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Judging marketing mix effectiveness

Neil Brooks and Lyndon Simkin
Business School, Oxford Brookes University, Oxford, UK
Abstract
Purpose The purpose of this paper is to review the differing structural constraints between corporates and small to medium-sized enterprises (SMEs) in the area of measuring marketing effectiveness and, using the premise that an imperfect measure is better than none, demonstrate a practitioner-developed tool for judging marketing mix effectiveness through a case study from the automotive sector. Design/methodology/approach The paper uses literature review, SME practitioner experience and a case study from the global automotive sector. Findings There is no single magic bullet metric for measuring marketing effectiveness. Whilst multiple 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 incomplete measurement system is better than none and that the most pragmatic start-point is the marketing mix itself. It is demonstrated to deliver positive outcomes in a number of areas. Research limitations/implications Owing to the volume of research data on measuring marketing effectiveness, the authors have focused on those metrics that they have observed more commonly in use in UK businesses. The research into the practitioner tool is based on its observed outcomes with 28 UK SMEs since 2005 and highlights a single implementation with an automotive sector firm. Practical implications The practitioner tool offers a pragmatic starting-point in an SME environment where there might otherwise be no rational measurement of marketing effectiveness (in whole or in part) at all. Originality/value The papers contribution is to question the applicability of current academic thought in the context of certain business situations, whilst offering an illustrative example of a pragmatic solution for SME practitioners. It is posited that by making use of this solution, SME owner/managers would be better equipped to understand the strategic linkages between marketing mix elements, customer groups and the outcomes of past marketing actions, leading to a more considered 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

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Received 20 January 2011 Revised 1 February 2012 12 April 2012 Accepted 20 April 2012

Marketing Intelligence & Planning Vol. 30 No. 5, 2012 pp. 494-514 r Emerald Group Publishing Limited 0263-4503 DOI 10.1108/02634501211251025

1. Introduction Measuring marketing effectiveness is notoriously difficult for academics and practitioners alike (Hood, 1969; Clark, 2000; Seggie et al., 2007; McDonald, 2010). The academic literature of the last 40 years suggests a number of long-standing reasons for this, all of which still exist. Marketing activity has both tangible and intangible effects. Measuring a tangible element, like sales volume, is easy (albeit retrospectively) 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 to manipulation (Ambler, 2003). Similarly, history impacts on marketing effectiveness expenditures tend to be accounted for annually, whereas the influence of those

expenditures is cumulative, thus a change in sales volume in one year could be partly a residual echo from previous years activity (Sheth et al., 2009). Marketing operates within a volatile and uncontrollable external environment that includes its customers, competitors and legislators. Thus measureable effects on business performance can be experienced that are not directly attributable to the firms own activities (Sheth and Sisodia, 1995a; Rust et al., 2004a). Equally, marketing operates within an internal environment which is subject to constraint and change. Strong marketing plans are informed by, and operate within, the confines of the firms strategy thus low marketing effectiveness could be the result of poor strategic direction rather than poor marketing (Sheth et al., 2009). Similarly, short-term executive decisions regarding marketing resources/budgets could lead to sub-optimal effectiveness. There is corporate confusion between marketings total business process and what the marketing department does. Agreeing exactly what to measure the effectiveness of is an essential starting point for any assessment process (Clark, 2000). When it comes to available metrics for measuring marketing performance and/or effectiveness, marketers have a wide choice. In reviewing the literature, the authors have uncovered more than 250 different metrics that could wholly or partly contribute to a marketing effectiveness measure, including an observed link with organisational emotional intelligence (Nwokah and Ahiauzu, 2009). Furthermore, Pont and Shaw (2003) concluded that the operational selection of metrics from this pool was more arbitrary than scientific and exhibited a clear preference for the subjective. Bonoma and Clarks view (1988, cited in Ambler et al., 2001) that, perhaps no other concept in marketings short history has proven as stubbornly resistant to conceptualisation, definition, or application as that of marketing performance remains true. Yet, to practice marketing without any rational means of effectiveness measurement would be reckless and wealth destroying (Ehrbar, 1999). Without measurement, current programmes, new initiatives and targeted improvements cannot be validated, so even the use of imperfect measures is better than none (Sheth and Sisodia, 1995b). This paper considers the structural constraints commonly facing small- to medium-sized enterprises (SMEs) (below 250 employees) that are not so prevalent in larger enterprises (Gilmore et al., 2001) and proposes a practitioner-developed tool for judging marketing mix effectiveness as a pragmatic alternative to continued haphazard small-firm marketing (Siu and Kirby, 1998; Gilmore et al., 2001). It begins with differing corporate/SME ease of use issues for marketing effectiveness measures then reviews prominently discussed formal effectiveness measures examining their applicability to the SME situation. This is followed by an anecdotal case example from the automotive sector by way of illustrating the tools usage, concluding with known limitations of the proposed tool and suggesting additional research to add further robustness, potentially making it self-service for smallbusiness owner/managers. The contribution that this paper makes is to question the applicability of current academic thought in the context of certain business situations, whilst offering an illustrative example of a pragmatic solution for SME practitioners. It is posited that by making use of this solution, SME owner/managers would be better equipped to understand the strategic linkages between marketing mix elements, customer groups and the outcomes of past marketing actions, leading to a more considered approach to future marketing decisions in line with business objectives.

