Marketing Metrics - The Old and The New

As the year comes to an end it is a good time to ponder what is old and what is new. My previous post focuses on what is new, looking at some of the top marketing trends for 2008. Today I want to make a brief comment about making the distinction between the old and the new.

I read an a recent article in Chief Marketer which discusses "a new way to allocate marketing resources". The article focuses on an excellent description of an approach that suggests three key stages of marketing optimization: 1. Campaign optimization, 2. Contact optimization (using predictive analysis on your customer data to optimize communication over a business cycle), and 3. Market Mix optimization (correlating sales data with marketing efforts across the enterprise). The approach outlined makes sense, but is it really new? Haven't marketers been pursuing the Holy Grail of market mix optimization for more than 40 years? The theoretical approach isn't new. It's old. What is new is the advancement of technology, allowing more sophisticated databases, data anaysis and insight development. The theory and the stages aren't new, our improving capabilities to achieve them are.

Maximize Marketing Investment By Understanding Tool Interactions

[Click the Image above for a Larger View.]

I’ve previously discussed the importance of aligning CMO goals with CEO objectives to maximizing return on marketing investment for the organization. Now, assuming the CMO has ensured alignment, the challenge remains to maximize the marketing mix to deliver on those goals. Maximizing marketing return on investment requires a deep understanding of the often elusive interplay between marketing variables. Whether you define you marketing toolkit as the traditional 4 P’s or as a more comprehensive kit of tools, do you understand how they work together? Understanding the interaction between variables can allow the marketer to enhance the overall return of the marketing investment spend by combining efficiencies with effectiveness. The less the guesswork about the interactions, the lower the inherent risk of any selected set of tactics.

A simple interaction grid shows that the 4 Ps impact one another. Not very helpful, though.

A deeper analytical staircase grid structure provides deeper insight and challenges the marketer to ask the questions appropriate for each cell of the grid. For example, in the grid above (click the image above for a larger view), let P1= Product. Column 1, Row1 is the intersection between Product/Product. Evaluate this cell by asking all of the traditional Product marketing questions to determine if the product is optimized to meet customer needs and profitability requirements. Let P2=Price. The cell below, Column1, Row2, reflects the interaction between Price and Product. Here, the marketer asks questions about the tradeoffs between product features and price points. Are there high end product opportunities? Are there opportunities to introduce lower priced products with a different set of features or services? Let P3=Place. Column1, Row 3 addresses the interaction between Place and Product. Are all products in the portfolio sold in the same channels? Do product features differ by channel?

Note that the questions in each cell can be modified to address situations and challenges specific to any business. By completing the grid with the questions relevant to your business you have a dynamic set of marketing questions to be addressed. Then, assess your ability to answer the questions in each cell. You will quickly determine the degree of knowledge that you have about the performance of the key elements of your marketing mix. Where the data is insufficient and a gap exists, further research may be warranted. Your ultimate goal is to understand the mix tradeoffs to maximize ROI against the marketing goals which are aligned with the business objectives of the CEO.

Note that while this example used the “4 Ps”, the same interaction analysis can be conducted against a deeper list of marketing tools, and it is a simple steps (but a lot of effort) to evaluate interactions at a deeper level with any given element. For example, you might construct a similar interaction analysis against each major element of the Promotion mix, evaluating the impact of print media and sponsorships or between coupon discounts and trade marketing.

How to Maximize Competitive Intelligence

There is a simple thing you can do as a marketer to generate greater return on investment from your market research and competitive intellegence efforts. Marketers spend countless hours optimizing research methodologies, survey questions and analytics (rightfully so, too.) Competitive intelligence can come from many sources, extending beyond formal research to include press tracking, and even simple hearsay from the sales force. So what's the single most powerful thing you can do to improve return? Create an organized central clearinghouse to capture the information. Great insight results from crossing data points from multiple sources. Market analysis indicates Competitor X may be boosting short term sales, HR hears that a key executive from Competitor X may interviewing in the market, and your Regional Sales Manager say the CFO of Competitor X golfing with the President of Competitor Y. Acquisition or merger? You'll need to learn more, but clearly there is a situation to be explored, and only by crossing these points of information are you able to gain the insight. So...create a central repository of competitive information (paper or digital) and review it often.

Good competitive intelligence reads: Society for Competitive Intelligence, Primary Intelligence