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Marketing Payback

Marketing Payback

Is Your Marketing Profitable?

Robert Shaw, David Merrick

Apr 2005, Paperback, 528 pages
ISBN13: 9780273688846
ISBN10: 0273688847
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"A landmark book, providing marketing practitioners with the tools to professionalize their marketing decision-making." Philip Kotler

Do you know if your marketing is profitable? Which activities deliver the most value? and which simply fail to deliver? These are the questions thatMarketing Payback has been built to answer.

Marketing touches every aspect of your business, but marketing costs money and there are many choices to be made about where marketing budgets can be spent.

Sooner or later, every marketing executive will have to get to grips with demonstrating the contribution of marketing. From deciding whether a major campaign is worth backing, to the immediate and daily challenge of managing budgets and measuring activities.

If you are drowning in data yet wondering whether your sales promotions are effective, want a more reliable sales forecast or simply want to justify a marketing budget, Marketing Payback will help you to unlock the relationship between customer insight and financial foresight, and use them to your advantage.

These are challenges that every business faces, and questions that every marketer will encounter. Knowing the answers to these questions will help you and your business to back the right choices, make the right decisions and deliver more profitable marketing performance.

Marketing Payback is every marketer’s companion to sounder judgment and sharper decision-making.

Publisher’s acknowledgements

Authors’ acknowledgements

1 Introduction: Payback begins here

Is the book for you?

Who should read the book?

Do I need to be Einstein to understand it?

Marketing marketing

The plan of the book

PART I: IS MARKETING PROFITABLE?

2 Marketing’s midlife crisis

Is my marketing department like that?

Can marketing be trusted with money?

Healing marketing of its payback myopia

How much is at stake?

The smouldering feud: financial accounting in marketing

Why change?

Key points

3 Demonstrating success

Is there a direct link between marketing and business results?

How should you evaluate your marketing?

Marketing success: a damn good story

Marketing’s magic numbers

Marketing payback – the final financial frontier

Ways of improving marketing profitability

Why only profit will do

What sort of profit is best?

Key points

4 The laws of marketing

What are empirical generalizations?

Why are empirical generalizations important?

Where do empirical generalizations come from?

Customer satisfaction and loyalty

Customer Relationship Management (CRM)

Branding

Distribution and availability

Sales promotion

Price

Advertising effects

Personal selling

Innovation and new products

Key points

5 Measuring how marketing really works

Why you must measure your customers

What expert help do you need?

Describing and predicting customer responses

Branding and the supply chain

How well does branding theory measure up?

How good is your market research?

An ideal basket of measures

Key points

6 Tracking trends and forecasting futures

Can you really make accurate sales forecasts?

Cutting through the jargon

Patterns in data

Forecasting methodology decision tree

Judgemental modelling

Statistical modelling

Econometric modelling

The process of econometric modelling

Integrated forecasting and predictive modelling in action

Key points

7 Avoiding decision traps

Decision making in the real world

Auditing and improving your decision analysis

Allocating analysis time and resources better

Overcoming the hurdles

Becoming a better judge

Becoming a better statistician

Seven habits of highly effective quantitative thinkers

Key points

PART II: SOLUTIONS TO COMMON PROBLEMS8 Expenditure allocation

The principles of expenditure allocation

What exactly do we mean by ‘allocation’?

Traditional ‘top-down’ approaches

The ‘above-the-line’ and ‘below-the-line’ expenditure split

Expenditure strategy research

Starting from the brand: ‘bottom-up’ approaches

Techniques for optimizing expenditure allocation

Optimizing the right variable

Optimizing expenditure for a single brand

Optimizing expenditure for a portfolio

Key points

9 Brand identity changes

Branding basics

What is brand identity?

Diagnosing your brand identity problems

Describing and managing your brand identity changes

Differentiation or salience?

Researching your brand identity strategy

Testing your brand identity decisions

Tracking your brand identity

Key points

10 Brand portfolio planning

Stretching your brand portfolio

Portfolio language and terminology

Analyzing the effects of your portfolio decisions

Researching your brand portfolio strategy

Testing your brand portfolio decisions

Tracking your brand portfolio

Key points

11 Valuing brands

The context for brand valuation

Corporate reputation

Company valuations

Brand valuations

Importance of brands as value drivers

How are brands valued?

Is brand valuation useful to you?

