Presentation on theme: "CIM Level 6 Diploma In Professional Marketing"— Presentation transcript:
1CIM Level 6 Diploma In Professional Marketing Mastering MetricsIntroduction to Unit
2Overarching OutcomesAnalyse marketing data for insight and to undertake effective decision-making in relation to the use of resourcesMetrics and Analytics (25%)Understand the role of Marketing MetricsUnderstand the significance of different measurement techniques across a range of market contextsMeasuring Effectiveness (35%)Know the relevant measures of marketing performanceApply Marketing Metrics to establish the effectiveness of marketing activitiesAnalytics for decision making (40%)Understand appropriate sources of data for marketing analysisUtilise various analytics tools and techniques for marketing insight and strategic decision making
3Individual Session Content Principles of MeasurementWhat to MeasureMeasurement Techniques – Statistical numerical and financialSources of Data (includes external research and internal secondary data)Using and Presenting informationUsing DataChallenges and TrendsBuilding an Information and Data Function
4Sample Assignment Topics Three parts to it (16 pages) based around a scenario such as mergers and partnerships or future growth challenges.There is a linear sequence of Why? Assess. Recommend.Task 1 (20 marks) requires an explanation of why organisations need data and metrics – Why?Task 2 (35 marks) analyse and identify the data and metrics which would be useful in the scenario.This part also requires a dashboard of the metrics used in evaluating an opportunity – Assess and EvaluateTask 3 (35 marks) recommend a data-focused course of action and the measurements needed, together with how it could be implemented - Recommend
5CIM Level 6 Diploma In Professional Marketing Mastering MetricsSession 1 – Principles of Measurement
6Learning OutcomesThis session contributes to the following elements of the assessment criteria:1.1 - Identify the context and requirements for an organisation to be able to set effective marketing metrics.1.3 - Understand the risk of poorly implemented metrics and communicate examples of this in practice
7A Basic Control System Input Output Process Corrective Measure Compare actionMeasureCompareThis model forms the basis of all quality improvement processes and measurement systems, i.e. do something and then measure the results against a pre-set benchmark. If it doesn’t meet the target set, then take corrective action.Target/budget95
8Principles of Measurement ObjectivesTargetsBenchmarksTrendsINMeasurePROCESSCompareReportingThis slide builds on the previous one by showing what happens at each stage. If watched in ‘slide show’ mode the diagram will build showing the individual stages involved, plus we have recorded a webinar that explains this approach.OUTAction
9Making Comparisons Snapshot Trend 2012 Comparison 2011 One of the key principles of measurement is comparison. Without some sort of benchmark or comparison against a target, a number is meaningless other than as a snapshot. For real understanding a comparison is needed and this slide illustrates the range of comparisons that can be made, such as looking for trends, or comparing to the previous period, or comparing to the same time last year. This principle is explored further in later sessions.
10Variance Analysis Variables used to judge operations Example Standards Profits15% ROISales perunit ofanalysis£5,000 averagesales per unit(e.g. customer)MarketingobjectivesMarketingplanComplaints andwarranty serviceper 100 units soldConsumerservicePerformanceSales costs £1,000Variance analysis demonstrates how different activities can be measured to indicate where issues may lie. For example, in the example above greater profitability could be achieved by reducing costs, such as distribution costs. This can also be measured and compared to a standard. By the same token, doing so may lead to an increase in complaints and warranty service per 100 units sold and this will also be shown. If it is still within the standards or benchmark set, then it will be fine. If not, then it can clearly be seen that a drop in one area has had an impact on another.Costs perunit ofanalysisDistribution costs£1,250Product costs£2,000Source: Adapted from Luck and Ferrell (1979)100
11Marketing Variances - Examples ItemTargetActualVariance PercentageVolume100 units110 units+10%Standard price£2 per unit£1.90 per unit-5%Standard cost£1 per unit£0.80 per unit-20%Budgeted profit£1.10 per unitTotal Profit£100£121+21%This example shows the effect of changing aspects of an organisation’s operation and the resulting impacts using variance analysis. There has been a reduction in price of 5% which would normally be expected to reduce the amount of profit. However, the costs of production have also been reduced and by a bigger percentage, making each sale more profitable overall. In addition, the number of units produced has also increased, thereby increasing the total profit from the original budgeted figure by a substantial margin. The effect of these changes can also be demonstrated over time, as shown in the earlier Making Comparisons slide.
