Marketing performance assessment: an exploratory investigation into current practice and the role of firm orientation

Marketing

Centre for Marketing Working Paper

1999

The objective of the present study is twofold: First, we explore how UK firms, in a variety of business sectors, assess their marketing performance. Second, we examine the relation between marketing performance, measurement practice and customer and competitor orientation. We suggest that marketing performance assessment requires three criteria: market (non-financial) comparisons with both internal (e.g. plan) and external (e.g. competitive) benchmarks, adjusted by changes in the marketing asset. In other words, firms need to adjust these short-term measures by the gain or loss in brand equity, by whatever name, between the beginning and end of each period. Data were collected through semi-structured interviews (n = 44) and a questionnaire-based survey (n = 531) with senior marketing and finance officers. The findings indicate that internal financial measures are, overall, regarded as more important measures of marketing performance than those from the market itself. Only a minority (24 percent) of UK companies assess performance using all three measurement criteria. Brand equity is the most frequent term used in the UK to describe the marketing asset (32.5 percent of those 62 percent who have a term at all). The marketing asset is measured financially annually or more frequently (brand valuation) by less than 14 percent of firms. However, about 40 percent regularly measure it non-financially. Firm orientation, as might be expected, influences measurement practice. Customer oriented firms, for instance, tend to give more importance to customer-based information than firms less so oriented. Consistent with previous findings, customer and competitor orientation are positively associated with business performance. Customer orientation, however, appears to be a stronger determinant of performance than competitor orientation. Firms need to be clear about the set of metrics that are necessary and sufficient for the assessment of their marketing performance. Ideally some metrics are predictive of future performance. Firms also need to establish a process for the periodic review of the system, and of the metrics themselves, in order to establish a virtuous circle of performance, measurement and organizational learning.

Centre for Marketing

99-901

Centre for Marketing Working Paper

No