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2. Corporation vs SME implications for metric usage SMEs 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 and knowledge/experience can leave SMEs in a difficult position. According to the anonymous CEO quoted in Sheth and Sisodia (1995b, p. 220), Many firms today practice Just In Time manufacturing, but Just In Case marketing. Marketing metrics have their own difficulties with measurement and with so many available it is no wonder that many marketers adhere to what they know. Ambler et al. (2001, p. 7) make the case that managers can be swayed by time, financial constraints and environmental uncertainty to take a partial view of their environment, thus they tend to select metrics that reflect that partiality often restricting measurement to what is easily measured rather than what is most useful to measure. And firms tend to achieve what they measure (Ambler, 2003). To quote Clark (2000, p. 21), Clearly managers are capable of assessing multiple dimensions regarding performance. The question, then, is whether they are assessing the right dimensions for their business. The level of market orientation that the firm exhibits, whilst highly influential on organisational performance (Akdeniz et al., 2010), will naturally direct the choice of effectiveness measures. Marketing academics do not always help. By couching their views in complex technical terms they can easily sway marketers from considering new measurement options consider this for example, a principal components multinomial logit regression model for estimating the Markov brand-switching matrix (Rust et al., 2004b, p. 123) one that would perhaps be consigned to the rapidly growing too difficult pile that exists on every marketing managers desk. Measurement concerns apply equally to both large and smaller organisations, but there are issues that predominate in each type of organisation. Data availability/quality is an obvious area, with too much in large organisations and too little in SMEs (Ambler, 2003). Similarly, the firms management ability/readiness to handle multiple metrics could be different larger firms can handle more, say 20, metrics because they have more 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 independent business units of corporates), it can be seen that they may have a number of structural difficulties in managing marketing metrics that do not as readily face their corporate cousins (Gilmore et al., 2001; Simpson et al., 2006):
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Limited, intermittent or no reliable multi-year data are independently kept on marketing activity other than financial information. This includes a lack of both internal non-financial data as well as external (market) data. All too often only anecdotal data are available. Revenues can be skewed by one or two large customer changes, easily swamping any marketing contribution to financial results. Whilst these changes could have happened due to marketing activity, they could equally occur through the customers own activity or generic market conditions. Agreed marketing plans can be diluted by events, diverting management and staff focus. At the end of the measuring period, it is hard to separate the actual aggregated results from what might have been achieved should the original marketing plan have been fully executed.

A rapid start/stop mentality is commonly applied to discretionary spend which disrupts marketing activity and thus measurability. This is especially true the smaller the firm gets with financial reserves to support continued marketing in hard times getting harder to allocate. The firms management may not feel it can afford to wait years to see the value of the long-term marketing effects, so the choice of activity favours those with more immediate (more tangible) effects. Organisational culture operates in all firms. However, in smaller organisations the culture is closely set by the long-standing owner/manager and their personal experiences/prejudices. Within these restrictions, marketing can only be effective in the window of operations permitted (cf. Siu and Kirby, 1998). Smaller organisations may have a tendency to focus on operational rather than strategic marketing activities, where making monthly/quarterly sales is a matter of survival. This extends to their marketing communications inasmuch as a focus on product rather than building customer relationship value can been observed (Gabrielli and Balboni, 2010).

