Marketing Performance Metrics
Abstract
The purpose of the study was to investigate the marketing performance metrics with a specific reference to Coca Cola Company and Net Marketing Contribution over the Life Cycle. The study will assist many companies in formulating strategies to be used as benchmark or the strategies to improve NMC.
Marketing Performance Metrics
Introduction
Measuring marketing performance is an external activity that helps to understand the customer’s perception and the competitor’s position in the industry. Many organizations sets different tools to use as benchmarks so as to identify the staffs’ performance and the rate of income. ROA and ROI are the main used financial measures to measure the internal financial statues.
Part 1: Discuss Three Measures of Marketing Performance
Marketing metrics are the numeric data that allows the marketers to analysis their performance against the organizational objectives. The metrics help to take corrective measures in case there is a deviation between the targeted plans and the achieved performance of staffs (Neely, 2001). They have various measurement elements that includes number of produced products, net sales billed, design registrations and a research on the brands to determine to determine the brand’s awareness. Metrics makes it easy for marketers to justify their budget that is based on sales returns.
Three Measures of Marketing Performance
The activity-based metrics among the popular metrics used in analyzing performance. It involves statistical calculating and reporting. The main type of activity-based metrics includes tracking website visitors, downloads and attendees at the firm’s events. This approach rarely link the marketing operations to the business outcomes. Instead, the business results like the customer value, market share and adoption of a new product provides an improved correlation. The main focus of MPM is to measure aggregated efficiency and effectiveness of the marketing firm. These specific metrics have some categories that includes the marketing effect on the preference shares, the average order quantity, the rate of customer acquisition, the growth of consumer’s buying rate, business share, loyalty and net advocacy, margin, growth rate compared to market competition and the total customer engagement. MPM is also used to determine the rate at which operational efficiency and the outside performance. If Coca Cola Company decides to manage its marketing activities it uses the operations performance metrics. The firm will hire extra personnel to work as marketing finance directors and marketing operations director. Basically the marketing team will collect data about program-to-people ratios, cost-sales, awareness-to- demand rate and the rate of conversation.
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This metrics primarily provides the firm with different ways of rationalizing the marketing investments but this strategy fails to correlate marketing to business performance and strategy. The approach helps marketers to find out how the firm’s resources are utilized. The external performance are aligned with the firm’s outcome and helps to determine the firm’s value to its customers and the firm’s performance in relation to its competitors (Neely, 2007).
If Coca Cola Company wants to determine the key performance indicator (KPI), top-down approach is the best approach to use. The first step in this approach includes making decisions that defines the scope. To come up with KPI and metrics, the marketers predicts on the likely results they are trying to influence. Asking opposite questions follows (Shaw et al, 1997), the answers help to determine the relationship between the questions and the outcome. The data that is required to answer the question is then determined. Marketers then searches for this data and determines the corrective measures to be taken. The measures undertaken aims at making it possible to achieve the goals.
The organization needs to continuously monitor and analyze its marketing performance metrics. This gives the organization intelligence in competition, have a chance to assess their market weaknesses and strengths and come up with a calculated budgetary opinions through the marketing mix. This will give the organization competitive advantages over its competitors. The profits of the firm will also increase.
The Major brands use return on marketing investment (ROMI), return on marketing objectives (ROMO) and the marketing return on investment (ROI) to prioritize and distribute their marketing investments. They help them to decide on the most profitable portfolio. A firm needs to analyze the ROMI, ROMO and ROI of a project for more than a year. This will protect the firm’s investigations.
The method selected in monitoring the marketing process must be easy and cheap to implement. Training should be carried out to train the staffs on the best benchmark and how it is used. Staffs should take part in determining the best benchmark to use. This brings a sense of belonging and appreciation of the worker to the company and management when you nvolve them in management roles.
Part 1: Analyze Metrics Used to Evaluate the Measures
The above measures can be measured using the following metrics (Leroy, 2011):
Correct quantity, measuring the weight, counting the units and weighing the contents are the main used types of measurement. Supplying customers with the right quality will strengthen the level of trust with your customers hence making it easy to retain them. An independent team is set aside in an organization to measure the products quantity and to make sure the customer gets what they specify in terms of size.
Elasticity to respond to unanticipated demands, this refers to the ability of a firm to adjust so as to meet the current demand. A metric will be used to measure the degree of change, this makes it easy to identify the level at which the firm is flexible.
Quality level, TQM is a tool to measure quality. The metrics will make sure the level of a product’s level is standardized. Controlling quality can also be done by the state authority to ensure a firm offers its customers with quality products. Firms that offer less standardized products are fined for the same. The total quality management is employed to control the quality of a good or service. The staffs who produce quality products are rewarded with gifts and appraisals. The staffs whose products are below the standard are trained and encouraged to produce quality products.
Existence of accreditation or other certification, after completion of a training a firm is issued with a certificate to show its participation. The certificates act as a measure of qualification and experience attained. Customers prefer to contract a firm that has experience and is highly rated in the industry. On-time delivery can be used to measure how a firm values its customers. If a firm supplies its products on time this shows the supply chain is well managed. In a case of failed or late delivery, less care is taken on the customer and the likeliness to loss the customer is high.
