Marketing Performance Measurement Is The Major Challenge For Marketing Impact Assessment

Marketing Performance Measurement Is The Major Challenge For Marketing Impact Assessment

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Figure 1.
As indicated in the model, marketing performance measurement is an on going circle and at its higher level, performance satisfaction reflects the marketing stature within firm (Bruce H. Clark et al., 2005). However, as emphasised by Bruce H. Clark (2001), the multidimensional nature of marketing construct is the major challenge for marketing impact assessment. Within an organisation, the conceptualised role of marketing identifies its importance toward the management board (Bruce H. Clark, 2001, Srinivasan and Hanssens, 2009). Ambler (2000) introduces three management perspectives toward marketing. ‘Pan-company’ marketing is defined when the entire company engages in marketing activities (Ambler, 2000). In this scenario, marketing is recognised as having a major impact on the firm’s value and reputation (Bruce H. Clark, 2001). At the lower level, when marketing is considered as activities of a particular division or strategic business units in a firm, it is categorised as ‘functional’ (Ambler, 2000, Bruce H. Clark, 2001). Finally, ‘budgetary’ marketing is identified in the context that company perceives marketing activities as marketing expenditure (Ambler, 2000, Bruce H. Clark et al., 2005). When ‘pan-company’ and ‘functional’ marketing focus both on long-term and short-term result of marketing, short-term result or financial impact is the main interest of ‘budgetary’ marketing (Ambler, 2000). As supported by many studies, it is evident that a clear measures of marketing contribution sharps marketing stature within firms (Lehmann, 2004, Webster Jr, 1992, Yuhui, 2010).
The financial results and short-term return of marketing investment
As showed in figure 1, the short-term financial impact of marketing is the most cri...

... middle of paper ...

Marketing expenditures are considered investments, and originally, the financial return is measured as ROI (Rust et al., 2004b). As mentioned above, ROI in marketing is interpreted in different ways, results in suboptimal marketing strategy (Ambler and Roberts, 2008). Many marketing experts have raised questions and concerns on the use of ROI (Ambler and Roberts, 2008, Barton, 2006, Pauwels and Reibstein, 2010, Rust et al., 2010). Because many profits achieved are the results of past marketing effort over years, short-term ROI is often prejudicial against marketing expenditures (Bruce H. Clark et al., 2005, Rust et al., 2004b). Hence, the correct usage of ROI requires the detail cash flow analysis (Rogers and Sexton, 2012). Furthermore, as discussed above, maximization of ROI is not recommended due to its inconsistency with profit maximization (Rust et al., 2004a).

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