Marketing activity effectiveness is often assessed on a narrow set of criteria and therefore does not quantify adequate information to indicate brand and business performance.
The complete picture of marketing evaluation relates to the conceptual model on how well an organization’s marketing mix activities are performing compared to its financial goals.
The chart below covers the main information required to evaluate as overall strategy for marketing activity whether it be traditional advertising, direct to customer, social media, new product development, pricing, sales force activity, distribution, pr/sponsorship, and general metrics.
Although marketing metrics have different indicators than financial metrics, the ultimate goal should be the same.
Financial Metrics are about representing profit in response to meeting customers needs. The success should not be based on one silver number or the highest number.
The American marketing Association defines to marketing accountability being:
“The responsibility for the systematic management of marketing resources and processes to achieve measurable gains in return on marketing investment and increased marketing efficiency while maintaining quality and increase value of the corporation”
How to measure your financial effectiveness of marketing activity?
Using three basic criteria a corporation can measure its financial performance.
Profit contribution – the appropriate measurement of the sales response versus the direct cost or marketing investment of an activity. Marketing measurement should tell the organization how well it executes both short and long term activities, how it builds brand equity and creates shareholder wealth.
Profit Margin – metrics need to be compared with the plan and prior period to understand trajectory of firm performance and be reviewed to see whether there is variation is due to the quality of performance or quality of plan.
Return on Investment or ROI is the measure of efficiency and effectiveness. ROI is important but can also be counterproductive – as it is difficult to measure one off returns for ongoing marketing campaigns. For example magazine advertising in attracting new customers. If measuring ROI based on spend in various media channels such as advertising it is important to allocate the results according to the exact activity. For example it could be the introduction of a new flavor or packaging rather than advertising a product in a catalogue that results in an increase of financial performance. EQUALLY IMPORTANT to look at the comparison to old data also.
Finally Customer Lifetime Value or CLTV – is the profit a firm earns from each customer – also known as customer equity and depends on how long a customer remains with the firm; – this measure is increased by raising retention rate, extend the customer life, increasing sales to customer.
Can you change your behavior?
Customer behavior analysis is an important marketing effectiveness measure rather than customer profitability. Also known as behavioural metrics. The firm can either encourage or influence consumer behaviour by changing pricing or other financial activities.
Coles supermarkets overhauled its approach to promotions to drive sales and profits for both themselves and their vendors. In 1990 they increased the discount level on certain categories to up to 10% off the shelf price. Through a pilot program in some Victorian stores, and the use of scan data and promotional history for particular target categories. The objective was to create promotional plans that would increase sales and profit. Through examples of Behavioural metrics such as sales – no of units sold, the proportion of market share, purchase frequency, share of category requirements, defection rate, customer complaints and recommendations.
The comparison of competitors products and the analysis of sales movement depending on the discount offered per category/product is important in determining whether the increase in sales came from other brands and if so which brands.
The table below illustrates whether the promotion has provided the best results. Coles attempted to analyse the effectiveness of promotions by plotting the sales promotion vs the sales increase. Discounts below 10% and above 20% produce the best results.
A comparison of Coles vs Aldi and other grocery retailer’s market share comparison shows that margins have been driven lower in the industry, due to the latter’s arrival in Australia. The rate of expansion along with the increase in marketing expenditure has affected the main players.
Market Share Analysis
Shoppers are also less loyal to a brand which, and value is the key driver to their behaviour – resulting in retailers to lower their prices by approximately 1.5 % – Aldi Market share is now at 12.1% and Coles is at 37.3% (Roy Morgan Data).
Proportion of product sold in category – Multiples command around 70% of all packaged grocery sales and have little opportunity to share growth in that category.
Purchase Frequency and Category Requirements
In an average four hour week period, 5.3 million customers shop at Aldi, and 10 million at Coles, and out of these shoppers 37% visited at least one Coles store.
Do you remember my brand?
Memory Metrics – relate to brand awareness, brand image association
In recent times Coles image has lead over Woolworths in savings across various brands. In June 2015, customers associated value-add in the Coles vs Aldi Shopping basket of over $100 per week. Most shoppers are guided by price and offer. If customers perceive your brand as too big and not putting in an effort they will go elsewhere, and in this case to the likes of Coles and Aldi.
“I think Aldi is the cheapest, second is Coles for value and last is Woolworths” customer statement.
Choice’s Consumer Pulse Survey in March showed that 75 per cent of Australians were concerned about grocery expenses and value for money was a top priority. A market price survey released this month showed that shoppers could save about 50 per cent on their weekly bill by foregoing leading brands at Coles and Woolworths.
For the purpose of this analysis – physical availability metrics will be brief and making a brand easy to notice and buy as possible. – Coles has physical and digital channels of distribution – with approximately 776 supermarkets in Australia. The brands available a numerous across private label and supplier lines.
Customer profile metrics
Customer profile metrics identify customer geometric criteria such as their gender, age or income. Retailers find it important to target buyers based on set where they live, who their buyers are, how, when and where they shop.
Advertising both through digital and social media have different marketing metrics than for example price promotions. Email campaigns are measured by open rates and click rates. To ensure a campaign is successful the comparison should be how your open rate vs the industry average click rate.
Other internet reports such as banners and tiles on website are measured by click through rate, post log in purchases but are also measured via overall sales data units post and during the promotional period.
Sales force data and CRM databases help collect data so that leads can be captured and recorded for follow up targeting.
Marketers now need to be involved in the marketing mix decision making, and market growth is often associated with economic growth.
Student ID: 212243981
email@example.com – Business Retail: Moody’s rings Aldi alarm bell for Coles, Woolies, April 22, 2016.
Mintz, Currim – What Drives Managerial Use of Marketing and Financial Metrics – Journal of Marketing Volume 77 (March 2013), 17-40
Wyner G, Do Financial Metrics Stifle Marketing Creativity – MM November/December, 2008
Ambler.T, Roberts J, Assessing Marketing Performance don’t settle for silver metric, Journal of Marketing Management, 2008, Vol 24, No 7-8, pp 733-750.
Clark B, Ambler T, Managing the Marketing Metrics Portfolio – Marketing Management, Fall 2011, 16-21
Gielens K, Drivers of Consumer Acceptance of packaged goods – International Journal of Research in Marketing. 24, (2007) 97-111.
Kembrey, M – Why Shoppers are turning to Coles and Aldi over Woolworths, The Sydney Morning Herald, Business Day, June 18, 2015.
Kennedy C, The Promotion side, Progressive Grocer, Sept 1993, 72: ABI inform collection, page 40.