12(£30M) Operations forecast Gap Analysis70(£60M) Corporate objective6050New strategies gap(£45M) Current SalesforecastThe planninggapSales(£m)4030(£30M) Operations forecast2010Operations gapThe Gap Analysis is a useful conceptual model to help an organisation understand how it is doing and what it could aim to reach. If it carries on doing what it is doing with no change, it will achieve the line called 'Current Sales Forecast'. Measurements will be needed to know whether it is on track for this. However, the organisation's objectives may actually be higher than the level of sales it currently expects to achieve, in which case there is a gap between what it is likely to achieve and what it wants to achieve. Forecasting will be needed to assess the size of these gaps and new strategies or approaches will be needed to close the gaps, i.e. the organisation needs to do something differently. This is the 'New strategies gap'. A second area where there may be a gap is what's called the 'Operations Gap'. This is where the organisation does not actually have the capacity to meet the amount of sales it expects to get. Measurement and forecasting can help to identify gaps here and then the organisation can amend its operations or reduce the number of sales it achieves so that it is able to meet its obligations and deliver the volume of sales expected to the standard expected by customers.Time (years)A plan details the actions needed to fill the gaps – but measurement is needed to assess the size of the gaps and to track progress towards closing the gap.73
13The APIC Planning Framework Major event, e.g. recession,new competitor, technology changeAudit & AnalysisPeriodic review,e.g. annuallyControlPlanningThis slide and the next, identify the generic planning process – notice how measurement principles can be used at numerous stages throughout the process. APIC is a useful mnemonic to help you remember the planning process. The diagram above shows how the audit and analysis aspects feed into the process, i.e. they can be conducted periodically but also when required, such as when the organisation has been, or is likely to be, affected by a major event. Measurement will be a key element of any audit. It also shows how the control elements can be used, i.e. to feed into future analytical exercises, as part of the planning process itself and as part of the Implementation stage, i.e. delivery of the activities, to ensure they are on track and delivering what was expected, with action able to be taken if not. Again, measurement is a fundamental aspect of control.ImplementationSource; Beamish & Ashford, 2008
14The Planning Process Step 2 - Where do we want to be? Step 1 - Where are we now?Marketing auditFinancial /ratio analysisCompetitor analysisCustomer analysisStep 2 - Where do we want to be?Mission (vision, values and purpose)ObjectivesStep 3 - How might we get there?Direction of growthWhich markets to compete inWhich customers to targetHow to position the offeringNature of growthStep 4 - Which methods should we use?Marketing MixPromotional activitiesMedia mixActivity plans, budgets, schedulesLook at each step here and identify where measurement can contribute and the metrics which may be useful as input at each stage of the process for your organisation. Notice also how many of the steps need measurement principles if they are to be done effectively.Step 5 - How can we ensure arrival?Monitoring and management controlsMeasurementsEvaluation
15Measurement in the Planning Process Marketing Plan ImplementationMeasure EfficiencyMeasure EffectivenessOperational ControlReasons for volume differencesReasons for cost differencesMarketing AuditMeasurement principles are used as a control method in implementation. The outputs of the activity, i.e. the results of the implementation, can be used to enhance both ongoing operational activity and feed into audits for developing future marketing plans.Marketing Planning ProcessSource; Adapted from Verhage Marketing 2014
16Measurement Levels in Organisations Management of:MarketingProductBrandSalesFinanceStrategicProduct and service deliveryCampaign DeliveryTeam PerformanceOperationalDifferent measurements and metrics will be needed at each level within the organisation, i.e. those needed to monitor the success of strategy are different to those required for measuring the success of individual campaign activity.CommunicationsPRAdvertisingDMCustomer ServiceTactical
17Performance MeasuresA comprehensive suite of measurements will cover all of these areas;Strategic – related to overall performance of an organisation, e.g. shareholder value, ROI, branding, reputationTactical – short term measures to assess and improve areas such as customer satisfaction, loyalty rates or promotional effectsCampaign – related to individual marketing activities undertaken by the organisation, such as pay-per-click or direct mail campaigns.