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In response, very small firms often adopt a pragmatic approach to judging marketing decisions and the effectiveness of previous activity because sophisticated data gathering and analysis are relatively expensive. Given that marketing is almost always a better strategy than merely selling (Ambler, 2003) a method of systemising a pragmatic way of judging historic, current and potential marketing effectiveness is needed that applies to very small firms. And a key requirement for this is to work within the available data and business culture. Whilst these gating factors need to be specifically understood on a firm-by-firm basis, some generalisations can be drawn in advance. Smaller firms tend to keep less non-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 of objective data that relates marketing activity to business performance (Simpson et al., 2006). Thus all that is available to the marketing practitioner is typically qualitative data, often of an anecdotal nature, combined with observational data that can be analysed within the context of perceived industry norms (Gilmore et al., 2001). Meanwhile, marketing decisions are often coloured by a lack of specialist marketing expertise within the firm and the specific way that the owner-manager runs his/her business 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 be haphazard, informal, loose, unstructured, spontaneous, reactive, built upon and conforming to industry norms. Taken to an extreme, whole avenues of marketing options may be defined as no go areas entirely due to the owner-managers prejudice. Whilst some sympathy accrues to the owner-manager as she/he must exhibit a broad range of skills and knowledge to solve problems that impact every aspect of their business (Giroux, 2009), it can be difficult to prove the effectiveness of certain marketing approaches that might be recommended for the future, except through reference to industry norms or specific competitor case examples, should they exist. This situation creates a need for an approach to judging marketing effectiveness within SMEs that not only provides a level of formalisation, repeatability and comprehension 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 are most applicable and/or usable y or indeed if any existent measures can apply realistically. 3. Using formal marketing effectiveness measures what are the options? In his 2003 book, Marketing and the Bottom Line, Ambler notes a five-stage evolution process in the thinking of firms about marketing assessment and asserts that firms do not always follow all five stages linearly, and indeed can jump backwards with changes in senior management. A key observation is the recognition that reliance on financial measures alone is insufficient (Lehn and Makhija, 1996) occurs early in the evolution process and is therefore commonplace today leading to a situation where many organisations are using a mix of metrics with little commonality (comparability) between them (Ehrbar, 1999). Reports of firms with more than 100 measures in use are legendary, with Ambler (2003) quoting financial services firm Skandia as having had 117 at one time. With the number of available metrics exceeding 250, this leads to the question of which metrics, and in which combinations, should an organisation adopt? Albert Einstein famously encapsulated the problem concisely when he said Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted. A notion echoed by Clark (1999, p. 720), The trend toward multidimensional measures has arguably been wonderful for researchers and horrible for practitioners. [y] unfortunately, successively more complicated schemes dramatically increase the burden on managers attempting to measure performance in the world. [y] figuring out which of many measures are really important may drive the conscientious manager to despair. Yet, trends in marketing effectiveness measures continue to shift with some metrics becoming more popular and others going out of fashion. Research by Seggie et al. (2007, p. 836) concluded that existent marketing metrics needed systematic reexamination and went on to formulate seven measurement themes to guide the evolution of better measures: (1) from non-financial to financial greater understanding of the measure can be engendered within the organisation through using a common financial language; from backward looking to forward looking assessments of historic performance are poor indicators of future performance when competitive differences occur over time; from short term to long term many marketing activities, such as advertising, deliver long-term sales/awareness benefits that are not accrued in short-term performance measures; from macro to micro data the causes of changes in macro measures, such as a fall in market share, would not be visible without related micro data, e.g. a number of significant customers defecting to competitors; from independent metrics to causal chains understanding the causal relationships between measureable marketing activities and profitability (or other corporate goals) will lead to improved decision-making and increased predictive accuracy;

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from absolute to relative relative performance measures allow managers to contrast performance against competitors, which is a superior indicator of actual marketing effectiveness; and from subjective to objective objective measures are more trusted within organisations, especially where budget setting or employee performance dependence is involved.

