world. Intangible promises have been made but still it was not calculated to prove them, only 17% of marketers could succeed to measure real outcome or return on their marketing investment and they are having comprehensive method or system to measure MROI (Stewart 2009). Increasing competition and huge investment forced marketing to give financial outcome of their investment rather intangible outcome like increased brand awareness, product awareness. Most of the business organization did not or could only measure short term return on the marketing activity. In this paper try to find out what are the approaches are adopted by marketing executives to manage marketing action and to make it more financially accountable. What kind of marketing activity they have and how they are involved to manage return on investment at local or territory level. Following are the objective of the paper:  To assess marketing activities adopted by the company.  To evaluate the Marketing Promotional ROI measurement approaches adopted by the company.  To evaluate financial implications of the methods and approaches adopted by the company as above. 2. Literature Review It has been major concern among all the CEOs and top executive about marketing performance measurement and ability to measure marketing performance. It is found that ability to measure marketing performance effects marketing functions as well performance of the CEOS of the company (Sullivan 2009; Rust et al. 2004). “Pressure is being place on marketing to justify their expenditure and translate them into likely financial outcome, which is the language of business firm” (DW.Stewart 2008). In 2002 a study of marketing executives for ROI said that it was biggest challenge in front of marketing executives to find out return on investment (ROI) or how to measure ROI against marketing activities(Accenture's Insight Driven Marketing report 2001).The study listed the four most prevalent metrics that marketers use: Response Rate (79%), Revenue Growth (78%), Customer Retention (69%), and Profit Generation (69%).The question arises whether these achievements are due to marketing promotional efforts or by other marketing functions. As the sales and service team both claims credit for the same for which marketing could have claim. So it is difficult to find out whether an increased sale is due to the promotional effort or due to the effort of sales team or by customer care team or efforts of channel partners. 90% of marketing executives wants to measure marketing ROI and 80% out of them are not having any method to measure. It is the biggest challenge for marketing executive managers and is matter of concern for them to justify their marketing investment so that further budget could get approve and could justify their role in the organization. The current tools are not capable enough to calculate marketing ROI and marketers are forced to apply it as they are not having any universal method to measure marketing ROI (Philip Kotler 2004) .ROI is the critical measures for marketing, but Maximizing ROI does not mean maximizing profit (Lenskold 2009) ROI tools helps management in making decision at corporate, marketing and at campaign level. Companies have been observed to focus more on short term goal or ROI not for long term ROI as it is very critical to measure the ROI for long term impact like customer satisfaction, brand building, corporate image & customer satisfaction, even these are also very important activities which help to gain profit in long term.ROI can be calculated in simplest form: [Net Present Value of Profits & Expenses] - Investment ROI = Investment 87
  • 3. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Here investment represents marketing expense & NPV profit & expenses is resulting flow of profit and expense. As per by Lenskold (2004) ROI can be measured & justifying by considering theses three components:  Customer life time value.  Total number of customer.  Marketing Expenses. Customer life time value is net present profit generated from the customer against the marketing investment and it captures buying behavior of the customer which can be valuable measurements for the marketing investment. Total number of customer is number of customer retained or added or generated due to marketing activities. This is basically lead generated from the marketing activities or number of customer interacted on that basis we can calculate number of sale generated and customer added. Theses customer interaction could help to compare the outcome with other marketing activities, through which it is an easy to know the impact of these marketing activities. With help of customer life time value and number of customer we can calculate cost per sale and lead generated and converted and can make benchmark for performance improvement. The improved CRM technology & businesses intelligence help marketers to make data more accessible. By using CRM technology marketers may focus more on highest value customer which in case miss opportunity with other