- Category: August 2011
There is a growing need to measure the effectiveness of marketing activities, especially in today’s digital age, therefore in the context of this issue take a look at the definition given by Wikipedia which should be inspiring.Marketing effectiveness is the quality of how marketers go to market with the goal of optimizing their spending to achieve good results for both the short-term and long-term and is also related to Marketing ROI and Return on Marketing Investment (ROMI).
The concept of marketing effectiveness first came to prominence in the 1990s with the publication of Improving Marketing Effectiveness by Robert Shaw that won the 1998 Business Management Book of the Year Award.
Marketing effectiveness has four dimensions:
- Corporate – Each company operates within different bounds, determined by their size, their budget and their ability to make organizational change. Within these bounds marketers operate along the five factors described below.
- Competitive – Each company in a category operates within a similar framework as described below. In an ideal world, marketers would have perfect information on how they act as well as how their competitors act. In reality, competitive marketing information is hard to come by.
- Customers/Consumers – Understanding and taking advantage of how customers make purchasing decisions can help marketers improve their marketing effectiveness. Groups of consumers act in similar ways leading to the need to segment them. Based on these segments, they make choices based on how they value the attributes of a product and the brand, in return for the price paid for the product. Consumers build brand value through information, received through many sources, such as, advertising, word-of-mouth and in the (distribution) channel often characterized with the purchase funnel, a McKinsey & Company concept. Lastly, consumers consume and make purchase decisions in certain ways.
- Exogenous Factors – There are many factors outside of our immediate control that can impact the effectiveness of our marketing activities. These can include the weather, interest rates, government regulations and many other things. Understanding the impact these factors can have on our consumers can help us to design programs that can take advantage of these factors or mitigate the risk of these factors if they take place in the middle of our marketing campaigns.
There are five factors driving the level of marketing effectiveness that marketers can achieve:
- Marketing Strategy – Improving marketing effectiveness can be achieved by employing a superior marketing strategy. By positioning the product or brand correctly, the product/brand will be more successful in the market than competitors’ products/brands. Even with the best strategy, marketers must execute their programs properly to achieve extraordinary results.
- Marketing Creative – Even without a change in strategy, better creative can improve the results.
- Marketing Execution – By improving how marketers go to market, they can achieve significantly greater results without changing their strategy or their creative execution. At the marketing mix level, marketers can improve their execution by making small changes in any or all of the 4-Ps (Product, Price, Place and Promotion). Without making changes to the strategic position or the creative execution, marketers can improve their effectiveness and deliver increased revenue by managing and executing each of their marketing campaigns better. It's commonly known that the consistency of a Marketing Creative strategy across various media (e.g. TV, Radio, Print and Online), not just within each individual media message, can amplify and enhance the impact of the overall marketing campaign effort. Additional examples would be improving direct mail through a better call-to-action or editing web site content to improve its organic search results - marketers can improve their marketing effectiveness for each type of program. A growing area of interest within Marketing Strategy and Execution are the more recent interaction dynamics of traditional marketing (e.g. TV or Events) with online consumer activity (e.g. Social Media). Not only direct product experience, but also any stimulus provided by traditional marketing, can become a catalyst for a consumer brand "groundswell" online as outlined in the book Groundswell.
- Marketing Infrastructure, also known as Marketing Management – Improving the business of marketing can lead to significant gains for the company. Management of agencies, budgeting, motivation and coordination of marketing activities can lead to improved competitiveness and improved results.
- Exogenous Factors - Generally out of the control of marketers, external or exogenous factors also influence how marketers can improve their results. Taking advantage of seasonality, interests or the regulatory environment can help marketers improve their marketing effectiveness.
If the explanations above are too complicated, just keep marketing expert Tony Lennon in mind who believes marketing effectiveness is quintessential to marketing, and even goes so far as to say “it's not marketing if it's not measured”.