1. Market-Based Management, 4th edition
Marketing Performance and Marketing Profitability
Chapter Two

2. Marketing Performance and Marketing Profitability
Chapter Two
Financial vs. Market-Based Performance
Marketing Performance Metrics
Marketing Profitability
Strategies to Increase Marketing Profitability
Marketing Profitability Metrics

3. Financial Vs. Market-Based Performance
Market-Based (External) Performance
Why is it important?
Strategy Implementation
Profitability
Marketing Effectiveness
Leading Indicators
How is it evaluated?
Market and Sales Growth
Market Share
Customer Retention and Acquisition
Customer Satisfaction
Relative Product/Service Quality
Financial (Internal) Performance
Why is it important?
How is it evaluated?
Sales Revenues
Return on Sales
Gross and Net Profit
Assets
Return on Assets

4. Financial Vs. Market-Based Performance Metrics

5. In-Process vs. End-Result Performance Metrics

6. Marketing Profitability
What is marketing profitability?
Net Marketing Contribution (NMC)
How is it measured?
Gross Profit – M&S Expenses
Sales Revenue X % Gross Margin – M&S Expense
Product vs. Customer focus
Hypothetical Financials
Sales Revenues
$10 Million
COGS
$8 Million
Gross Profit
$2 Million
Marketing and Sales Expenses
$1 Million
NMC
Operating Expenses
Net Profit
($1Million)

7. Marketing Profitability Product Focus﹣
[ ( )]
NMC Market Market Price Variable Cost Marketing
(P1) Demand Share per Unit per Unit Expenses
= X X

8. Marketing Profitability Customer Focus
6.23%
1,302,000
210,000
$95.31
$124.7
$55.1
$37.8
$60.75
$34.56

9. Marketing Strategies and Marketing Profitability
Strategies to Grow Market Demand
Strategies to Increase Market Size
Strategies to Increase Purchases
NMC Market Market Rev per VC per Marketing
(P1) Demand Share Customer Customer Expenses
= X X
Strategies to increase Market Efficiency
Strategies to Enter or Exit Markets
Strategies to lower VC per Customer

10. Marketing Profitability Metrics
Marketing ROI
Why is it important?
Assess marketing productivity of investment
How is it measured?
NMC/M&S Expenses
Marketing ROS
Why is it important?
Benchmarking
How is it measured?
NMC/Sales Revenues

11. Return on Capital and Marketing Productivity

12. Takeaways/Review Financial and Market-Based Performance Evaluation
Marketing Profitability and Measurement
Impact of Basic Marketing Strategies
Marketing Productivity Metrics
Exercises
Marketing Performance Tools

13. Marketing Performance Tools
Marketing Profitability: A Product Focus

14. Marketing Performance Tools
Marketing Profitability: A Customer Focus