customer segment which in case there would be increase average customer life time value but decrease no of customer which would again lead ROI analysis less profitable. In today’s world there is lot of marketing investment is happening and everybody is concerned about the return on that, apart from other investment it critical to measure return on marketing investment.ROI is matter of concern for all the marketers since last decades; Marketing ROI can be defined as amount of profit against amount of resource. A paper by Hawthorne (2004) argues that marketer should either look at MER (Media efficiency rate) or profit margin against investment to know about the MROI. It is evident that most of the marketing ROI has been calculated for short term (Which gives immediate result against investment) like sponshership, promotions & discounts & not for long term (Which do not yield financial return immediately rather takes months and year). Marketing investment can be either in offline environment or in online environment. As technology has been changing over decades most of the marketers are focusing in online marketing activities like website promotions etc. In 1990 BMW had started its promotion in online business environment assuring that they would expect ROI against these expenses. They developed a tracking system & find out the number of hits on the web site (reported as over 9 million hits in the first few months) but the question arose whether hits means conversion or something else and could not meet the financial gain (Rob Dub 2004).William Duffy (2004) Managing director and partner of marketing analytic services, Burlington says that it is easy to calculate MROI by adding all media campaign cost and comparing it with profit margin & revenue earned which is associated with product or services. Bill Murphy (2004) says that MROI can be calculated by counting response rate, purchase made by the respondent and leads converted & lead generated against the investment for the campaign. This can only calculate the profit earned during the campaign. what about the others who were not visited but come to know during walking or roaming and planned to buy in future? Which is exactly due to the campaign? 88
  • 4. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Anne Klein (2003) says that Marketing ROI is best tool to find out best place to invest in marketing. It is difficult to calculate ROI as it is very difficult to track (Anne Klein 2003). MROI start from your campaign and need to track response around the campaign. Once tracking system is developed well to know about the response in terms of revenue or in terms of awareness then the next step is to calculate the following variables: 1: Expense of the program, 2: Revenue generated 3: Profit earned 4: Contribution Margin. ROI can be calculated in form of Percentage, Ratio or as a Breakeven/Pay back method which all are the financial methods of calculation of MROI. It is noted previously that marketing activities has both long term as well short term gains while business organization could only calculate short term gains not long term gain (Seggie et al.2007). As long term gain gives more wealth for business organizations and marketing has to think towards long term gain calculation rather shorter one. It is not easy to calculate brand image or loyalty of customer which do not change in shorter period as yields financial outcome later by increasing customer retention and acquisition (Mark Solcansky 2010).David Stewart (2009) argues in his research paper that the marketing ROI has been major concern for each and every business organization as well as for academician. There has not been yet developed any standard methods or metrics to calculate marketing ROI .David finds in his study that each and every organization have its own method of calculating marketing ROI or return on Marketing investment, but in most of the cases 70% of Marketing officers could measure to short term impact of marketing activity not for result which is expected to after some period of time. He also categorized marketing ROI basically two categories: 1: Short term performance evaluation. 2: Long term performance evaluation. Short term effect of marketing activity can be generated with help of promotional campaign like price discount or on spot sale which can be calculated either in case of long term impact of marketing like Branding; Float activity etc.It is not easy to calculate as such campaign as they cannot yield result instantly. The question arises again for the organizations that from which point they should start to calculate ROI for such campaign as organization are not having any bottom line or start point to calculate the ROI. From the table 1 of the concept matrix we can understand that number of research and studies has been done in the area of Marketing ROI and Marketing performance measurement, it is suggested that numerous methods and approaches has been defined to make marketing more financially accountable. It is evident that calculating