Judging marketing mixeffectiveness

Neil Brooks and Lyndon SimkinBusiness School, Oxford Brookes University, Oxford, UK

Abstract

Purpose – The purpose of this paper is to review the differing structural constraints betweencorporates and small to medium-sized enterprises (SMEs) in the area of measuring marketingeffectiveness and, using the premise that an imperfect measure is better than none, demonstratea practitioner-developed tool for “judging” marketing mix effectiveness through a case study fromthe automotive sector.Design/methodology/approach – The paper uses literature review, SME practitioner experienceand a case study from the global automotive sector.Findings – There is no single “magic bullet” metric for measuring marketing effectiveness. Whilstmultiple metrics might therefore be used, SMEs’ variances from corporates can render this approach“too difficult”. This can lead to SMEs managing their marketing without adequate planning/control,relying instead on anecdotes/myths. The case-examined practitioner tool assumes an incompletemeasurement system is better than none and that the most pragmatic start-point is the marketing mixitself. It is demonstrated to deliver positive outcomes in a number of areas.Research limitations/implications – Owing to the volume of research data on measuringmarketing effectiveness, the authors have focused on those metrics that they have observed morecommonly in use in UK businesses. The research into the practitioner tool is based on its observedoutcomes with 28 UK SMEs since 2005 and highlights a single implementation with an automotivesector firm.Practical implications – The practitioner tool offers a pragmatic starting-point in an SMEenvironment where there might otherwise be no rational measurement of marketing effectiveness(in whole or in part) at all.Originality/value – The paper’s contribution is to question the applicability of current academicthought in the context of certain business situations, whilst offering an illustrative example ofa pragmatic solution for SME practitioners. It is posited that by making use of this solution, SMEowner/managers would be better equipped to understand the strategic linkages between marketingmix elements, customer groups and the outcomes of past marketing actions, leading to a moreconsidered approach to future marketing decisions in line with business objectives.

Keywords United Kingdom, Automotive industry, Small to medium-sized enterprises,Marketing mix, Marketing decision making, Performance, Measurement

Paper type Case study

1. IntroductionMeasuring marketing effectiveness is notoriously difficult for academics andpractitioners alike (Hood, 1969; Clark, 2000; Seggie et al., 2007; McDonald, 2010).The academic literature of the last 40 years suggests a number of long-standingreasons for this, all of which still exist. Marketing activity has both tangible andintangible effects. Measuring a tangible element, like sales volume, is easy (albeitretrospectively) but intangibles, like brand equity, can only be estimated at best(Ambler, 2003). Marketing activity has both short-term and long-term (future) effects.Measuring the short term is relatively straightforward, but measuring (estimating)the future is an inexact science that relies on many assumptions that are open tomanipulation (Ambler, 2003). Similarly, history impacts on marketing effectiveness –expenditures tend to be accounted for annually, whereas the influence of those

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0263-4503.htm

Received 20 January 2011Revised 1 February 201212 April 2012Accepted 20 April 2012

Marketing Intelligence & PlanningVol. 30 No. 5, 2012pp. 494-514r Emerald Group Publishing Limited0263-4503DOI 10.1108/02634501211251025

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expenditures is cumulative, thus a change in sales volume in one year could be partly aresidual echo from previous years’ activity (Sheth et al., 2009).

Marketing operates within a volatile and uncontrollable external environment thatincludes its customers, competitors and legislators. Thus measureable effects onbusiness performance can be experienced that are not directly attributable to the firm’sown activities (Sheth and Sisodia, 1995a; Rust et al., 2004a). Equally, marketingoperates within an internal environment which is subject to constraint and change.Strong marketing plans are informed by, and operate within, the confines of the firm’sstrategy thus low marketing effectiveness could be the result of poor strategicdirection rather than poor marketing (Sheth et al., 2009). Similarly, short-term executivedecisions regarding marketing resources/budgets could lead to sub-optimaleffectiveness.

There is corporate confusion between marketing’s total business process and whatthe marketing department does. Agreeing exactly what to measure the effectiveness ofis an essential starting point for any assessment process (Clark, 2000). When it comesto available metrics for measuring marketing performance and/or effectiveness,marketers have a wide choice. In reviewing the literature, the authors have uncoveredmore than 250 different metrics that could wholly or partly contribute to a marketingeffectiveness measure, including an observed link with organisational emotionalintelligence (Nwokah and Ahiauzu, 2009). Furthermore, Pont and Shaw (2003)concluded that the operational selection of metrics from this pool was more arbitrarythan scientific and exhibited a clear preference for the subjective.

Bonoma and Clark’s view (1988, cited in Ambler et al., 2001) that, “perhaps noother concept in marketing’s short history has proven as stubbornly resistant toconceptualisation, definition, or application as that of marketing performance”remains true. Yet, to practice marketing without any rational means of effectivenessmeasurement would be reckless and wealth destroying (Ehrbar, 1999). Withoutmeasurement, current programmes, new initiatives and targeted improvements cannotbe validated, so even the use of imperfect measures is better than none (Sheth andSisodia, 1995b).

This paper considers the structural constraints commonly facing small- tomedium-sized enterprises (SMEs) (below 250 employees) that are not so prevalent inlarger enterprises (Gilmore et al., 2001) and proposes a practitioner-developed toolfor “judging” marketing mix effectiveness as a pragmatic alternative to continued“haphazard” small-firm marketing (Siu and Kirby, 1998; Gilmore et al., 2001). Itbegins with differing corporate/SME ease of use issues for marketing effectivenessmeasures then reviews prominently discussed “formal” effectiveness measuresexamining their applicability to the SME situation. This is followed by an anecdotalcase example from the automotive sector by way of illustrating the tool’s usage,concluding with known limitations of the proposed tool and suggesting additionalresearch to add further robustness, potentially making it self-service for small-business owner/managers.

