Marketing Accountability

Marketing Accountability aw:Large workbook HBK FB 26/5/09 11:51 Page 1 MARKETINGACCOUNTABILITY Professor Malcolm No CEO or CFO wants to hear that a McDonald enjoys a global marketing investment was a gamble, and reputation as a leading greater accountability for marketing authority on marketing. expenditure is one of the biggest issues He was until recently Professor of facing the marketing community today. Marketing and Deputy Director at Cranfield University School of Malcolm McDonald and Peter Management, and he is now an Emeritus Mouncey’s Marketing Accountability is Professor at the university as well as MARKETING a major breakthrough for marketing and being an Honorary Professor at Warwick essential reading for any marketing Business School. He has been consultant professional. Based on seven years’ to many major companies from the United research into global best practice in Kingdom, Europe, the United States, Far ACCOUNTABILITY marketing, it introduces a marketing East, South-East Asia, Australasia and metrics model that will help marketing Africa, in the areas of strategic marketing The ultimate test of marketing investment, indeed any investment, is whether it creates value directors align marketing activities with and marketing planning, market for shareholders. But few marketing investments are evaluated from this perspective, and corporate strategy. Crucially it describes segmentation, key account management, boards of directors and financial analysts are increasingly dissatisfied with this lack of MARKETING the key steps in this model and the international marketing and marketing accountability for what are often huge budgets. process of practically applying it. In doing accountability. Malcolm is also Chairman so it investigates every aspect of six companies and works with the Marketing Accountability is based on years of research at Cranfield School of Management, surrounding this vitally important topic, operating boards of some of the world’s and it introduces a marketing metrics model which not only shows how marketing including: leading multinationals on all continents. systematically contributes to shareholder value, but also provides a metric-based framework He has written over 40 books including the for developing and implementing marketing strategies that are measurable and accountable. ACCOUNTABILITY • why CEOs are demanding greater best-selling Marketing Plans: How to The key steps in the model and the process for practically applying it are described in detail as marketing accountability; prepare them, how to use them and well as key areas that need to be considered such as: How to measure marketing effectiveness • strategic marketing planning – a Malcolm McDonald on Marketing framework for what needs measuring; Planning (published by Kogan Page). • why a company-wide data management strategy is a vital foundation to measuring the value • a three-level marketing accountability added by marketing strategy; framework; • how to implement the necessary marketing strategy and allocate resources; • the process of marketing due diligence; Peter Mouncey is an • the marketing metrics model and experienced marketing • how to become the first choice for the customers you want; process; professional who now • the importance of ensuring that other functions are fully engaged with the marketing plan to • market segmentation; works in marketing ensure results can be delivered. • turning strategy into action – MALCOLM MMALCOLM DONALD education and consultancy. A Visiting AND PETER MOUNCEY developing action plans and budget Fellow of Cranfield University School of Marketing Accountability will enable senior executives to measure the impact of marketing templates; Management, he is also a Director of the activities against the goals of an organization. It will empower marketers to account for their • finalizing the metrics strategy, Cranfield Marketing Measurement and expenditure, and justify their actions to CEOs and CFOs. identifying the metrics that matter and Accountability Forum. Peter is also delivering accountability; Director of Research at the Institute of • the importance of data quality; Direct Marketing (IDM) and on the • measuring the effectiveness of executive editorial board of the IDM C multichannel strategies; journal. He was appointed Editor-in-Chief • valuing brands. of the Market Research Society’s International Journal of Market Research Marketing Accountability will enable in 2004 and was