Part 1: Case Study that Exemplifies Best Practices of each Measure.
Coca-Cola Company is an example of a company that demonstrates the best practices of the above measures. According to the company’s website they put their customers to be the king and aims at providing the best so as to retain the customers and to attract new customers.
Coca-Cola Company has an independent department that deals with quality control. The unit makes sure quality is maintained through the supply chain from when raw materials are obtained from the supplier to when they are delivered to the customer. The team tests the product at each level of manufacturing to make sure the right contents and composition are used. The team is also involved in ensuring quality services are offered to the customers. They establishes feedback programs as a way to allow the customers to get back to them.
The company parks its drinks in containers of different sizes. A team is established in the company to make sure only the correct quantity is supplied to the users. The team weighs at random the already packed products and in case of a deviation the whole pack is weighed and repacking is done. Customers have trust in Coca-Cola because there products are correctively packed.
Elasticity to respond to unanticipated demands, the company produces its products in great volumes. The products are then stored in its outlet’s warehouse. If the demand is low the supply is kept low but if the demand changes and more of their products are demanded the firm supplies more. They have special facilities to store their products for a long period.
The firm is certified and customers are confident in its products. It has been in the market for a long time hence gathering more experience on the type of products to produce. The company has learnt different ways of surviving in the market and how to win more customers. They now provide different types of soft drinks.
Coca-Cola Company has set outlets all over the world. This makes it easy to meet the buyer’s order on time with no dely. Transportation of the product from their warehouse to your premises is very fast. The drinks will be transported in crates or packed in cartons to avoid breakages and maintain a deliverable state.
Part 2: Short-Run Marketing Strategy
Short-run marketing strategy refers to a duration of time which only few factors can be changed as there is no enough time for changing the other variables in marketing strategies. Marketing Strategy is a detailed and specific tactics that are established and designed to be used over a period of time depending on the range of the plan (Neely, 2001). Advertising and media relations strategies used by the Coca Cola Company have an effect on the net marketing contribution both in short-term and in long-term.
In short-term, once the firm has decided to increase its efforts in advertisements commercial so that it reaches many people. There will be an increase in the product awareness and hence increase in the sales level. Once the sales are high the NMC will be high. In case the public fails to respond in a positive manner the firm will suffer loss as the advertisement costs will be very high compared to the income from the goods sold (Tanzania Society, 1966). In short-term a lot of advertisement will be profitable to the firm as the sales will be high.
The media relation refers to how a firm uses the media including the social media to market its products. In short-run using the media will be expensive as it needs time to gain publicity. This in return will lead to a fall in NMC. Many large beverage companies like Coca Cola were late in entering the product-markets of bottled water, fruit drinks, sports drinks, iced coffee, and energy drinks due to SHORT-TERM VISION.
Part2: Analyze Net Marketing Contribution in the Introductory Stage
During the product introductory phase the net marketing contribution is negative as no profits are made from selling the product. The income obtained is used to cover the high costs of advertisement and promotional costs incurred. The firm incurs loss (Louw, 2012). With proper advertisement the product survives this stage and the NMC start to raise as the product has gained customers. The advertisement costs are now low.
Part2: Analyze Net Marketing Contribution in the Late Growth Stage
As the product moves through its lifecycle, NMC will reach the break-even point, then grow, to peak, flattens and then starts to decline due to decrease in the market demand. At the end-growth stage the NMC starts to flatten as the product is now in the market and has gained its customers. When a new substitute product is introduced into the market, many customers will shift their preference. This will lead to decrease in demand of the product causing NMC to start falling. If the firm fails to add flavors to the product it might die and overtaken by the new product (Northern Marianas College.).
The graph below shows the movement of the NMC along a product lifecycle.
Conclusion
In conclusion we can summarize the above by saying that a firm must choose the most profitable portfolio to invest. Investment affects both the profitability and the NMC of a firm. The firm needs to understand the product cycle so that it determines the type of advertisement to use.
References
Neely, A. (2001). Business performance measurement: Theory and practice. Cambridge: Cambridge University Press.
Top of Form
Neely, A. D. (2007). Business performance measurement: Unifying theories and integrating practice. Cambridge: Cambridge University Press.
Bottom of Form
Shaw, R., Mazur, L., & FT Retail & Consumer Publishing. (1997). Marketing accountability: Improving business performance. London: FT Retail & Consumer Publishing
Tanzania Society. (1966). Tanzania notes and records. Dar es Salaam: Tanzania Society. Louw, A. (2012). Ambush marketing and the mega-event monopoly: How laws are abused to protect commercial rights to major sporting events. The Hague: T.M.C. Asser Press. Northern Marianas College. (n.d.). Performance report on strategic master plan implementation and assessment of institutional effectiveness. Saipan, MP: Northern Marianas College, Office of Institutional Effectiveness.
Leroy, G. (2011). Designing user studies in informatics. London: Springer.
Books.google.com,. (2015). isbn:1607522330 – Google Search. Retrieved 8 January 2015, from https://books.google.com/books?isbn=1607522330
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