The contribution that this paper makes is to question the applicability of currentacademic thought in the context of certain business situations, whilst offering anillustrative example of a pragmatic solution for SME practitioners. It is posited that bymaking use of this solution, SME owner/managers would be better equipped tounderstand the strategic linkages between marketing mix elements, customer groupsand the outcomes of past marketing actions, leading to a more considered approach tofuture marketing decisions in line with business objectives.

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2. Corporation vs SME – implications for metric usageSMEs tend towards a somewhat haphazard way of managing their marketing activity(Siu and Kirby, 1998; Gilmore et al., 2001) which includes how they measure (if at all)effectiveness. Issues with existing metrics compounded by a lack of data andknowledge/experience can leave SMEs in a difficult position. According to theanonymous CEO quoted in Sheth and Sisodia (1995b, p. 220), “Many firms todaypractice ‘Just In Time’ manufacturing, but ‘Just In Case’ marketing”. Marketing metricshave their own difficulties with measurement and with so many available it is nowonder that many marketers adhere to what they know. Ambler et al. (2001, p. 7) makethe case that managers can be swayed by “time, financial constraints andenvironmental uncertainty to take a partial view of their environment”, thus theytend to select metrics that reflect that partiality – often restricting measurement towhat is “easily measured” rather than what is most “useful to measure”. And firmstend to achieve what they measure (Ambler, 2003). To quote Clark (2000, p. 21), “Clearlymanagers are capable of assessing multiple dimensions regarding performance. Thequestion, then, is whether they are assessing the right dimensions for their business”.The level of market orientation that the firm exhibits, whilst highly influential onorganisational performance (Akdeniz et al., 2010), will naturally direct the choice ofeffectiveness measures.

Marketing academics do not always help. By couching their views in complextechnical terms they can easily sway marketers from considering new measurementoptions – consider this for example, “a principal components multinomial logitregression model for estimating the Markov brand-switching matrix” (Rust et al.,2004b, p. 123) – one that would perhaps be consigned to the rapidly growing “toodifficult pile” that exists on every marketing manager’s desk.

Measurement concerns apply equally to both large and smaller organisations, butthere are issues that predominate in each type of organisation. Data availability/qualityis an obvious area, with too much in large organisations and too little in SMEs (Ambler,2003). Similarly, the firm’s management ability/readiness to handle multiple metricscould be different – “larger firms can handle more, say 20, metrics because they havemore to draw on, whereas SMEs may need only five or six” (Ambler, 2003, p. 108).

Specifically focusing on the situation facing SMEs (or similarly sized independentbusiness units of corporates), it can be seen that they may have a number of structuraldifficulties in managing marketing metrics that do not as readily face their corporatecousins (Gilmore et al., 2001; Simpson et al., 2006):

. Limited, intermittent or no reliable multi-year data are independently kept onmarketing activity other than financial information. This includes a lack of bothinternal non-financial data as well as external (market) data. All too often onlyanecdotal data are available.

. Revenues can be skewed by one or two large customer changes, easily“swamping” any marketing contribution to financial results. Whilst thesechanges could have happened due to marketing activity, they could equallyoccur through the customer’s own activity or generic market conditions.

. Agreed marketing plans can be diluted by “events”, diverting management andstaff focus. At the end of the measuring period, it is hard to separate the actualaggregated results from what might have been achieved should the originalmarketing plan have been fully executed.

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. A rapid start/stop mentality is commonly applied to “discretionary” spendwhich disrupts marketing activity and thus measurability. This is especiallytrue the smaller the firm gets with financial reserves to support continuedmarketing in “hard times” getting harder to allocate.

. The firm’s management may not feel it can afford to wait “years” to see the valueof the long-term marketing effects, so the choice of activity favours those withmore immediate (more tangible) effects.

. Organisational culture operates in all firms. However, in smaller organisationsthe culture is closely set by the long-standing owner/manager and their personalexperiences/prejudices. Within these restrictions, marketing can only be effectivein the window of operations permitted (cf. Siu and Kirby, 1998).

. Smaller organisations may have a tendency to focus on operational rather thanstrategic marketing activities, where making monthly/quarterly sales is a matterof survival. This extends to their marketing communications inasmuch as afocus on product rather than building customer relationship value can beenobserved (Gabrielli and Balboni, 2010).

In response, very small firms often adopt a pragmatic approach to judging marketingdecisions and the effectiveness of previous activity because sophisticated datagathering and analysis are relatively expensive. Given that marketing is almost alwaysa better strategy than merely selling (Ambler, 2003) a method of systemising apragmatic way of judging historic, current and potential marketing effectiveness isneeded that applies to very small firms. And a key requirement for this is to workwithin the available data and business culture.

Whilst these gating factors need to be specifically understood on a firm-by-firmbasis, some generalisations can be drawn in advance. Smaller firms tend to keep lessnon-financial data than larger firms and often rely heavily on their innate “knowledge”of their customers, competitors and market meaning, so that there is a general lack ofobjective data that relates marketing activity to business performance (Simpson et al.,2006). Thus all that is available to the marketing practitioner is typically qualitativedata, often of an anecdotal nature, combined with observational data that can beanalysed within the context of perceived industry norms (Gilmore et al., 2001).

