Indicators of the Effectiveness of Marketing
An important task of marketing research is the evaluation of the effectiveness and efficiency of marketing activities. Management companies require marketers increasingly rigorous reporting and substantiation of expenses. Tired of the high and steadily increasing marketing costs, executives are naming the following as marketing : failed new products and failed advertising campaigns, too many phone calls and expensive campaign that are created to stimulate sales but fail to do so. Marketing research is partly able to solve the problem of accountability of marketing.
Consider the basic approach to evaluating the effectiveness of marketing activities – a system of performance marketing. Performance indicators of marketing – the criteria by which companies quantify, compare, and interpret the results of its marketing activities. Brand managers are using these indicators, or metrics, program design, and top managers – in the allocation of financial resources. If the marketer can show how the money will give the effect of his proposed measures, which means he can no longer justify the allocation of appropriate resources to senior management.
Performance indicators can be internal marketing, i. e. , refer to the company’s internal environment and external, that is, relate to the external environment of the company. In turn, internal and external indicators are divided into: •Current – continuously varying parameters, which require continuous monitoring, and are often carried out with the help of a marketing information system. •Final – indicators that are used as marketing the company’s goals and evaluated, as a rule, for the quarter, half, or year. Let’s consider the most popular domestic rates. Current domestic rates: •defect rate of products degree of knowledge of the company’s goals of personnel •timeliness of delivery •errors in billing •inventory turnover It is advisable to keep in mind key indicators that are not directly related to marketing activities. For example, estimating the percentage of defective products and participating in the task to reduce the reject rate, the marketer, thus reducing production costs, which in turn can reduce the price of the product. A price control is one of the essential tasks of the marketer. Timeliness of delivery can improve customer loyalty and forms in their eyes the image of a reliable and punctual company.
The degree of knowledge of the objectives of the company allows staff to make the right decisions in complex ambiguous situations. And, most often benefit from such solutions is primarily a consumer. The final internal indices: •net profit (income) •return on sales •margin per unit of output •return on assets These figures can be attributed to the financial. The marketer should be aware of the dynamics of their growth or decline. Financial performance could not be more eloquently and accurately described as the company’s activities in general and the marketing department.
Of course, to a direct relationship between the magnitude of these parameters and the degree of effectiveness of the marketing department can not, however, the negative trend indicators will clearly indicate the true chosen strategy of the company and, accordingly, a lack of effectiveness of the marketing department. The most popular external indicators include the following. 1. Current external indicators: •degree of customer satisfaction •the number of complaints •the total number of customers •loyalty, retention rates •intention to buy •awareness of the product
The presented figures are difficult to translate into a financial equivalent. How, for example, brings the company’s customer loyalty? Therefore, these parameters are estimated separately, according to a specific, produced for a specific company, the system scales. Also, the absolute values are used, for example, to measure the number of complaints or the total number of customers, and the relative values of, for example, the percentage of people who have the intention to purchase goods in the near future. 2. Final external indicators: •market share •size of the market comparative sales of new products •revenue per customer •market growth rate In fact, these figures constitute a group of industry and competitive rates. Industry indicators – a measure to assess the state of the industry – its rate of growth or size of the market. It is not possible to measure these indicators. But on the basis of these figures the company can make adjustments to the marketing communications plan or competitive strategy. Competitive rates, for example market share, company can assess its position in the market relative to competitors.
Market share – one of the most important indicators of the effectiveness of marketing activities, and the dynamics of its growth has a direct impact on sales growth. To ensure the maximization of the diversity metric can be done by the special organizational processes and systems. All materials used in the company’s internal and external parameters can be represented as a marketing information system. As a source of data for marketing information system companies can use two systems of market valuation, reflecting the company’s results and help to learn in advance about the possible impending problems.
The evaluation system of consumers includes analysis of the following indicators: •percentage of new buyers from the average number of customers •percentage of dissatisfied customers of the average number of customers •percentage of customers who are able to return, the total number of customers •percentage of customers who declare their intention to re-purchase the product •percentage of customers who declare their intention to recommend a product to others •the average perception of roduct quality in comparison with the main competitor •percentage of consumers who claim that the product is the most preferable in its category The evaluation of people that have interest. Companies need to continuously monitor the mood of the various groups interested in their work, or to affect it: employees, suppliers, banks, distributors, retailers and shareholders. It should also set standards for each group and take action as soon as one or more of them show an increased level of dissatisfaction. Example
In each division of the company «Hewlett-Packard» evaluation system of customers is applied, which includes from 18 to 20 indicators. Some criteria (customer satisfaction and timely delivery) the same for all, while others depend on the specifics of each department. Analysis of these estimates allows company management to assess the effectiveness of marketing strategies, sales and profits and to identify areas in which improvements can achieve greater quantitative indicators. 9. 2. Methods for assessing the effectiveness of marketing activities
Evaluating the effectiveness of marketing activities is very challenging and not always given the opportunity to express the quantitative effect obtained at the expense of marketing activities. Nevertheless, there are many different approaches for addressing this problem, which allows you to select the following classification of methods for evaluating the effectiveness of marketing. Qualitative methods involve the use of marketing audit, during which the comprehensive analysis of environmental organizations, as well as all the threats and opportunities.
