With the intensive development of communications there appeared a great many diverse definitions of marketing. Whatever the definition marketing is regarded the unique function of business. At present no successful business is possible without effective marketing.
One of the corner-stones of business Philip Kotler defines marketing as human activity directed at satisfying needs and wants through exchange processes. The marketing activities commonly include market research, new product development, product life cycle management, pricing, channel management and promotion.
Two most conspicuous goals of marketing are the acquisition of new customers and the retention of the existing ones. Consequently, the effectiveness of marketing can be quantified and measured in numbers of new customers and new products purchased by the existing ones. Apart from this, there are aspects of marketing effectiveness that cannot be quantified. For instance, the status of a company, its ability to stay at the forefront of the customer’s mind are also considered the benchmarks for testing marketing success.
In today’s fast moving competitive business world measuring marketing performance is crucial to set future business goals, monitor progress, assess effectiveness and align objectives and tactics. To help businesses thrive marketers utilize analytical data to evaluate, recommend, implement and measure marketing initiatives, which can propel the marketing value of the business.
Marketing success is measured by certain performance metrics, which provide insights into better performance management. Some factors within the marketing framework contribute to enhancing performance management. They include aligning activities and resources with strategies and goals, linking marketing performance to financial performance, establishing and maintaining marketing team accountability, integrating and optimizing cross-functional spending, and improving the efficiency of marketing activities.
Many marketing system analysts argue that marketing performance is inherently ambiguous because it is difficult to say what is measured. Without well-defined performance metrics it is problematic to answer the question how the marketers calculate the value of a marketing campaign.
Marketing performance metrics differ depending on whether the aim is to evaluate performance for consumer or business to business companies. To diagnose the performance of both marketing communications such metrics as media effects analysis, integrated marketing communications tracking and customer satisfaction tracking are often employed. Other cutting-edge marketing performance metrics are brand equity and customer equity analyses.
However, depending on the situation different companies can focus on different types of metrics. Thus, efficiency metrics are aimed at describing the cost to execute marketing projects or campaigns, i.e. staff hours per project and cycle time per project. Program metrics are employed to measure effectiveness by comparing the costs and results. Brand metrics are used to measure attitudes related to a product by means of surveys. The knowledge of the brand, preferences for the brand, purchase intentions and product satisfaction enable marketers to predict future purchases. Customer value metrics help to estimate future sales by individual customers and customer segments. Segment results are of special importance because customers from different spheres of business, demographic groups and other categories tend to behave differently. The principle measures here are retention and purchase rate, which are derived from historical data.
It is essential to consider different metrics when building a system for marketing performance measurement.