Meanwhile, marketing decisions are often coloured by a lack of specialist marketingexpertise within the firm and the specific way that the owner-manager runs his/herbusiness – a condition referred to by Welsh and White (1981) as “resource poverty”.According to Gilmore et al. (2001, p. 6), the result is that, “SME marketing is likely to behaphazard, informal, loose, unstructured, spontaneous, reactive, built upon andconforming to industry norms”. Taken to an extreme, whole avenues of marketingoptions may be defined as “no go” areas entirely due to the owner-manager’s prejudice.

Whilst some sympathy accrues to the owner-manager as she/he must exhibit abroad range of skills and knowledge to solve problems that impact every aspect oftheir business (Giroux, 2009), it can be difficult to “prove” the effectiveness ofcertain marketing approaches that might be recommended for the future, exceptthrough reference to industry norms or specific competitor case examples, shouldthey exist.

This situation creates a need for an approach to judging marketing effectivenesswithin SMEs that not only provides a level of formalisation, repeatability andcomprehension by non-marketers, but also works within an environment of resource

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and data poverty. This then begs the question of which existent measures aremost applicable and/or usable y or indeed if any existent measures can applyrealistically.

3. Using formal marketing effectiveness measures – what are the options?In his 2003 book, Marketing and the Bottom Line, Ambler notes a five-stage evolutionprocess in the thinking of firms about marketing assessment and asserts that firmsdo not always follow all five stages linearly, and indeed can jump “backwards” withchanges in senior management. A key observation is the recognition that relianceon financial measures alone is insufficient (Lehn and Makhija, 1996) occurs early in theevolution process and is therefore commonplace today leading to a situation wheremany organisations are using a mix of metrics with little commonality (comparability)between them (Ehrbar, 1999). Reports of firms with more than 100 measures in useare legendary, with Ambler (2003) quoting financial services firm Skandia as havinghad 117 at one time.

With the number of available metrics exceeding 250, this leads to the question ofwhich metrics, and in which combinations, should an organisation adopt? AlbertEinstein famously encapsulated the problem concisely when he said “Everythingthat can be counted does not necessarily count; everything that counts cannotnecessarily be counted”. A notion echoed by Clark (1999, p. 720), “The trend towardmultidimensional measures has arguably been wonderful for researchers and horriblefor practitioners. [y] unfortunately, successively more complicated schemesdramatically increase the burden on managers attempting to measure performancein the world. [y] figuring out which of many measures are ‘really important’ maydrive the conscientious manager to despair”.

Yet, trends in marketing effectiveness measures continue to shift with some metricsbecoming more popular and others going out of fashion. Research by Seggie et al.(2007, p. 836) concluded that existent marketing metrics needed systematic re-examination and went on to formulate seven measurement themes to guide theevolution of “better measures”:

(1) from non-financial to financial – greater understanding of the measure can beengendered within the organisation through using a common financiallanguage;

(2) from backward looking to forward looking – assessments of historicperformance are poor indicators of future performance when competitivedifferences occur over time;

(3) from short term to long term – many marketing activities, such as advertising,deliver long-term sales/awareness benefits that are not accrued in short-termperformance measures;

(4) from macro to micro data – the causes of changes in macro measures, such asa fall in market share, would not be visible without related micro data, e.g. anumber of significant customers defecting to competitors;

(5) from independent metrics to causal chains – understanding the causalrelationships between measureable marketing activities and profitability(or other corporate goals) will lead to improved decision-making and increasedpredictive accuracy;

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(6) from absolute to relative – relative performance measures allow managersto contrast performance against competitors, which is a superior indicator ofactual marketing effectiveness; and

(7) from subjective to objective – objective measures are more trusted withinorganisations, especially where budget setting or employee performancedependence is involved.

Seggie et al. (2007) then ranked six popular metrics against these criteria to see if anywas the single overriding metric, but none emerged in this role.

The specific marketing effectiveness measures reviewed in the preparationof this paper are listed in Table I. They have been selected based on the volume ofacademic discussion uncovered, as well as observed usage within firms.Unsurprisingly, given the historical antecedents of marketing performancemeasurement, there is a predominance of metrics that express themselves eitherfinancially or numerically.

Large organisations will almost certainly use a number of these metrics rather thanrely on a single indicator of marketing effectiveness. It seems that the selection ofwhich metrics to use may well owe as much to the organisation’s ability to accuratelygather the data, as it does to the level of insightfulness gained from the metricsthemselves. However, focusing on the SME situation, conclusions can be drawnabout just how practical each of these marketing effectiveness measures are inpotential usage. This can lead to a very difficult situation for an SME manager whendeciding how best to proceed, especially in a very small firm where a lack of data, time,expertise and confidence will abound. However, just because measuring theeffectiveness of marketing decisions is difficult it should not justify doing it (Shethand Sisodia, 1995b). No matter how small the firm.

Table II summarises some of the largely anecdotally sourced usability issues thateach of the reviewed marketing metrics potentially presents to an SME.

Table II is a striking visual confirmation that Bonoma and Clark’s (1988) view, thatmeasuring marketing effectiveness remains stubbornly resistant to definition andapplication, is still the case in SMEs.