the joint editor of Market £30.00 senior executives to measure the impact US$49.95 Research Best Practice: 30 visions for the of marketing activities against the goals future (published by ESOMAR/Wiley in ISBN:ISBN 97978-0-7494-5386-28-0-7494-5386-2 Malcolm McDonald of an organization, and empower 2007). marketers to justify their actions to both CEOs and their Chief Financial Officers. Kogan Page Kogan Page US 120 Pentonville Road 525 South 4th Street, #241 and Peter Mouncey London N1 9JN Philadelphia PA 19147 9780749453862 United Kingdom USA www.koganpage.com Marketing I ᔡ MARKETING ACCOUNTABILITY ᔡ II This page is intentionally left blank III ᔡ MARKETING ACCOUNTABILITY How to measure marketing effectiveness Malcolm McDonald yecnuoM reteP dna reteP yecnuoM London and Philadelphia ᔡ IV Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or any of the authors. First published in Great Britain and the United States in 2009 by Kogan Page Limited Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road 525 South 4th Street, #241 London N1 9JN Philadelphia PA 19147 United Kingdom USA www.koganpage.com © Malcolm McDonald and Peter Mouncey, 2009 The right of Malcolm McDonald and Peter Mouncey to be identifi ed as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. ISBN 978 0 7494 5386 2 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data McDonald, Malcolm. Marketing accountability : how to measure marketing effectiveness / Malcolm McDonald and Peter Mouncey. p. cm. Includes bibliographical references. ISBN 978-0-7494-5386-2 1. Marketing--Management. 2. Marketing--Cost effectiveness. I. Mouncey, Peter. II. Title. HF5415.13.M369159 2009 658.80072--dc22 2009001273 Typeset by Saxon Graphics Ltd, Derby Printed and bound in India by Replika Press Pvt Ltd V ᔡ Contents Acknowledgements ix Introduction 1 1. It’s tough at the top – CEOs are fi nally demanding accountability for marketing expenditure 5 Summary 5 1.1 The growing importance of intangible assets 6 1.2 The marketing investment time lag and profi t and loss accounts 11 1.3 The tyranny of forecasts and budgets and the consequences 14 References 21 2. Strategic marketing planning – a brief overview 22 Summary 22 2.1 Introduction 22 2.2 Positioning marketing planning with marketing 23 2.3 The marketing planning process 26 2.4 How formal should this process be? 27 2.5 What should appear in a strategic marketing plan? 40 2.6 How the marketing planning process works 42 2.7 Guidelines for effective marketing planning 44 2.8 Twelve guidelines for effective marketing 46 2.9 Conclusions 53 References 54 ᔡ VI CONTENTS 3. A three-level marketing accountability framework 55 Summary 55 3.1 Introduction 55 3.2 A three-level marketing accountability framework 56 3.3 Three distinct levels for measuring marketing effectiveness 61 3.4 Level 2: linking activities and attitudes to outcomes 67 3.5 Level 3: micro measurement 71 Acknowledgement 71 References 72 4. A process of Marketing Due Diligence 73 Summary 73 4.1 What is the connection between marketing and shareholder value? 74 4.2 What is the Marketing Due Diligence diagnostic process? 77 4.3 Implications of the Marketing Due Diligence process 90 4.4 The linkage of strategy risk to shareholder value 91 4.5 The risk and return relationship 92 4.6 A focus on absolute returns rather than risk 93 4.7 Alignment with capital markets 97 4.8 Turning Marketing Due Diligence into a fi nancial value 98 4.9 Highlighting defi ciencies and key risks 101 4.10 Implications for users 102 Acknowledgements 103 5. The Marketing Metrics model and process 104 Summary 104 5.1 Introduction 104 5.2 Overview of the Marketing Metrics model 107 5.3 Implementing the Marketing Metrics model 112 5.4 The workshop team 117 References 118 6. Segmentation – the basic building block for markets 119 Summary 119 6.1 Introduction 120 6.2 Markets we sell to 122 6.3 Stage 1 – defi ning the market 132 6.4 Stage 2 – who specifi es what, where, when and how 136 6.5 Case studies 143 6.6 Segmentation and the Metrics model 156 References 161 CONTENTS VII ᔡ 7. How to become the fi rst choice for the customers you want 163 Summary 163 7.1 What are impact factors? 164 7.2 Qualifying factors 165 7.3 Competitive advantage factors (CAFs) 168 7.4 Productivity factors 172 7.5 Analysing impact factors: a strategy-based alternative 178 7.6 Impact factors: using ‘gap’ analysis for creating organizational alignment 180 7.7 Helpful pointers 183 References 184 8.

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