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Seggie et al. (2007) then ranked six popular metrics against these criteria to see if any was the single overriding metric, but none emerged in this role. The specific marketing effectiveness measures reviewed in the preparation of this paper are listed in Table I. They have been selected based on the volume of academic discussion uncovered, as well as observed usage within firms. Unsurprisingly, given the historical antecedents of marketing performance measurement, there is a predominance of metrics that express themselves either financially or numerically. Large organisations will almost certainly use a number of these metrics rather than rely on a single indicator of marketing effectiveness. It seems that the selection of which metrics to use may well owe as much to the organisations ability to accurately gather the data, as it does to the level of insightfulness gained from the metrics themselves. However, focusing on the SME situation, conclusions can be drawn about just how practical each of these marketing effectiveness measures are in potential usage. This can lead to a very difficult situation for an SME manager when deciding 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 the effectiveness of marketing decisions is difficult it should not justify doing it (Sheth and Sisodia, 1995b). No matter how small the firm. Table II summarises some of the largely anecdotally sourced usability issues that each of the reviewed marketing metrics potentially presents to an SME. Table II is a striking visual confirmation that Bonoma and Clarks (1988) view, that measuring marketing effectiveness remains stubbornly resistant to definition and application, is still the case in SMEs. 4. Judging marketing mix effectiveness a case example To combat a continuation in the haphazard nature of very small-firm marketing (Gilmore et al., 2001), a pragmatic tool for judging historic marketing mix effectiveness has been developed that allows common ground to be set between the marketing practitioner and the business management, that fosters a more considered approach to future marketing decision making. The tool uses what information is available within the firm along with a limited number of customer interviews, a competitive review, combined with the practitioners understanding of industry norms. A focus on the marketing mix rather than the total marketing process has provisionally been deemed an acceptably pragmatic compromise in order to better match the common SME view of what marketing is (Siu and Kirby, 1998), work within the practical constraints of the SME under review and to deliver recommendations that are more easily understood and implementable. The tool has been informally trialled with 28 small firms operating within a variety of B2B industry sectors since 2005, with very encouraging results. Participating firms were approached during the normal course of marketing consultancy by one of the authors and a marketing effectiveness audit using the tool

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Financial Market share (Aaker, 1996; Clark, 2000; Ambler, 2002; 2003; Barwise and Farley, 2004; Sheth et al., 2009) Perceived quality (Aaker, 1996; Yoo et al., 2000; Netemeyer et al., 2004; Rust et al., 2004b)

Return on investment (Hayman and Schultz, 1999; Ambler, 2003; Rust et al., 2004a; DEsopo and Almquist, 2007; Ambler, 2008) Customer satisfactionb (Kotler, 1991; Aaker, 1996; Ittner and Larcker, 1998; Clark, 1999; Berger et al., 2002; Rust et al., 2004b; Sheth, 2009) Brand awareness (Pappu et al., 2005; Esch et al., 2006; Davis et al., 2009; Wu and Lo, 2009)

Discounted cash flow (Shapiro, 1979; Dias and Ryals, 2002; Ambler, 2008)

Brand valuation (Srivastava et al., 1998; Yoo et al., 2000; Ailawadi et al., 2003; Ambler, 2003)

Customer lifetime value ( Jain and Singh, 2002; Bell et al., 2002; Ambler, 2003; Reinartz and Kuma, 2003; Rust et al., 2004b; Schumacher, 2007) Economic value add (Lehn and Makhija, 1996; Ehrbar, 1999; Seggie et al., 2007) General direction of historical evolution - - - - - - - - - - - -

Notes:aThe hybrid classification is for measures that are made up of multiple metrics that transcend the other categories.bCustomer satisfaction has been classified in both the quantitative and qualitative categories because, whilst it is often ultimately calculated as a numeric index, the information sources are heavily founded in qualitative data

Table I. Reviewed marketing effectiveness measures Quantitative Qualitative Hybrida Brand equity (Keller, 1993, 2003; Clark, 1999; Schultz, 2000; Yoo et al., 2000; Ailawadi et al., 2003; Ambler, 2003; Rust et al., 2004a; Seggie et al., 2007; Oliveira-Castro et al., 2008; Kuhn et al., 2008) Customer equity (Lemon et al., 2001; Rust et al., 2004b; Bennett and Rundle-Thiele, 2005; Seggie et al., 2007) Customer satisfactionb (Kotler, 1991; Aaker, 1996; Ittner and Larcker, 1998; Clark, 1999; Berger et al., 2002; Rust et al., 2004b; Sheth, 2009) Customer loyalty (retention) (Srivastava et al., 1998; Clark, 1999; Rust et al., 1999; Thomas, 2001; Berger et al., 2002; Barwise and Farley, 2004; Lages et al., 2008; Sheth et al., 2009) Price premium (relative price) (Aaker, 1996; Ailawadi et al., 2003)

