Marketing Metrics

Marketing metrics is the set of measures that help marketers quantify, compare, and interpret their performance.²³ Marketers today have better marketing metrics for measuring the performance of marketing plans (see Table 2.2 for some examples).²⁴ Firms can choose metrics based on the particular issues or problems they face. London Business School’s Tim Ambler believes firms can split evaluation of marketing performance into two parts: (1) short-term results and (2) changes in brand equity.²⁵ Short-term results often reflect profit-and-loss concerns as shown by sales turnover, shareholder value, or some combination of the two. Brand-equity measures could include customer awareness, attitudes, and behaviors; market share; relative price premium; number of complaints; distribution and availability; total number of customers; perceived quality; and loyalty and retention.²⁶

Marketing-Mix Modeling

Marketing accountability means that marketers must more precisely estimate the effects of different marketing investments. Marketing-mix models analyze data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand the effects of specific marketing activities.²⁷ To deepen understanding, marketers can conduct multivariate analyses, such as regression analysis, to sort through how each marketing element influences marketing outcomes such as brand sales or market share. Especially popular with packaged-goods marketers such as Procter & Gamble and Colgate, the findings from marketing- mix modeling help allocate or reallocate expenditures. Analyses explore which part of ad budgets are wasted, what optimal spending levels are, and what minimum investment levels should be.

Although marketing-mix modeling helps to isolate effects, it is less effective at assessing how different marketing elements work in combination. Wharton’s Dave Reibstein also notes three

TABLE 2.2 Marketing Metrics

other shortcomings:²⁸ (1) it focuses on incremental growth instead of baseline sales or long-term effects; (2) it has limited integration of metrics related to customer satisfaction, awareness, and brand equity; and (3) it generally fails to incorporate metrics related to competitors, the trade, or the sales force.