Marketing ROI has been major concern of business organization and they are not having any standard methods to calculate the same .Even some tried well to calculate ROI of their investment but with limitations of long term effect of marketing investment. Some of the organizations focuses more on financial return on the marketing investment some consider financial as well non financial aspect of return. From financial points of view ROI of marketing should yield some financial input to the business organization not the non financial aspects of the marketing out come because ROI is the 23 language of the finance and finance talks about monetary gain to their cash flow. Marketing investment has two dimensional outcomes one is primary out come and other is secondary out come. Authors and researchers have tried to calculate marketing ROI either by considering intermediary or directly, by using various concepts like Customer life value, Customer equity, Shareholder value & other matrix like Balance score card and through experimental designs. 89
  • 5. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 3. Research Methodology Case Study Approach: Explanatory Case study methodology has been adopted to examine and verify the current status of marketing approaches towards calculating marketing ROI. Company in Consideration: The Company in consideration is one of the leading telecom company of the Asia. It has received a license to operate GSM telecom services in 19 of India's 22 telecom territory-and has also been allotted spectrum in 18 telecom territory. Of these, it has already rolled out services in all the 18 territory that it received spectrum in India-.Today company serves over 84 million customers in more than 450,000 towns and villages across the country, Cellular operator association of India (COAI) and Telecom regularity authority of India (TRAI), with a bouquet of telephony services encompassing Mobile Services, Wireless Desktop Phones, Public Booth Telephony and Wire line Services. Company is operating in 5 clusters in territory under consideration. Each territory is having Marketing and communication executives who are accountable for marketing activities of the territory. Marketing organization chart is explained in figure1. Budget is allocated from the corporate office of the business organization on quarterly basis and budget allocation are based on the basis of territory performance the territory in consideration was not performing well as it was one of the least profitable territory among all the territory as marketing and Communication executives were in extreme pressure towards investment and against return. Company is operating through 165 distributors and 13394 retailers, total sales force team are having 70 sales persons and five marketing executives, details are in table 2 and table 3. Responsibility of Marketing and communication Executives of Company in Consideration:  Promotion of the Brand & Product.  To ensure the proper utilization of the branding material and also the placement of the branding items, so that it reaches the target segment.  To handle agencies for various tasks.  Organizing the cluster wide BTL activity by identifying location, costing, and advertisement and below the line support.  Actively involved in media negotiation and planning.  Devising & implementing pre & post marketing activities for successful launching of new products.  Ensuring Maximum return on Investment against Marketing and communication activities. 3.1 Marketing Activity & Frequency Marketing and communication executives were involved in planning and implementing following activity even these activities were below the line in nature (BTL), BTL communications is used by the organizations to build brand as well as to create awareness amongst the consumer or in market, gives the marketer the ability to tailor their messaging in a more personal manner to the audience. BTL promotions are highly measurable, giving marketers valuable insights into their return-on-investment. In the table 4 it is clearly mentioned that for which activity they could be able to measure ROI or they have some method or process to calculate ROI against theses activity. We can also understand that they have some methods to measure ROI for all the five major marketing activity but they are not having any methods to calculate ROI for wall painting as it find that there is no contact points to come to know about the effect of wall painting done by the marketing as well as which in turn creates more brand awareness than on spot sale or lead generation. 4. Measurement Methods 4.1 Float activity outcome & its measurement process diagram 90