In this case there are two areas of marketing control: control of marketing results-oriented and marketing audit, i. e. analysis of the qualitative aspects of the organization. Quantitative methods for evaluating the effectiveness of marketing requires comparing the costs of marketing with the resulting gross profit and the cost of advertising to sales, and they characterize the final financial results for the organization. Analysis of the profitability and cost analysis can also be one of the options for the quantitative method of assessing the effectiveness of marketing.
In evaluating marketing activities should be the parameters that characterize the activity of a particular business units – sales volumes, the organization of the market share, margin and net profit. The volume of sales (gross sales) is a complex indicator and reflects not only and not the success of efforts to implement the product, but also chosen the right price, and most importantly, how the goods “fell” in the target group of consumers. Dynamics of sales – an indicator of an organization’s position in the market, its shares and trends.
It should also be noted that independent place in the analysis of cost structures and evaluating the development potential of the organization is the analysis of break-even point. Break-even volume shows how many goods to be sold, that the resulting contribution margin covers all fixed costs. This volume is an indicator of the organization capabilities to maneuver in the market. Sociological methods for evaluating the effectiveness of marketing aimed at using the tools of applied sociology – the development of sociological research program and in accordance with its conduct of the study.
In the use of tools of applied sociology also is oriented assessment of the effectiveness of marketing communications (advertising effectiveness, sales Tenths methods for assessing the effectiveness of marketing separating its effectiveness for each activity in compliance with the eligibility criteria of the list of structures and processes of the marketing concept of setting a specific score for each criterion. Nowadays, there is an increasing number of methods to assess the effectiveness of information marketing that are most widely discussed on the Internet.
The essence of these methods is that in order to evaluate the effectiveness of marketing programs used by Sales Expert 2, Success, and others, which are software for marketing information systems. In fact, the evaluation of the effectiveness of marketing activities is one of the functions of a marketing information system. All the indicators needed to assess the effectiveness of marketing activities should be incorporated in the marketing information system. Marketer, the user of the system is only necessary to define the algorithm and the method of assessing effectiveness. 9. 3.
Performance indicators of marketing – the criteria by which companies quantify, compare, and interpret the results of its marketing activities. Performance indicators can be internal marketing, i. e. , refer to the company’s internal environment and external, that is, relate to the external environment of the company. In turn, internal and external indicators are divided into current – which should be continuous monitored and which are often carried out with the help of a marketing information system, and final – indicators that are used as marketing the company’s goals and evaluated, usually on the basis of quarter, year.
The following methods of evaluating the effectiveness of marketing activities: •Qualitative methods involve the use of marketing audit, during which the comprehensive analysis of environmental organizations, as well as all the threats and opportunities. •Quantitative methods are used for evaluating the effectiveness of marketing requires comparing the costs of marketing with the resulting gross profit, and advertising costs to sales. •Sociological methods – for evaluating the effectiveness of marketing aimed at using the tools of applied sociology – a program of sociological research and in accordance with its conduct of the study. Tenths methods for assessing the effectiveness of marketing “isolate” its effectiveness for each activity in compliance with the eligibility criteria of the list of structures and processes of the marketing concept of setting a specific score for each criterion. The essence of the method of information lies in the fact that the evaluation of the effectiveness of marketing programs used by Sales Expert 2, Success, and others, which are software for marketing information systems.
Four tools for monitoring the implementation of the marketing plan. 1. Analysis of the distribution suggests a partition of the total sales data into categories such as products, end users, marketing intermediaries, sales territory, and the size of the order. The purpose of the analysis – to identify strengths and weaknesses of the area, for example, products with the highest and lowest sales, buyers, who account for a large portion of the proceeds, as well as sales agents and territory, demonstrating the highest and lowest quality of work. . Analysis of market share. Sales volume and market share are the primary functions of a number of determining factors. For consumer goods, these factors include the efficient allocation, the relative price, retain or change the perception of one or more of the essential characteristics of the product to consumers in comparison with competitors’ products and product placement on store shelves. 3. Itemized analysis of earnings and expenses.
Data on sales – it is certainly not the only relevant information regarding the success of marketing activities. Need to monitor values of gross margin and profit margin, and to measure the efficiency and effectiveness of all marketing expenditure items. 4. Analysis of the ratio of marketing costs and sales volumes. Analysis of the annual plan requires ongoing monitoring to achieve the goals of expenditure. The main management measure is the ratio of marketing costs and sales volumes.