4. “Judging” marketing mix effectiveness – a case exampleTo combat a continuation in the haphazard nature of very small-firm marketing(Gilmore et al., 2001), a pragmatic tool for “judging” historic marketing mixeffectiveness has been developed that allows common ground to be set between themarketing practitioner and the business management, that fosters a more consideredapproach to future marketing decision making. The tool uses what information isavailable within the firm along with a limited number of customer interviews,a competitive review, combined with the practitioner’s understanding of industrynorms. A focus on the marketing mix rather than the total marketing process hasprovisionally been deemed an acceptably pragmatic compromise in order to bettermatch the common SME view of what marketing is (Siu and Kirby, 1998), work withinthe practical constraints of the SME under review and to deliver recommendations thatare more easily understood and implementable.

The tool has been informally “trialled” with 28 small firms operating within avariety of B2B industry sectors since 2005, with very encouraging results.Participating firms were approached during the normal course of marketingconsultancy by one of the authors and a marketing effectiveness audit using the tool

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Table I.Reviewed marketingeffectiveness measures

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Financial measuresReturn on investment (ROI) Discounted cash flow (DCF)

No track record in forecasting the likelyreturns of marketing activities, thereforehard to solve the equation

Considered too difficult or not consideredat all

Often cynical view of potential returns frommarketing (based on weak/inconsistentusage of marketing tools in the past),therefore little faith in the ROI calculation

Setting the risk/future assumptions may bebeyond the “comfort/experience zone” ofmany small-firm managers

Short-term management thinking limits thescope of potential returns to months/singleyears thus unbalancing the ratio withan investment which may well have amulti-year effect on brand equity

The internal/external data required for theassumptions does not exist (or isinconsistent) and not thoughtvaluable enough to acquire

Brand valuation Customer lifetime value (CLV)This is considered of questionable relevance tonon-niche SMEs and often dismissed as “outof our league”

This can be a valuable metric to firms witha few, relatively large, customersproviding the base data has beencollected in the past and is easilyavailable – which typically it is not

The process of collecting/analysing the data isconsidered too onerous for the firm and theresult has little practical usage

The relative CLV of customers is often seenas intuitive knowledge within thebusiness (based on anecdote andaggregated impression – neither ofwhich is accurate), thus there maybe nosupport for specifically calculating it

The technical jargon involved is misplaced in asmall firm and may not gain managementsupport

Many small firms have 100s or 1,000s ofcustomers, so to calculate CLV, even ifaggregated over a number of segmentgroupings, may be too onerous

Economic value addWhere the equity capital is very low, especiallyin an owner-managed situation where itmight be negligible, EVA is not insightfulDoes not identify which areas of value-addwere from “marketing” per se and whichfrom other activities that the firmnaturally undertakesChanges in customer buying can have a bigeffect on net income which can be temporaryand not related to any specific marketingactivity

Quantitative measuresMarket share Customer satisfaction

External market data is typically hard/expensive to collect and not always accurate;whilst internal data are not always kept in auseful format (especially if the firm hasdifferent products/services in differentmarket segments)

In an SME, the lion’s share of revenue maycome from relatively few customers, socustomer satisfaction processes in thefirm could be heavily skewed to keepingthe “few” happy (at the expense of themany). This may benefit the firm in theshort term, but would increase thedependence on the current customer basethus increasing risk from a single ormultiple customer loss

(continued)

Table II.Practical issues with

marketing metricswithin SMEs

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The extent/scope of the market can be difficultto define which makes it open to debateand possible data massaging. Competitive/technical innovations may explode orcontract markets rapidly invalidatingprevious market share calculations

It can be difficult to weight satisfaction resultsin terms of their impact on the business –should every customer vote be equal, orrank by revenue or rank by profitability?The consequence of this decision will have alarge skewing effect on the final results

The usefulness of market share can be limitedfor firms with low shares – “we now have0.09% of the market, up from 0.05%” – howwill this change their marketing decisions?Occasionally small firms can have a largepercentage of a market, but this is typicallywithin a specific niche – again, knowing theexact percentage may not materially affecttheir marketing decisions, though a negativechange over time might indicate remedialactivities (or a new niche!) are needed

Being low on a supply chain makes a smallbusiness vulnerable to poor satisfactionmanagement by higher chain firms becausethe end-using customer has to be satisfiedwith the aggregated quality and service ofall chain members not just the SME’scontribution

Customer loyalty (retention) Price premiumFinancial data on customers is readilyavailable through the accounting system,but customer profitability is probably notcalculable on customer-specific basis asactivity-based costing is not implemented

In B2C markets, pricing data is relatively easyto get, but in B2B markets this might be toodifficult/expensive to achieve, especiallywhere specific project/contract discounts areoften given rather than selling from“list price”

Top customers may well be personally knownto the firm’s management, as will theirperceived motivation for staying loyal.Thus, assessing loyalty beyond simplehistoric accounting data and themanagement’s personal relationships istypically not valued sufficiently to warrantthe cost of measuring it

Many small firms are price followers ratherthan leaders, thus they do not charge apremium. However, in some markets, smallfirms can deliver more a personal/convenient service thus potentiallyjustifying a price premium by changing themarketing mix, so measuring the extent ofthis can be useful in justifying the additionalservice costs, but only if they can readilycapture the competitive data

In B2B areas, customer loyalty can “turndown” with customer staff changes, strategyreviews and so on that are not related to thecustomer service received or perceivedproduct quality. Equally though, customerscan be acquired through the movement ofstaff from one firm to another

A sudden change in market structure, such asa large low-cost entrant, could erode anSME’s price premium potential without theSME having the financial might to respondprotectively

Qualitative measuresPerceived quality Brand awareness

Gathering the data, other than throughanecdotal means, can be expensive. Evenwhen gathered, it is quite likely be part of alarger overall satisfaction survey and notspecific enough to help improve quality

Many SME’s have very small marketshares within large markets, thus they tendto focus to a great extent on servicingcustomers that already know them well andpotential customers that are somehowproximal. In this situation, knowing theirbrand awareness percentage across thewhole market would not materially affecttheir operational marketing choices

(continued)Table II.