  • 6. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Float activity: It is a program comprising a series of marketing events that companies organize at multiple locations to generate interest regarding a subject that they want to promote .It includes Branded Mobile van with promoters and marketing collaterals. Objective: 1: Generate Lead-Hot, Cold & Mild Lead generation and conversion of these generated lead. 2: Creating Brand and Product awareness. Revenue generated through on spot sale On spot sale Float activity Revenue generated Revenue Generation Brand awareness through lead conversion Lead generated Revenue generated through brand awareness 4.1.1 ROI calculations for Float/Canopy/Stall activity {Revenue generated through on spot sale+ Revenue generated through lead conversion+ Revenue generated through brand awareness (Incremental sale during the activity +Incremental sale for the duration of one month once activity stopped) at Distributor point / Spend on Float activity} This is the method which is used by marketers to calculate ROI on marketing spend, but this method is applicable only for the product specific activity like for Prepaid and Post paid products. 4.2 ROI calculations for Signage installation/ In store Signage/In store: It is any kind of visual graphics created to display information about the product as well as about the brand and installed at retailers point or inside the retail space. Objective: 1: Increasing Brand visibility. 2: Increasing Brand awareness. 3: Increasing Retailers participation and retailers association. TV scrolling is sliding text, images across a display. "Scrolling", as such, does not change the layout of the text or pictures, or but incrementally moves the user's view across what is apparently a larger image that is not wholly seen. Revenue generated at Point of Purchase Signage installation/ In Brand awareness Revenue generated Revenue Generation store/TV Scroll Retailer’s participation through brand awareness Increased Retailers participation 91
  • 7. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 4.2.1 ROI calculations for Signage installation/ In store/TV Scroll {Average incremental sale generated for two months after signage installation at Distributor point / Total investment on Signage installation} + Incremental Retailers Participation (Non financial but as the number of retailers will added in Distribution network revenue will grow) 4.3 ROI calculations for Wall painting Wall Painting Brand Awareness Revenue Generation 4.3.1 Wall Painting Wall painting is another commercial advertising, which is manifested on the street walls or on the highways to increase brand visibility and brand awareness. From above diagram we can understand that ROI can be calculated for wall painting but there is no contact point to calculate revenue generation source as executives does not know from where to start to calculate ROI as in case of wall painting most of the wall paintings done at Highways and or Links highway so that case it is difficult to calculate ROI as it becomes more of mass advertising rather focused one, so they are not having any standards or method to calculate ROI for wall painting. On other Hand executive see it primarily as a promotional tool for brand awareness than revenue generation because it does not pay much attention of marketing officers because it has only 2% of total budget allocation for this activity as it is having lower investment compare to other investment, secondary is that they are not having any method as discussed above to calculate ROI for wall painting activity. 4.4 ROI calculation for Stall activity Stall Activity and Canopy: A booth, cubicle, or stand used by a vendor, as at a market. A stall is designed after taking into account the image that you want to create of your brand in trade fair to display their products at the event. Informative banners and posters should be pasted, so that a visitor can get a basic idea of the product at display. Revenue generation through lead conversion Brand awareness Stall Activity Revenue generation Lead Generation Revenue Generation Canopy through spontaneous sale activity On spot sale Revenue generation Stall through brand awareness activity calculation for Stall/Canopy 4.4.1 ROI {Revenue generated through on spot sale+ Revenue generated through lead conversion+ Revenue generated through brand awareness (Incremental sale during the activity +Incremental sale for the duration of one month once activity stopped) at Distributor point / Marketing spend on stall activity/Canopy activity} Canopyare the methods of calculation at territory level which is calculated for each clusters of their These activity territory, as we can understand from below mentioned table 5 that all the marketing activity respective which is planned and implemented by the Marketing and communication executives have measurement methods except for wall painting and duration in consideration for each marketing activity is differ from Stall other one. activity 92
