1. Metrics for Measuring Performance
PPT13
S.Venkat

2. Discussion Question
1. Planning and implementation are important,
but results are what count.
So, what kinds of systems should marketing
managers put into place to ensure that
planned results are actually delivered?
What’s their purpose?

3. • Systems needed to ensure results
• Strategic Control System
• What’s its purpose?
• To track relevant changes in the market and
competitive environment that might require
changes in the firm’s strategies

4. • Strategic Control (Monitoring) System
• What are some questions that such a system should ask
regularly?
• What changes in the environment have positively or
negatively affected the current strategy?
• What changes have major competitors made in their
objectives and strategies?
• What changes have occurred in the industry in such
attributes as capacity, entry barriers, substitute products?
• What new opportunities or threats have derived from
changes in the environment, competitors’ strategies, or the
nature of the industry?
• What changes have occurred in the industry’s key success
factors?
• To what extent is the firm’s current strategy consistent with
the preceding changes?

5. • Systems needed to ensure results
• Marketing Performance Control System
• What’s its purpose?
• To track the degree to which planned marketing
performance is delivered

6. The Control Process
(Exhibit 13.2.)
Setting standards of performance
Specifying the necessary feedback data
Obtaining the needed control data
Evaluating feedback data -- explaining gap
between actual and given standards of performance
Taking corrective action

7. • Setting performance standards
– SMART
– Profitability analysis is used at all levels
• Single most important measure of performance
• Limitations
– Many objectives are nonfinancial
– Short-term measure that might be manipulated by
taking action detrimental in the long-term
– Can be affected by uncontrollable factors

10. Four Key Questions For Designing
Control Systems to Manage Marketing
Performance
• Q1: Who needs what information?
• Q2: When and how often is it needed?
• Q3: In what media and in what formats
should it be provided?
• Q4: What contingencies should be planned
for?
Let’s examine each of these questions.

11. Discussion Question
Q1: The heart of the control system: who
needs what information?

12. Discussion Question
• In most organizations, what sort of
information is needed about marketing
performance?

13. • What marketing performance info is needed?
• Sales: Just total sales in the aggregate?
• No!
• Sales by territory, by product, by customer and
customer type, by distribution channel, by order size,
and so on.
• Why is sales analysis, which breaks sales into its
component parts, important?
• Breaking down sales into its component parts is
central to understanding and responding to
changing market demand

15. • What kinds of marketing decisions might be made as a result of
such analyses?
• Change product assortment, change prices, change promotional
budgets, change distribution. In other words, all of the 4Ps may
change as a result of information produced by the control
system.
• What other marketing information should be tracked and
analyzed?
• Gross and contribution margins, broken down the same ways
sales are broken down
• Marketing expenses against budget and as a percentage of sales:
what kinds of expenses?
• Product development expenses and product costs
• Advertising and sales promotion expenses and their relationship to sales
• Personal selling expenses and their relationship to sales

16. Discussion Question
• In most organizations,who needs
information about marketing
performance?

17. •
•
•
•
•
Who needs sales, margin, and expense data?
Top and middle management
Production, procurement
Finance
Marketing managers
• Do they all need the same information, at the
same level of detail, with the same frequency?
– No.

18. Discussion Question
• Q2: When and how often is the
information needed?

19. • Does timeliness matter? Why?
• Can be a source of competitive advantage
• But what’s the tradeoff?
• The tradeoff is between more detailed
information, delivered sooner, on one hand, and
information overload on the other. Spending
money to provide more information than people
can use wastes both time and money.

20. Discussion Question
• Q3: In what media and in what formats
should information be provided?

21. • What sort of information might the company
where you work need in print form?
Electronically, on a computer terminal?
• What sort is needed remotely, in the field?
• Who in your company needs what sort of
management reports, aggregated how?
• What info don’t you receive, or do you receive in
a format that’s not helpful, that would help you
manage better?
• Does your system of marketing metrics measure
up?

23. Discussion Question
• Q4: What contingencies should be
planned for?

24. • Most plans are based on sets of
assumptions. Contingency plans allow for
changes in those assumptions, and require
that the most critical ones be monitored.
– May not be too specific but lays out possible
options

25. The Contingency Planning
Process
(Exhibit 13.14)
Identifying critical assumptions about the future
Assigning probability of each critical assumption’s being right
Rank ordering of critical assumptions
Tracking/monitoring of action plan
Setting triggers to activate contingency plan
Specifying alternative response options

26. Discussion Questions
• Finally, what are the merits of continuous
performance measurement systems
versus periodic marketing audits?
Are both needed? Why or why not?

27. • Continuous performance measurement systems
• Essential for tracking day-to-day, week-to-week,
and month-to-month performance to see that
planned results are actually delivered.
• Marketing audits
• A control and planning activity that involves a
comprehensive review of the firm’s total
marketing efforts cutting across all products and
business units. They are broader in scope and
cover longer time horizons than sales and
profitability analysis.

28. • Note: Both continuous performance
measurement systems and marketing
audits are needed and useful. The first is
needed for day-to-day evaluation, while the
second is important for reviewing longterm marketing performance.

29. Types of Audits
•
•
•
•
•
•
•
•
Marketing environment audit
Objectives and strategy audit
Planning and control system audit
Organization audit
Marketing productivity audit
Marketing functions audit
Ethical audit
Product manager audit

31. Some Advice on Designing Control
Systems for Managing Marketing
Performance
• A well-designed control system can provide
competitive advantage. Ask yourself, “What
critical data do my competitors have, and
when?” Can I compete based on better or more
timely information?
• “What gets measured gets done.” Measure the
things you want your people to pay attention to.