Key points

12 Integrated marketing communications

Objective and task frameworks

Creative execution decisions and their effects

Media decisions and their effects

Tracking your marketing communications

Modelling your marketing communications

Calculating the payback from your marketing communications

Key points

13 How pricing works

The importance of pricing decisions

Price elasticity and its limitations

Optimum pricing

Profit maximization compared with revenue maximization

What about the competition?

How do price promotions fit in?

Key points

14 How promotions work

Introduction

Defining sales promotion

What drives you to use promotions?

A framework for evaluating promotions

How can promotions affect your sales volumes?

How can promotions affect your prices?

How can promotions affect your costs?

A framework for managing sales promotions

Promotional research, testing and tracking

Key points

15 Customer equity optimization

What is customer equity optimization?

How to account for the customer base

How to alight financial and customer accounting

How to use the model to evaluate alternatives

How to discover what maximizes profits

Key points

16 Getting better value from marketing information

Too much information, too little insight

Where should you begin the diagnosis?

Decision-problem diagnosis

Insight-problem diagnosis

Information-problem diagnosis

Summarizing your diagnosis

Visualizing your best solution

Marketing information library

People and processes

Management tools and techniques

Learning and culture change

The case for change

Key points

PART III: FINANCIAL PLANNING AND CONTROL

17 The number wizard’s toolbox

Why you must become a better model maker

The perfect model and its structure

Applications of modelling

Modelling do’s and don’ts

Case study example

Self-assessment exercise

Key points

18 Marketing planning

What is marketing planning?

Establishing the planning timetable

Step 1: Organizing the planning process

Step 2: Assembling a fact base

Steps 3 & 4: Preparing the baseline forecast and options for investigation

Step 5: Constructing a marketing plan simulator

Step 6: Selecting the best plan

Step 7: Writing the plan report

Step 8: Getting approval

Key points

19 Better budgeting

An overview of the budget cycle

Transforming your budgeting process

Setting guidelines for budgeting

Analyzing marketing budgets

Linking progress to its sources

Choosing an appropriate level of detail

Allocating budgets to time periods

Presenting, revising and approving the budget

Should you bin your budget?

Key points

20 Marketing bookkeeping and accounting

The marketing shoebox

Getting started

Analyzing sales volumes and revenues

Calculating variable costs

Calculating fixed costs

Calculating marketing accruals and commitments

Tracking marketing activities and associated costs

Key points

21 When results go wrong

Will management reporting alert you to a crisis?

Reporting against budget

Checking results for accuracy

Separating the variances into hierarchies of effects

Volume variances, time patterns and their sources

Grey areas in reconciling variances to sources

Product mix variance

Marketing expenditure variances, ratios and trade-offs

Responding to variances, ratios and trade-offs

Responding to variances and maximizing profits

How corrective action should be selected

The trouble with traffic light reporting

Balancing the budget

Key points

22 Twenty things you’ll do differently

ReferencesIndex

  • Marketing value is THE emerging topic in marketing. Over two-thirds of the UK's Marketing Leadership Council membership see marketing accountability as more important than ever before. (FT, 14 October 2003).
  • Top quality endorsements from Philip Kotler, Jack Trout, Jean-Claude Larrache.
  • Marketing value is increasingly finding interest in business schools. Teachers at Business Schools and internal business academics will find clear expositions for teaching, along with discussion questions. This book is based on a successful executive education programme at Cranfield.
  • Principles of evaluating marketing decisions are not to be found anywhere, not even in Kotler.
  • Worked examples of evaluations ease the difficult process of turning principles into action.
  • Case studies from successful companies, checklists and summaries throughout.

Robert Shaw is one of Europe’s top experts on business modelling and economics, specialising in the study of marketing’s effectiveness and return on investment. He advises the senior executive teams of many large organisations including Manchester United, IBM Global Services, BP, Direct Line, British Telecom, British Airways. He is a prolific author and has published many books, reports and articles on marketing and CRM evaluation. He acted as advisor last year to the Chartered Institute of Marketing on its Guideline on Marketing Effectiveness. The Institute of Chartered Accountants has commissioned a Good Practice Guideline from Professor Shaw.

"This interesting book... offers <marketing managers> a wealth of ways to improve the financial and business credibility of their function." - The Value Partnership

"Top of my list is Marketing Payback" Market Leader