  • 8. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Frame work mentioned in figure 2, has been drawn on the basis of the method in consideration and which is very much similar to conceptual frame work given by David Stewart (2009) & Ronal T Rust (2004) for financial outcome of marketing performance. Linking marketing investment to shareholder value & Return on marketing using customer equity respectively .In previous researches which has been made were focusing towards financial outcome of marketing using different approaches as said earlier but the major concern was still practical applicability of these approaches as how come researchers or academician can insure that the incremental sale or increase in shareholders’ value or customer equity is result of these marketing actions as it is necessary to differentiate the outcome respective to each marketing actions. Due to complexity in the marketing operations it is very difficult to distinguish the outcome with the series of the activity, even David Stewart (2009) tried to overcome these complexities by giving an idea of making some base line. ROI (Territory1+ Territory 2+……..Territory N) = ROI for the Organization The concept of calculating ROI at cluster and territory level will resolve the problem of base line and data complexity associated while calculating at large label as it is traceable and even a small change in the customer retention or acquisition can be recorded. This approach is more of bottom up approach as it is better to start calculating at micro level rather macro level. 5: Findings Following findings can be drawn:  Financially linked marketing initiative is in consideration for the company in consideration.  Short term evaluation of Marketing ROI.  Outcome for wall painting was difficult to calculate as majority of wall paintings were in major districts road and it was difficult to create a base line for the same at cluster level.  Change in consumer behavior and consumer retention and attraction was noticeable during and after the activity.  Which marketing action has better impact on the consumer could see at cluster level, which further helps to marketing to invest more in. 6: Managerial Implications As discussed with marketing executives of the leading telecom company following implications have been found while calculating marketing performance measurement: Budgeting is measure major issues and company is focusing more on cost cutting rather spending more which has directed marketing towards being more financially accountable, earlier budget were allocated annually basis and end of the year manipulations have been made to justify outcome Budgeting of the marketing initiatives. “Quarterly budgets needs to justify within given time frame the time period given to us is not sufficient to yield longer effect of marketing performance” 93
  • 9. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 No standards methods are available through which ROI can be calculated for distinct marketing Available activity as in case of wall painting we have seen marketing executives are so much confused about Methods the outcome. Frequency of activity is another constraints for marketing to calculate ROI ,focus shifted from one Frequency activity to another activity and pressure generated to justify the current activity and so on which in of Activity case lacks focus towards marketing performance measurements. Lack of Most of the marketing activity initiated due to pressure generated by sales team where there is proper focus only activity initiation and implementation rather planning. planning Sales have been increased drastically after three or four months of the activity without any promotion which may in case result of earlier marketing action. Functional 60% of generated lead has been converted within two or three months of the activity started & that issues is considered not as a part of MARCOM initiative and added in sales account. No measurements methods are available to calculate MROI of wall painting as it do not yield spontaneous or direct responses and marketing is not having any answer to calculate it. 7: Conclusion From the above discussions we can understand that marketing roi has been measure concern for marketers as increasing scrutiny of marketing activities has increased their demand. The approach in consideration of the given company is applicable only for the companies which is having distributed territories at operational and functional level. The measurement is based on by assuming a certain baseline in given time frame, and which is more of giving short term conversion, longer impact of marketing actions is still difficult to measure and which is further are of research. References: Anne Klein & Tracy Swartzendruber (2003), “A user’s guide to marketing ROI: White Paper”, American Marketing Association. Bill Murphy (2004), “ROI by Number: White Paper”, Response Magazine: Direct Response Marketing. Don O ‘Sullivan and Abela, A.V. (2007), “Marketing performance measurement ability and firm performance”, Journal of Marketing, Vol.71, pp.79-93. D.W. Stewart (2009), “Linking marketing Actions to financial outcomes”, Journal of Business Research, Vol.62, pp.636-643. Eric Almquist and Gordon Wyner (2001), “Boost your marketing ROI with experimental design”, Harvard Business School Publishing corporation, October, pp.5-11. 94