18Types of Control Strategic controls Effectiveness (doing the right thing)Efficiency (how well it’s done)AdaptabilityAnnual planning controlsProfit controlsBrand equity controlsTactical performance measurementAnnual budgeting proceduresAuditing mechanismsBenchmarking proceduresThere are lots of different types of controls and areas to measure as shown here. One key factor to take into account is the difference between efficiency and effectiveness. It’s the difference between doing the right thing (effectiveness) and doing it well (efficiency). So an organisation might produce very attractive direct mail packs that retain response rates – they would be efficient at it – but customers may actually buy products in that sector by searching online, in which case it would actually be an ineffective piece of activity. It might be done well, but it’s not the best thing to do.1818
19Strategic Control Systems Type of analysisUsed to controlFinancial analysisRatio analysisVariance analysisCash budgetingCapital budgeting and expenditureElements of profitabilityCosts or revenueCash flowInvestmentMarket/sales analysis - overall consideration of size and growth of market segments and corporatemarket shareDemand analysisMarket share or penetrationSales targetsSales budgetCompetitive standingSales effectivenessEfficiency in use of resources for sellingPhysical resource analysisCapacity fillYieldProduct inspectionPlant utilisationMaterials utilisationQualityHuman resources analysisWork measurementOutput measurementLabour turnoverProductivityWorkforce stabilityHere is a range of measures which might be employed at a strategic level within the organisation, as opposed to measuring campaign performance.
20Financial Measurement Principles Financial measurement covers two areas; costs and returns.Costing can be on an absorption basis (split between departments or functions) or marginal costing (allocated to the cost of producing each product).Returns should consider the Key Performance Indicators, i.e. the most important things to the organisation.The overall effect of these costs and returns on the organisation is shown via the Company Accounts.A range of ratios is available to analyse the accounts to give a fuller picture of the health of the organisation.Financial measurement principles are also used in decision-making, i.e. to assess the costs and returns of different options.
21Financial and Non-financial Metrics Again, this is another set of potential metrics with the emphasis at a strategic level.
22Measuring the Marketing Mix ProductPriceMarket shareSalesSales by segmentNo of new productsWarranty claimsRepeat purchasesProfit marginDiscount levelsPrice by segmentPrice comparisonsControlEffectiveness controlEfficiency controlStrategic controlProfitabilityPlacePromotionChannel costsChannel volumeChannel growthDelivery timeStock levelsCost per contactMedia coverageSales per callAwareness levelsEnquiries generatedThere are lots of things which could potentially be measured and this slide starts to introduce some of them. These points are related to the marketing mix and what might be measured for it. Notice also the points in the middle. The nature of the control required, e.g. whether it is about effectiveness, productivity, strategy or profitability will help to determine exactly what the right measure is. Session 2 explores what to measure in greater detail.2222
23Choosing MetricsShould be clearly linked to corporate, business or marketing objectivesFocused on measuring the key indicators in a clear way so they are easily understoodEncompass broad and balanced factors and incorporate a range of marketing measuresBe capable of tracking performance reliably over timeCost-effective
24Knowledge HierarchyDATA – raw facts (need processing to be meaningful)INFORMATION - data processed to provide specific informationANALYSISThis flow indicates that raw data (a piece of information, perhaps something read from an article) is, in itself, a bit meaningless. It has to be turned into something useful by placing it in context with existing knowledge or perceptions. If someone makes a statement such as; ‘the use of social networking is growing phenomenally’, my immediate reaction is; ‘compared to what?’, because I have no context in which to place the phrase ‘growing’. It’s growing because it’s relatively new, so there is nothing useful in the statement. However, if it’s growing faster than any other communication media ever has, or any other media currently is, then I have a comparison which adds some context to it. If I later find out additional information that it is growing among the year old age groups but is static for those between 30 and 70 I can start to make judgements, such as a potential gulf in communication media used between different age groups. I have, in effect, analysed a piece of information and then added extra details to it, i.e. I have synthesised (meaning; to combine) multiple items to provide me with real knowledge and intelligence about the situation from which I can form a justified opinion. There are differences between facts and opinions. ‘It’s growing by 25% per annum’ would be a fact. Whereas saying; ‘It’s good because it’s growing by 25% per year’ would be adding a judgement, thus making it an opinion. As the discussions in later slides and sessions point out, I would also want to conduct further research before I accepted this piece of information as a ‘fact’, e.g. What was the source and how was the research conducted? The ‘fact’ could be wrong or a misinterpretation.INTELLIGENCE - piecing together related information to provide a bigger pictureSYNTHESIS
25Seeing the Big Picture - Example If reducing A&E waiting times was a target, you would need to measure more than just the waiting times. For example:Were there are any groups who waited shorter or longer, e.g. Elderly or younger, ambulance or made their own way?Were there patterns of injuries at certain times, e.g. Alcohol-related on Friday nights, traffic accidents on foggy mornings?How have linked areas performed, e.g. Did GP surgery waiting times decrease at the same time? How did the NHS helplines perform?They all impact on each other but only the ‘big picture’ will reveal this.Map out the end-to-end journey for stakeholder interactions with the organisation when creating the measurement system.