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offered. This “trial” has not been undertaken as a formal research project in any wayand the following case example is offered on the basis of anecdotal evidence alone in anattempt to demonstrate that there is some potential to develop a working tool thataddresses a number of the concerns expressed previously in this paper. Much furtherresearch is required to formally test the tool’s potential more rigorously for bothapplicability in a range of SME sectors and cultures as well as marketing content andreliability. This research need has recently formed the basis of a newly started doctoralresearch project.

During its use to date, the tool’s pragmatism has delivered the following benefits:

(1) works using whatever historic information the firm has (financial, anecdotal,etc.) and authenticates elements with customer surveys and competitorreview;

Firms with support/maintenance service offerscan measure quality through fault analysis,but only if they have an IT system (andsupportive processes) for logging faults andresolutions. However, they do not see, andthus cannot measure, negative qualityperceptions that are not reported as faults

SMEs typically would not fund the primarymarket research to regularly gathercomparable brand awareness statistics,preferring instead to rely on anecdotalsources

Small firms do not “have the time” (or moreaccurately “set aside the time”) for qualitycircles and other improvement initiatives aspart of the culture – they tend to firefightinstead. Thus having the perceived qualitydata would not necessarily drive positivesystemic changes

SME’s rarely invest in the extensive andsustained advertising that might be requiredto drive improved brand awareness in theirtarget markets, thus measuring brandawareness with no reliable means ofchanging it would be considered futile

Customer satisfactionAlready covered above

Hybrid measuresBrand equity Customer equity

Calculating brand equity would be consideredtoo expensive and too difficult. Collectingand collating the volume of data needed aswell as defining the calculation weightingsare considered beyond the day-to-daycompetence of SME marketing staff

Within SMEs this would typically be thoughtof as too difficult to calculate. Setting thefuture assumptions may be beyond the“comfort/experience zone” of manymanagers

SMEs typically do not give as muchconsideration to their brand, its attributesand values, as do larger organisations – thusthey might not see brand equity calculationsas relevant/valuable

Relatively small changes in customer spendingcan represent major swings in CLV for asmall firm – these cannot be predicted oreasily attributed to specific marketingactivity and could be more affected bygeneral market conditions instead

Small firms could find it hard to make specificdecisions (within their budget/resourceconstraints) to manage for brand equityrather than enacting short-term marketingcampaigns designed to raise immediaterevenues. A rise in brand equity may well beconsidered a beneficial by-product of arevenue-focused activity as opposed to agoal in itself

Whilst customer equity calculations do givestrong indications of future revenue streamsthey assume a level of repeat purchasingand customer churn. SMEs are highlyvulnerable to the impact of customersabbaticals/defections, thus higher riskfactors are needed which would lead to areduced attractiveness for proposedmarketing initiatives Table II.

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(2) looks at all aspects of the marketing mix, even when the firm does not consideranything other than promotion to be “marketing” (Siu and Kirby, 1998);

(3) creates a jargon-free language that the practitioner and firm can use torationally discuss/decide marketing matters;

(4) uses visual indicators to deliver a marketing mix effectiveness rank that thefirm can understand; and

(5) creates an agreed agenda for the marketing areas that will improve futureeffectiveness.

The tool primarily focuses on all “P”s of the marketing mix but can consider howan organisation uses segmentation, targeting and positioning (STP) as well. However,to aid jargon-free communication it does not use that terminology. It separatesinformation gathering into two areas; internally sourced (typically related topromotional activities) and externally sourced from customers, competitors, industrynorms and practitioner knowledge (typically related to all of the non-promotional“P”s and STP). This is to take account of the differing availability and quality of dataobtainable within and without the organisation. By contrasting the internal andexternal information, a final marketing mix effectiveness judgement can be considered.

There follows an illustrative example of the tool within one of the participatingfirms, a UK SME in the global automotive sector. This example has been selectedmore for its convenience to be written up rather than for formally representingall of the participating firms. The tool was “operated” by the marketing practitionerthroughout.

4.1 BackgroundFirm X is an independent research and consulting firm focused on specifictechnology areas within the global automotive sector. Clients included majorautomotive manufacturers, system suppliers to automotive manufacturers andother interested parties. The firm’s service offer covered the original research andproduction of technology, market reports, as well as technical project consulting inrelated areas.

The market for firm X’s services were typified as continuously evolving. Therewere a number of competitive suppliers of original research and project consultingand the onward march of technology in automobile design and productionmeant that there would continue to be a growing need for independent help to“unconfused” a complex technology landscape. Also there were a numberof geographic markets that were somewhat behind the leaders in the adoption ofcurrent technologies which would require access to the type of information that firmX could provide.

Employing 20 staff along with a number of contractors, the firm boasted a customerbase of around 45 clients, amongst which a large proportion of the world’s majorautomobile manufacturers figured highly. Approximately 75 per cent of its customerswere considered to be regular repeat purchasers, especially in relation to the publishedreports. Revenues had remained fairly flat at £900,000.