  • 10. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 James D. Lenskold (2009), Marketing ROI: the path to campaign, customer, and corporate profitability, AMA. Liane Ringham (2005), “Return on marketing investment: A practical end to end approach for linking marketing investments to shareholder value: White Paper”, Australia: Knowledge Management. Lucio Lamberti and Giuliano Noci (2009), “Marketing strategy and marketing performance measurement system: Exploring the relationship”, European Management Journal, Vol.28, pp.139-152. Mark Solcansky and Iveta Simberova (2010), “Measurement of marketing effectiveness”, Economics and management, pp.755-759. Paul D. Berger, Naras Eechambadi, Morris George, Donald R. Lehmann, Ross Rizley and Rajkumar Venkatesan (2006), “From Customer Lifetime Value to Shareholder Value: Theory, Empirical Evidence, and Issues for Future Research”, Journal of Service Research, vol.2, pp.156-167. Philip Kotler (2004), "A three-part plan for upgrading your marketing department for new challenges", Journal of Strategy & Leadership, Vol. 32, pp.4 - 9 Rob Duboff (2006), “Resisting Gravity: White Paper,” American Marketing Association. Robert S.Kaplan and David P.Norton (2007), “Using the balance score card as a strategic management system”, Harvard Business review, (July/August), pp.1-14. Rust RT, Roland T.,Lemon,Katherine N. and Zeithaml,Valarie A.(2004), “ Return on Marketing using Customer Equity to Focus Marketing Strategy”, Journal of marketing,Vol.68,No.1,pp.109-27. Srivastava, Rajendra K., Tasadduq A. Shervani, and Liam Fahey (1998), “Market-Based Assets and Shareholder Value: A Framework for Analysis”, Journal of Marketing, Vol.62, pp.2-18. Steve Blundell (2001), “Measuring the ROI of your marketing strategy”, Accenture’s Insight Driven Marketing report. Steven H. Seggie, E Cavusgil and S Phelanetl (2007), “Measurement of return on marketing investment: A conceptual framework and the future of marketing metrics”, Industrial Marketing Management, Vol.36, pp.834-841. Timothy Hawthorne (2004), “Measuring return on investment (ROI) can be tricky, but it’s an important step in any direct campaign: White Paper”, Response Magazine: Direct Response Marketing. 95
  • 11. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Tim Ambler and John Roberts (2005), “Beware the silver metric: Marketing performance measurement has to be multidimensional”, Center for Marketing Working Paper. William Duffy (2004), “ROI by the Numbers”, www.responsemagazine.com [accessed 16 th Feb 2011] Appendix: 96
  • 12. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 97
  • 13. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Table: 1 Author Topic Approaches Marketing ROI industry specific/ Telecom Non Financial outcome of the Marketing Marketing ROI using share holder value Long term and Short term evaluation of Marketing ROI using Customer equity Marketing performance measurement Financial outcome of Marketing Return on customer (ROC) Markov switching Matrix Customer life time value Marketing intermediary Balance score card Shareholder value Budget allocation Companies Marketing Kaplan Norton et al.(1996,2001) N N N Y N N N Y N N Y N Y N Srivastav et al.(1998) N Y N Y N N N N N N N N N N Almquist & Wyner(2001) N N N N N Y N N N N N Y Y N T Rust et al. (2004) Y N N Y N Y N N Y N N N N N Ringham (2005) N N Y Y Y N N N N Y N Y N N Ambler & Roberts (2005) N N N Y N Y N N N N N N N Y Paul D. Berger et al.(2006) N Y N Y N Y N N N Y N Y N N Seggie et al.(2007) N Y N Y Y Y N Y N Y Y Y Y N Stewart (2009) N N N Y Y Y N N N N N Y N N Lamberti & Noci (2010) Y N N Y N Y Y N N N N N Y N Table: 2 No of No. of Cluster Distributor Retailer Company owned Store Franchise Cluster 1 28 2890 1 24 Cluster 2 36 3210 3 18 Cluster 3 38 3560 4 16 Cluster 4 32 1800 1 12 Cluster 5 31 1934 1 15 Total 165 13394 10 85 98
  • 14. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Table: 3 No. of Marketing Executives Cluster Employed No. of Sales man Employed No. of Promoter Employed Cluster 1 1 13 6 Cluster 2 1 18 8 Cluster 3 1 18 8 Cluster 4 1 10 6 Cluster 5 1 11 6 Total 5 70 34 Table: 4 Sr. no. Marketing activity Frequency ROI Measures 1 Float activity Once in a month Yes 2 Canopy Activity Twice in a month Yes 3 Signage installation Once in six months Yes 4 Wall painting once in year No 5 In store Once in year Yes 6 TV Scrolling Once in six month Yes 7 Stall activity Depends on availability Yes 99
  • 15. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.6, 2011 Table: 5 Secondary out Calculation time Measurement methods Sr.no. Activity Primarily out come come period availability On spot sale, Brand During activity awareness, Lead Revenue One Month 1 Float activity generated generation For 15 Days Yes Signage Brand awareness, Installation Retailers Revenue 2 In store participation generation Two month Yes Revenue 3 Wall Painting Brand Awareness Generation NA NO Stall Activity On spot sale, Brand One month awareness, Lead Revenue 4 Canopy generated generation One month Yes Revenue 5 TV Scroll Brand awareness generation Two months Yes 100