Financial measures Return on investment (ROI) No track record in forecasting the likely returns of marketing activities, therefore hard to solve the equation Often cynical view of potential returns from marketing (based on weak/inconsistent usage of marketing tools in the past), therefore little faith in the ROI calculation Short-term management thinking limits the scope of potential returns to months/single years thus unbalancing the ratio with an investment which may well have a multi-year effect on brand equity Brand valuation This is considered of questionable relevance to non-niche SMEs and often dismissed as out of our league The process of collecting/analysing the data is considered too onerous for the firm and the result has little practical usage

Discounted cash flow (DCF) Considered too difficult or not considered at all Setting the risk/future assumptions may be beyond the comfort/experience zone of many small-firm managers The internal/external data required for the assumptions does not exist (or is inconsistent) and not thought valuable enough to acquire Customer lifetime value (CLV) This can be a valuable metric to firms with a few, relatively large, customers providing the base data has been collected in the past and is easily available which typically it is not The relative CLV of customers is often seen as intuitive knowledge within the business (based on anecdote and aggregated impression neither of which is accurate), thus there maybe no support for specifically calculating it Many small firms have 100s or 1,000s of customers, so to calculate CLV, even if aggregated over a number of segment groupings, may be too onerous

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The technical jargon involved is misplaced in a small firm and may not gain management support Economic value add Where the equity capital is very low, especially in an owner-managed situation where it might be negligible, EVA is not insightful Does not identify which areas of value-add were from marketing per se and which from other activities that the firm naturally undertakes Changes in customer buying can have a big effect on net income which can be temporary and not related to any specific marketing activity Quantitative measures Market share External market data is typically hard/ expensive to collect and not always accurate; whilst internal data are not always kept in a useful format (especially if the firm has different products/services in different market segments)

Customer satisfaction In an SME, the lions share of revenue may come from relatively few customers, so customer satisfaction processes in the firm could be heavily skewed to keeping the few happy (at the expense of the many). This may benefit the firm in the short term, but would increase the dependence on the current customer base thus increasing risk from a single or multiple customer loss

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Table II. Practical issues with marketing metrics within SMEs

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The extent/scope of the market can be difficult to define which makes it open to debate and possible data massaging. Competitive/ technical innovations may explode or contract markets rapidly invalidating previous market share calculations The usefulness of market share can be limited for firms with low shares we now have 0.09% of the market, up from 0.05% how will this change their marketing decisions? Occasionally small firms can have a large percentage of a market, but this is typically within a specific niche again, knowing the exact percentage may not materially affect their marketing decisions, though a negative change over time might indicate remedial activities (or a new niche!) are needed Customer loyalty (retention) Financial data on customers is readily available through the accounting system, but customer profitability is probably not calculable on customer-specific basis as activity-based costing is not implemented Top customers may well be personally known to the firms management, as will their perceived motivation for staying loyal. Thus, assessing loyalty beyond simple historic accounting data and the managements personal relationships is typically not valued sufficiently to warrant the cost of measuring it In B2B areas, customer loyalty can turn down with customer staff changes, strategy reviews and so on that are not related to the customer service received or perceived product quality. Equally though, customers can be acquired through the movement of staff from one firm to another Qualitative measures Perceived quality Gathering the data, other than through anecdotal means, can be expensive. Even when gathered, it is quite likely be part of a larger overall satisfaction survey and not specific enough to help improve quality

It can be difficult to weight satisfaction results in terms of their impact on the business should every customer vote be equal, or rank by revenue or rank by profitability? The consequence of this decision will have a large skewing effect on the final results Being low on a supply chain makes a small business vulnerable to poor satisfaction management by higher chain firms because the end-using customer has to be satisfied with the aggregated quality and service of all chain members not just the SMEs contribution

Price premium In B2C markets, pricing data is relatively easy to get, but in B2B markets this might be too difficult/expensive to achieve, especially where specific project/contract discounts are often given rather than selling from list price Many small firms are price followers rather than leaders, thus they do not charge a premium. However, in some markets, small firms can deliver more a personal/ convenient service thus potentially justifying a price premium by changing the marketing mix, so measuring the extent of this can be useful in justifying the additional service costs, but only if they can readily capture the competitive data A sudden change in market structure, such as a large low-cost entrant, could erode an SMEs price premium potential without the SME having the financial might to respond protectively

Brand awareness Many SMEs have very small market shares within large markets, thus they tend to focus to a great extent on servicing customers that already know them well and potential customers that are somehow proximal. In this situation, knowing their brand awareness percentage across the whole market would not materially affect their operational marketing choices

Table II.

