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Summary All lectures and articles Marketing Performance
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Samenvatting Marketing PerformanceColleges & literatuur
Session 1: Marketing Performance
College:
What is marketing?
Marketing is about exchanging value. A definition of marketing: ‘the activity, set of
institutions, and processes for creating, delivering and exchanging offerings that have value
for customers, clients, partners and society at large.’
How do you measure marketing success?
There are different perspectives, for example financial measures (profit, market share, sales)
but also non-financial (brand awareness, purchase intention, customer perceptions).
What is marketing performance?
Marketing performance is the productivity of marketing. In marketing resources are employed
to generate outcomes. How productive is this? What is the impact of marketing?
There are a lot of marketing metrics: loyalty measures, market performance, objective
performance, customer lifetime value, customer equity, online brand sentiment, market
orientation and relationship measures. These will be discussed in this course.
Katsikeas et al. (2016) name 6 categories of performance:
− Customer mindset: how do people think about the brand?
− Customer behavior: how many customers do we generate, how many customers stay,
how many customers talk positively about the brand?
− Product-market performance: how does the product perform on the market? How many
products did we sell? What is the profit and the market share?
− Customer-level performance: how ‘good’ is this customer? For example: share of wallet
(% of purchases a customer does). Or how much money you make on a customer.
− Accounting performance: looking at the organization as a whole, how many sales?
Profit growth, margin, cash-flow etc.
− Financial-market performance: how are we doing in the financial market? For example
the stock market. Or, can we pay back our loans? Etc.
Discussion:
− A lot of researchers look at performance as a single construct, so they only look at 1
aspect.
− Correlations between indicators of performance (the 6 categories) have not been
researched a lot.
− We can not generalize results because everyone uses another aspect when they do a
research about marketing performance.
Managerial implications:
− Use at least one of the metrics of each category of performance.
− Pay attention to causal relationships between aspects (the arrows in the model), and
realize that there can also be some negative relationships.
,Recent changes in marketing thinking:
There is a shift from goods-dominant to service-dominant.
Service-dominant is more complicated.
For example: buying a car (goods) it is clear that a customer thinks the quality of the car is
important. But when getting a hair cut (service) may be also the waiting time, behavior of the
hairdresser etc. is important.
Operand resources: ‘resources on which an operation or act is performed to produce an
effect’. → steal is an operand resource to make a car.
Operant resources: ‘resources that are employed to act on operand resources’. → The
knowledge that is needed to make a car is an operant resource. This is the thing that really
creates value.
In a goods-dominant view the customer is the receiver of a product (and of advertisement
etc.). In a service-dominant view the customer is a co-producer, without the customer there is
no service, so customers are often one of the operant resources.
A new challenge for assessing marketing performance:
Value is created with the help of co-creators. So the impact of marketing also depends on the
co-creators. Not only customers but also other stakeholders. This makes the assessment of
performance complicated and new questions are raised.
,Article Katsikeas et al., 2016:
Assessing performance outcomes in marketing
There is a problem: We can’t get cumulative knowledge from research because a lot of
different ways to assess performance are used, and mostly the measures are not well
defined and don’t cover the whole construct.
Operational performance: achieving goals within the value chain of the company, primary
activities like marketing but also supporting activities like purchasing (inkoop).
Organizational performance: ‘the economic outcomes resulting from the interplay among
an organization’s attributes, actions and environment.’
The model below starts with marketing resources, strategies and actions. After customers
are exposed to this they can form perceptions. The purchase and post-purchase behavior of
customers results in customer-level performance outcomes, you can look at this individually
or on group level. After this, outcomes can also be viewed on a product-market level (sales,
market share etc.).
The marketing-performance outcome chain is dynamic.
− Companies invest financial resources they’ve gained again to build and maintain their
marketing related (and complementary) resources and opportunities.
− Companies learn while going through the chain, it can lead to adjustments in the
selection of marketing resources or future the marketing programs.
Evaluative framework:
− Theoretical rationale: often, researchers refer to performance in broad and abstracts
terms, or they do not use conceptual logic to justify their conceptualization.
− Conceptual approach: there are 3 types of approaches that are common:
− Latent conceptualization: performance is a superordinate phenomenon, it exists on
a more abstract level than its indicators/components. With the shared variance of the
indicators, we can assess performance.
− Separate constructs: performance is a composition of separate constructs which
are slightly connected. We need to focus on different aspects.
, − Aggregate construct: performance is the sum of dimensions and we can assess it
with mathematical combinations.
− Aspects of performance: there are 6 aspects (shown in the model).
− Referents of performance: this is the standard we use to judge performance. This
needs to be based on theory.
− Absolute: the presence or absence of a standard (for example profits).
− Relative to inputs: outcomes relative to the used resources (ROI).
− Temporal: based on timeframes (margin growth).
− Competition: relative to other firms (ROI relative to competitors).
− Firm goals: did we reach the planned results? (sales volume relative to goal)
− Stock market: comparing the stock related performance to the rest of the stock
market. (abnormal stock returns)
− Time horizon: the period of the measurement.
− Past (ROS over past 3 years)
− Current (overall performance at current period)
− Future (expected new product performance over the next 5 years)
Method: 998 relevant journals are analyzed and the data is coded.
Results:
− Theoretical rationale and conceptual approach: less than 10% of researches have a clear
definition and theoretical justification for their conceptualization. Most of the time latent-
construct conceptualization is used. Also, there are often a lot of inconsistencies between
the conceptualization and the operationalization.
− Aspects and measures: the focus is mostly on accounting and product-market aspects.
There is a growing focus on financial-market returns.
o Customer-based: is used in 23% of the researches. Mostly they used customer
satisfaction. Brand equity is the least common.
o Product-market: mostly focused on market share, this is used a lot more than
product-based (like unit sales) or brand-related (like revenue premium) measures.
o Accounting: profit and sales revenue are very common. Cash flow is the least
common, this is remarkable because this is a very relevant measure. Also, cost-
related performance are less common.
o Financial-market: the use of stock-market related measure is increasing, probably
because focusing on stakeholders is emphasized more these days. Remarkably,
growth-related measures are not common, while growth is mostly one of the main
goals of a firm.
− Referents and time horizon: referents relative to inputs and absolute referents are most
common. Temporal and goal-related referents are the least common. This can be seen
as problematic. Also, the focus is mostly on current performance (over the past 12
months), 20% looks at the past, and very few studies focus on the future. Probably
because this is difficult regarding data.
Aspect of Advantages Disadvantages Considerations
performance
Customer mindset - causally close to - primary data may be - current vs. past vs.
marketing actions difficult and costly potential customers
- may be unique - secondary data may - demographic effect
- commonly used to set not align well with - noise in survey
specific goals theorized constructs - If primary data is
collected it allows
goal-based
assessment
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