The Marketing Effectiveness Review

Here is an actual situation.

The president of a major industrial-equipment company reviewed the annual business plans of various divisions and found several lacking in marketing substance. He called in the corporate vice president of marketing and said: I am not happy with the quality of marketing in our divisions. It is very uneven. I want you to find out which of our divisions are strong, average, and weak in marketing. I want to know if they understand and are practicing customer-oriented marketing. I want a marketing score for each division. For each deficient division, I want a plan for improving marketing effectiveness over the next several years. I want evidence next year that each deficient division is improving its capabilities. The corporate marketing vice president agreed. His first inclination was to base the evaluation on each division's performance in sales growth, market share, and profitability. His thinking was that high-performing divisions had good marketing leadership and poor-performing divisions had poor marketing leadership.

But good results could be due to a division's being in the right place at the right time. Another division might have poor results in spite of excellent marketing planning.

A company's or division's marketing effectiveness is reflected in the degree to which it exhibits the five major attributes of a marketing orientation: customer philosophy, integrated marketing organization, adequate marketing information, strategic orientation, and operational efficiency (see the Marketing Memo "Marketing Effectiveness Review Instrument"). Most companies and divisions receive scores in the fair-to-good range.33

Marketing Effectiveness Review Instrument

(Check One Answer to Each Question) Customer Philosophy

A. Does management recognize the importance of designing the company to serve the needs and wants of chosen markets?

0_Management primarily thinks in terms of selling current and new products to whoever will buy them.

_1_Management thinks in terms of serving a wide range of markets and needs with equal effectiveness.

2_Management thinks in terms of serving the needs and wants of well-defined markets and market segments chosen for their long-run growth and profit potential for the company.

B. Does management develop different offerings and marketing plans for different segments of the market? 0_No. 1_Somewhat. 2_To a large extent

C. Does management take a whole marketing system view (suppliers, channels, competitors, customers, environment) in planning its business?

0_No. Management concentrates on selling and servicing its immediate customers.

1_Somewhat.Management takes a long view of its channels although the bulk of its effort goes to selling and servicing the immediate customers.

2_Yes. Management takes a whole marketing systems view, recognizing the threats and opportunities created for the company by changes in any part of the system.

Integrated Marketing Organization

D. Is there high-level marketing integration and control of the major marketing functions?

0_No. Sales and other marketing functions are not integrated at the top and there is some unproductive conflict.

_1_Somewhat.There is formal integration and control of the major marketing functions but less than satisfactory coordination and cooperation.

2_Yes.The major marketing functions are effectively integrated.

E. Does marketing management work well with management in research, manufacturing, purchasing, logistics, and finance?

0_No. There are complaints that marketing is unreasonable in the demands and costs it places on other departments.

_1_Somewhat.The relations are amicable although each department pretty much acts to serve its own interests.

2_Yes.The departments cooperate effectively and resolve issues in the best interest of the company as a whole.

F. How well organized is the new-product development process?

0_The system is ill defined and poorly handled.

_1_The system formally exists but lacks sophistication.

2_The system is well structured and operates on teamwork principles.

Adequate Marketing Information

G. When were the latest marketing research studies of customers, buying influences, channels, and competitors conducted? 0_Several years ago. 1_A few years ago. 2_Recently.

H. How well does management know the sales potential and profitability of different market segments, customers, territories, products, channels, and order sizes? 0_Not at all. 1_Somewhat. 2_Very well.

I. What effort is expended to measure and improve the cost effectiveness of different marketing expenditures? 0_Little or no effort. 1_Some effort. 2_Substantial effort.

Strategic Orientation

J. What is the extent of formal marketing planning?

0_Management conducts little or no formal marketing planning.

_1_Management develops an annual marketing plan.

2_Management develops a detailed annual marketing plan and a strategic long-range plan that is updated annually.

K. How impressive is the current marketing strategy?

0_The current strategy is not clear.

1_The current strategy is clear and represents a continuation of traditional strategy.

2_The current strategy is clear, innovative,data based,and well reasoned.

L. What is the extent of contingency thinking and planning?

0_Management does little or no contingency thinking.

_1_Management does some contingency thinking but little formal contingency planning.

2_Management formally identifies the most important contingencies and develops contingency plans.

(continued)

Marketing Effectiveness Review Instrument (continued)

Operational Efficiency

M. How well is the marketing strategy communicated and implemented?

0_Poorly. 1_Fairly. 2_Successfully.

N. Is management doing an effective job with its marketing resources?

0_No.The marketing resources are inadequate for the job to be done.

1_Somewhat.The marketing resources are adequate but they are not employed optimally.

2_Yes.The marketing resources are adequate and are employed efficiently.

O. Does management show a good capacity to react quickly and effectively to on-the-spot developments?

0_No. Sales and market information is not very current and management reaction time is slow.

1_Somewhat. Management receives fairly up-to-date sales and market information; management reaction time varies.

2_Yes.Management has installed systems yielding highly current information and fast reaction time.

Total Score

The instrument is used in the following way.The appropriate answer is checked for each question.The scores are added—the total will be somewhere between 0 and 30.The following scale shows the level of marketing effectiveness: 0-5 = None 11-15 = Fair 21-25 = Very good

Source: Philip Kotler,"From Sales Obsession to Marketing Effectiveness,"Harvard Business Review, November-December 1977, pp. 67-75. Copyright © 1977 by the President and Fellows of Harvard College; all rights reserved.

part five

Managing and Delivering Marketing Programs

Better Business Budget Planning

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