The firm’s financial aspirations were to grow revenue by 20 per cent per year, toraise prices for project work from £700 to £800 per day to more than £1,000 per day,and to improve margin as a percentage of revenue from the current 9 per cent to aprevious level of near 23 per cent.

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4.2 Marketing mix effectiveness assessmentIn November 2005 a marketing mix effectiveness assessment was undertaken.

4.2.1 Stage 1 – communications effectiveness ranking. “Communicationseffectiveness” is the term used within the tool to cover how well the firm usesmarketing communications tools in the context of its market (customers, potentialcustomers and competitors) and is assessed using internal information providedby the firm.

The firm’s use of marketing communications is assessed separately to the othermix components (which are assessed collectively in Stage 2), because data forcommunications use and results are better sourced internally. Whereas judging theeffectiveness of product, price and so on is better sourced externally (through customerinterview, competitor review, practitioner knowledge and market norms).

Figure 1 gives an example of the categories that were used to assess how well thefirm was using marketing communications to influence potential customers, typicallya main focus for small-firm marketing activity (Simpson et al., 2006), as well as existingcustomers, which is often a neglected area. The categories can be changed to suit thenature of the firm and to aid with management dialogue. Similarly the number ofcategories can be varied, provided that the “answer” at the bottom is an average of thescores expressed as a percentage.

The role of the practitioner is to assess the available information for each categoryand, using their own knowledge/experience of similar firms/industries, arrive at a“score” out of 10 for how well each is used to communicate with potential and existingcustomers. Whilst the principal source of information for completing this stage isthe firm itself, during subsequent customer interviews and competitor research, thepractitioner’s derived assessment for each category can be verified.

Firm X’s current use of marketing communications was ranked poorly (at 33 percent overall from nine of the ten categories – hence the 90 maximum “score” in

Average Percent

How good you are at usingthese activities to …

Communicate withpotential customers

Communicate withexisting customers

Advertising 1 0

Brochures/printable 7 6

Direct marketing 5 5

Sales force 3 5

Telephone 0 0

Sales promotions 0 0

Press 3 1

Web 7 3

Exhibitions and conferences 8 5

Sales channels – –

Total (out of 90 maximum) 34 25

Communicating the offer

How well are you communicating with the marketScore out of ten for each

(appropriate) activity

33

Figure 1.The communication

effectiveness rankingof firm X

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Figure 1), though it was noted that unlike many other small firms they did pay roughlyequal attention to communicating with existing customers as well as potentialcustomers.

The ranking “scores” calculated by the practitioner were based on a wide range ofinput derived from structured interviews with a number of senior staff, including themanaging director, and a member of staff from the marketing function, and wereheadlined as follows:

. Advertising – the firm advertised only sporadically with little quantifiedresponse.

. Brochure/printable material – the firm had a range of materials available,however, they were extremely variable in content and insight, and rarelymentioned the firm’s prestigious customer list.

. Direct marketing – the firm used professionally written e-mail newsletters toannounce the availability of specific reports which were known to generate anumber of sales, but little other use of direct marketing was identified.

. Sales force – executives acted as the prime sales force for both research reportsand project consulting. However, being busy and not specifically sales trained,their contribution lacked sufficient diligence and adherence to core salesprocesses.

. Telephone – no outbound activity.

. Sales promotions – no activity.

. Press – the firm did release ad hoc information to the “press” but did not retain aPR agency nor a clipping service. Executives had not been media trained.

. Web – the firm’s web site was professionally designed and included a cut-downvariant in an oriental language. The site had been optimised for search-engineranking and came in Google’s top ten for a few (very specific) business-relevantphrases, and was the main route for subscribing to e-mail newsletters(generating five to eight subscribers per week).

. Exhibitions and conferences – the firm attended a number of public eventsglobally mostly just as delegates, but also as an exhibitor when deemedimportant. When available the firm would take a speaking slot as this generatedgood interest amongst delegates and it generally achieved three to four speakingengagements per year.

4.2.2 Stage 2 – offer effectiveness ranking (covering the rest of the marketing mix).“Offer effectiveness” is the term used within the tool to address how well the firm usesthe total marketing mix, excluding marketing communications (already addressed inStage 1) in the context of its market – that is how attractive the firm’s offer is viewedrelative to customer needs and competitive propositions. The prime data source forthis ranking is external information from customer interviews, competitor analysis,practitioner knowledge and market norms.

The tool uses a number of easily understood concepts (described in plain English)as proxies for single or combined elements from the total marketing mix. The proxiesare plotted on a 2� 2 matrix with cells named Defocus, Monitor or Desist, Improve andPromote to provide a visual overview of the current ranking for each.

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The position of each proxy is calculated according to horizontally – how importantit is to customers in their purchasing decisions and vertically – how much better(or worse) the customers feel that firm’s offer is than competitors in respect to thatfactor (the central horizontal line represents equality with competitors). Thepractitioner’s competitive research/knowledge should be used to “sanity check” thecustomer feedback.

The nature and number of proxies to be used are not prescribed by the tool,although an example of the choices for firm X is provided in Figure 2. To aid in thevisual communication of the final assessment, the practitioner is recommended toselect no more than ten proxies, but circumstances at each firm need consideration.Deciding on which proxies (and concept names) to use is important to correctly includethe significant marketing mix elements as well as STP aspects, but also to ensureuseful communication with the organisation subsequently. The practitioner’s decisionat this point can either positively or adversely affect the usability and insightfulness ofthe ranking tool, so appropriate care must be taken.