26Creating a Measurement Process Have SMART objectives so that there is something specific to measure.Establish what to measure from these objectives – these are the specific targets.Identify how to obtain measurements. If ‘awareness’ was your target, there would need to be a means of measuring awareness, e.g. research.Create the measurement system, e.g. implement the research programme.Conduct measurements and compare against target – look for the variances.Disseminate results and take action.This slide illustrates the steps to go through when creating a measurement system. Notice that it starts on being clear with what needs to be measured, then the method for doing it can be established. Results also need to be circulated so that appropriate action can be taken.
27Benchmarking“A systematic and ongoing process of measuring and comparing an organisation’s business processes and achievements against acknowledged process leaders or key competitors to facilitate improved performance”Drummond & Ensor
28Benchmarking ProcessIdentify key performance measures for each business functionMeasure own performance as well as that of competitorsIdentify areas of competitive advantage by comparing performance levelsDesign and implement plans to improve own performance on key issues2810728
29Disadvantages of Benchmarking Implies there is only one best way of doing somethingCould be yesterday’s solutionA catching up exercise, i.e. comparing the organisation to what has already been done, as opposed to identifying what could be doneAssumes the information you’re getting is accurate29
30Benchmarking Example - Service Comparison Importance to customerElementsActual PerformanceLowMediumHighPoorSatisfactoryGoodOrder cycle timeDelivery reliabilityFrequency of deliveryDocumentation qualityOrder completenessIn this example a number of elements which determine levels of service perception have been identified. The performance for the organisation has been identified as has that of the ‘best of breed’ competitor. 'Importance to Customer' as a measure has also been included in this exercise. Although the organisation outperforms the competitor on a number of areas such as Order Completeness, Technical Support and Service Support, these are not actually areas important to customers. The competitor outperforms the organisation on factors important to customers such as Order Cycle Time, Delivery Reliability and Frequency of Delivery. By using this information, the Marketing Manager will know where to concentrate his future efforts.Technical supportService supportCompanyBenchmarkcompetitor
31Measuring Campaign Effectiveness Track both general indicators of the success of tactical activities and campaign specific results – both are needed.Consider using:A database for recording contacts, sales, enquiries, etc. ensure that one unique record per customer is used, even if there are multiple databases.Source codes to track where the business came from. Ensure a system is in place for all channels.Testing disciplines to monitor results and track improvements in performance.Both analysis and research based on the relevant performance indicator (KPI).
32Evaluation Tools & Methods Potential tools which can be used for measurement include;Database analysisSales informationRetail auditsFeedback from repsVoucher/coupon returnsCampaign-specific measures, e.g. website visits or callsResponse RatesConversion Rates32
33Additional Skills Required Having a set of measurements is not enough. The organisation also needs to be able to analyse and use the information.This creates the need for marketers and organisations to have additional skills:Advanced numeracy in the form of statistical and accounting techniquesData management as the information for the analysis will need to be held and retrieved somewhereResearch as the right data needs to be sourced and capturedIT and programming skills for the technical data storage requirements and use of software.
34Next Learning StepsThere are chapter references from a textbook available via MyiLibrary for you to read plus some videos to watch.There are also podcasts available for you to listen to.Then look at the Additional Resources section to deepen your knowledge. There may be other sources you can use to enhance your knowledge such as those in the General Information section of the course or from CIM's Click and Learn facility.When you feel you understand the topics, attempt the Activities. You will know you are ready to move on when you can confidently answer the questions given.
35References ListLuck, D. J., Ferrell, O. C., (1979) Marketing Strategy and Plans. London. Prentice-Hall.Drummond, G., Ensor, J., Ashford, R., (2008) Strategic Marketing: Planning and Control. 3rd edition. Oxford. Butterworth-Heinemann.Verhage, B., (2014) Marketing: a Global Perspective. 3rd edition. Andover. Cengage.