Firm X’s market offer and the way that it was delivered was ranked quite highlybased on a mix of internally and externally sourced data. In the specific case of firm X,direct contact with customers was not permitted so feedback data were sourcedinternally from recorded customer comment and anecdotal sales evidence. However, inusing this tool with other participating firms, three-four customer telephone interviewswould typically be conducted, though as many as six have been delivered in someinstances. Customers are nominated by the firm but requested to offer a representativemix. In all cases, competitor and other market research is performed by the marketingpractitioner based on published secondary data (web sites, industry reports, etc.).

4.2.3 Stage 3 – marketing mix effectiveness rank. The third, and final, stage of thetool calls for the consolidation of the communications effectiveness and offer

Importance to customers

Relativecompetitive

strength

Monitoror desist

High

HighLow

Low

Improve

PromoteDefocus

Ease of purchase

Offer quality

Customer care

Independence

Completenessof offer

Customerrelationship depth

Proximityto customer

Offer featuresand functionsImage/brand

reputation

How the market views the offer

The offer and its delivery

Price

Figure 2.The offer and delivery

effectiveness rankingof firm X

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effectiveness findings into a single and highly visual marketing mix effectiveness“rank”. Another 2� 2 matrix is used which, to aid jargon-free communication with thefirm’s management, has quadrants named somewhat emotively so as to underline theirsignificance.

To define the ranking, a “Now” bubble is plotted by the practitioner vertically usingthe Stage 1 (communications effectiveness) percentage, with 0 per cent at the bottom,50 per cent on the central line and 100 per cent at the top; and horizontally using thepredominance of the Stage 2 (offer effectiveness) findings – which is quite subjective,but the tool does not require absolute precision to make its assessment and be useful incommunicating with the firm’s management because it heavily aggregates thecomponent “scores” to arrive at the final effectiveness rank, so a few misplaced scoreswill have little effect. The practitioner can then plot the “Possible” bubble to representwhat the firm could achieve at a future point in time with an improved marketingprogramme.

Firm X’s overall marketing mix effectiveness ranking (Figure 3) put them in the“Room for significant improvement” quadrant. The vertical positioning reflectedtheir somewhat low-key approach to marketing communications as a whole, whilst thehorizontal positioning reflected the competitive quality and independence of themarket offer, as well as the nature of their customer successes.

The “Possible” bubble was plotted to indicate where the ranking could be moved towithin a two-year planning horizon should the current marketing weaknesses beaddressed.

4.3 OutcomesAs a result of the assessment and its recommendations, the firm strengthened itsmarketing resources by hiring an experienced marketing professional to manage asmall team and giving marketing more “air time” at board meetings. In addition, adedicated sales person was hired to reliably undertake the sales process basics ahead ofintroducing the executives to prospective customers when needed.

The web site and downloadable materials were significantly improved, integrationwith the opt-in e-mail newsletters was increased and the technology was changed toallow for immediate self-updating by firm X staff. It now carried many more news

The offer and its delivery

Communicatingthe offer

Ineffective EffectiveEffective

Ineffective

Squanderingmoney

Room forsignificant

improvement

Wastingmoney

Fine tunefor

excellencePossible

Now

Marketing mix effectiveness rank

Figure 3.The offer and deliveryeffectiveness rankingof firm X

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items and links to popular Web 2.0 environments, and formed a much more integralpart of the firm’s communication strategy (although customers still cannot buy reportsdirectly from the site [y] ). The firm has continued with e-mail marketing as the majoroutbound activity, but with integrated linkage to their CRM system. Attendance atinternational events was reduced for budget reasons but increased in impact throughbetter focus, coordination and follow-up. In addition, the firm worked to broaden itsknowledge and influence within existing customers as well as establishing contactswith non-competitive firms who also supply existing customers and defined targets.

The revised marketing activities undertaken by the firm proved fruitful until theglobal recession arrived which was particularly badly felt in the automotive sector.The firm has survived the downturn although somewhat slightly downsized.Marketing is a major driver of new business and is delivered in a more integratedfashion thus improving its value for money and respect within the firm. Since theoriginal assessment at the end of 2005, the firm’s marketing activity has been reviewedtwice to check on progress and fine tuning. The basic understandings and commonlanguage that was developed during the original assessment still brings value to thesereviews, several years later, thus proving one element of its residual value.

5. Conclusions and ongoing requirementsHaving reviewed a number of marketing effectiveness measures, this researchconcluded that none can claim to be the single “silver bullet” metric (cf. Seggie et al.,2007). By examining how they translate into practical usage by SMEs, the authorsassert that many metrics do not enjoy currency, or sometimes even applicability,for small firms. The principal issues being data paucity (Ambler, 2003), skills deficitand cultural dogma (Gilmore et al., 2001).

This has lead to the case example of a pragmatic practitioner-developed tool thatworks with whatever data are available (factual/anecdotal), supplemented withcustomer interviews and competitor review, to aggregate an effectiveness judgementthat SME management can accord with and thereafter plan from. The tool focuseson the marketing mix, rather than the total marketing process, to better match thecommon SME view of what marketing is, work within the practical constraints ofspecific SMEs and to deliver recommendations that are more easily understood andimplementable.

The tool has been used a number of times in the last few years with small firms inB2B markets. Each time it has (anecdotally) delivered well in establishing a commonview amongst business management of the current effectiveness of their marketingactivity, expanding their view of what “marketing” should include, and setting anagenda for future marketing investment.

The tool has evolved as a practical response to the situational problems found insmall firms (Gilmore et al., 2001). As such it exhibits some concerns which need to beaddressed before being considered entirely robust:

(1) Completeness concerns – for reasons already detailed, the tool focuses onthe marketing mix, but within that currently provides incomplete coverageof the mix elements. For example, the tool does not mandate that allelements be considered and where they are, they are equally weighted inassessment. Further development is required to provide broader and moreconsistent mix coverage but without compromising the usability andcommunicability.

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(2) Environmental concerns – the operating environment of the tool is oftendefined by its lack of numerical and/or objective historic data (Simpson et al.,2006) and the various personality factors that owners/managers exhibit.Similarly, the fact that previous marketing may not been conducted by amarketing professional will affect results and thus management’s view of it.The tool has only been exercised in B2B markets so far, where customerinterviews can be conducted by telephone and in some depth.

(3) Analytical concerns – due to the lack of objective data, much of the analysisand “scoring” are subjectively controlled by the practitioner. In mitigation, thetool heavily aggregates to arrive at the final effectiveness rank, thus a fewmisplaced “scores” will have little material effect, but a continuous bias woulddistort the results. Equally, the tool currently weights factors in each stageequally, whereas it would be more realistic to use relative weightingsaccording to different industry characteristics. In addition, the selection offactors could be pre-populated by industry type if suitable benchmark datawere available.

(4) Presentational concerns – to avoid complex or jargon-ridden charts, the tooluses very simple presentation grids, which does mean that precision isexchanged for an overall “impression”. This has communication benefits, butcan mask more subtle implications. Whilst competitive factors are consideredby the practitioner, the firm does not really have a way to “see” how theycompare with competitors. The ability to draw an industry norm chart (anaverage of competitors) would be a helpful addition to scope the extent andurgency of remedial actions.

Despite these concerns the tool makes a valuable addition to the B2B SME practitioner’stoolkit by fostering the development of a mutually acceptable framework for judgingpast marketing mix effectiveness which in turn lays the ground for future marketingplanning on a more holistic rather than ad hoc or “gut-feel” basis. The tool could befurther enhanced by addressing the following areas of research. Industry benchmarkdata – if suitable benchmark data were available then the tool could be “calibrated”such that Stages 1 and 2 factors were more rigorously pre-defined, relative weightingsmade available and relative competitive strengths viewable against objective norms.Testing in B2C markets – the tool allows for customer feedback to be acquired throughsurvey questionnaires where telephone interviews are not practical – however, this hasnot been tested thus far. Improved communication – the scaling of the final rankposition and the potential future rank position could be better aligned to tangibleresults, such as sales growth percentages or returns on investment bandings, thusaiding a clearer cost-benefit view of potential marketing changes. Practitioneracceptability and usability – to date the tool has only been used by this paper’s authors.Monitored use by a wider community of practitioners will help refine/improve usabilityand ultimately the acceptability of this as a practical tool.

Nevertheless, the tool’s pragmatism has repeatedly demonstrated sufficientbenefits to outweigh its limitations and it therefore makes a significant contributionto solving the practical problem of assessing marketing mix effectiveness in SMEswhere there might otherwise be no assessment made at all. By making use of thistool, SME owner/managers will be better equipped to understand the strategiclinkages between marketing mix elements, customer groups and the outcomes of past

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marketing actions, leading to a more considered approach to future marketingdecisions in line with business objectives.

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Jayawardhena, C. (2010), “The impact of service encounter quality in service evaluation: evidencefrom a business-business context”, Journal of Business & Industrial Marketing, Vol. 25No. 5, pp. 338-48.

Stewart, S. (1993), The Stern Stewart Performance 1000 Database Package: Introduction andDocumentation, Stern Stewart Management Services, New York, NY.

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About the authors

Neil Brooks, DipM FCIM, is an Associate Lecturer in the Business School of Oxford BrookesUniversity and at the Business School of Brunel University, as well as running his ownmarketing consultancy business focused on small business in the home counties of the UK. Hisresearch interests are directed towards understanding and improving the practical application ofmarketing theory in a small business context. Before his involvement with Oxford BrookesUniversity, he had over 20 years’ experience as a marketing practitioner working in seniorpositions with multi-national organisations in the IT and high-technology sectors. Neil Brooks isthe corresponding author and can be contacted at: nbrooks@brookes.ac.uk

Lyndon Simkin is Professor of Strategic Marketing at Oxford Brookes University. Previouslyhe was at Warwick Business School, where he was Director of the MSc in Marketing & Strategyand versions of Warwick’s MBA Programme. In addition to many journal articles, he hasauthored numerous books, including Marketing: Concepts and Strategies, Marketing Planning,Market Segmentation Success and Marketing Essentials. He is consultant to many blue chipcorporations, including EDF Energy, GfK, Fujitsu, Raytheon and IKEA, plus he is a recognisedHigh Court expert witness in cases of marketing and business planning litigation. He is alsoco-chair of the Academy of Marketing’s Special Interest Group in Market Segmentation. He haspublished in many journals, including the European Journal of Marketing, Industrial Marketing

Management, Services Industries Journal, Journal of Marketing Management, Journal of

Industrial & Business Marketing, Journal of Strategic Marketing, OMEGA and the International

Journal of Advertising.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.comOr visit our web site for further details: www.emeraldinsight.com/reprints

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