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Firms with support/maintenance service offers can measure quality through fault analysis, but only if they have an IT system (and supportive processes) for logging faults and resolutions. However, they do not see, and thus cannot measure, negative quality perceptions that are not reported as faults Small firms do not have the time (or more accurately set aside the time) for quality circles and other improvement initiatives as part of the culture they tend to firefight instead. Thus having the perceived quality data would not necessarily drive positive systemic changes Customer satisfaction Already covered above Hybrid measures Brand equity Calculating brand equity would be considered too expensive and too difficult. Collecting and collating the volume of data needed as well as defining the calculation weightings are considered beyond the day-to-day competence of SME marketing staff SMEs typically do not give as much consideration to their brand, its attributes and values, as do larger organisations thus they might not see brand equity calculations as relevant/valuable Small firms could find it hard to make specific decisions (within their budget/resource constraints) to manage for brand equity rather than enacting short-term marketing campaigns designed to raise immediate revenues. A rise in brand equity may well be considered a beneficial by-product of a revenue-focused activity as opposed to a goal in itself

SMEs typically would not fund the primary market research to regularly gather comparable brand awareness statistics, preferring instead to rely on anecdotal sources SMEs rarely invest in the extensive and sustained advertising that might be required to drive improved brand awareness in their target markets, thus measuring brand awareness with no reliable means of changing it would be considered futile

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Customer equity Within SMEs this would typically be thought of as too difficult to calculate. Setting the future assumptions may be beyond the comfort/experience zone of many managers Relatively small changes in customer spending can represent major swings in CLV for a small firm these cannot be predicted or easily attributed to specific marketing activity and could be more affected by general market conditions instead Whilst customer equity calculations do give strong indications of future revenue streams they assume a level of repeat purchasing and customer churn. SMEs are highly vulnerable to the impact of customer sabbaticals/defections, thus higher risk factors are needed which would lead to a reduced attractiveness for proposed marketing initiatives

Table II.

offered. This trial has not been undertaken as a formal research project in any way and the following case example is offered on the basis of anecdotal evidence alone in an attempt to demonstrate that there is some potential to develop a working tool that addresses a number of the concerns expressed previously in this paper. Much further research is required to formally test the tools potential more rigorously for both applicability in a range of SME sectors and cultures as well as marketing content and reliability. This research need has recently formed the basis of a newly started doctoral research project. During its use to date, the tools 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 competitor review;

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looks at all aspects of the marketing mix, even when the firm does not consider anything other than promotion to be marketing (Siu and Kirby, 1998); creates a jargon-free language that the practitioner and firm can use to rationally discuss/decide marketing matters; uses visual indicators to deliver a marketing mix effectiveness rank that the firm can understand; and creates an agreed agenda for the marketing areas that will improve future effectiveness.

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The tool primarily focuses on all Ps of the marketing mix but can consider how an organisation uses segmentation, targeting and positioning (STP) as well. However, to aid jargon-free communication it does not use that terminology. It separates information gathering into two areas; internally sourced (typically related to promotional activities) and externally sourced from customers, competitors, industry norms and practitioner knowledge (typically related to all of the non-promotional Ps and STP). This is to take account of the differing availability and quality of data obtainable within and without the organisation. By contrasting the internal and external information, a final marketing mix effectiveness judgement can be considered. There follows an illustrative example of the tool within one of the participating firms, a UK SME in the global automotive sector. This example has been selected more for its convenience to be written up rather than for formally representing all of the participating firms. The tool was operated by the marketing practitioner throughout. 4.1 Background Firm X is an independent research and consulting firm focused on specific technology areas within the global automotive sector. Clients included major automotive manufacturers, system suppliers to automotive manufacturers and other interested parties. The firms service offer covered the original research and production of technology, market reports, as well as technical project consulting in related areas. The market for firm Xs services were typified as continuously evolving. There were a number of competitive suppliers of original research and project consulting and the onward march of technology in automobile design and production meant that there would continue to be a growing need for independent help to unconfused a complex technology landscape. Also there were a number of geographic markets that were somewhat behind the leaders in the adoption of current technologies which would require access to the type of information that firm X could provide. Employing 20 staff along with a number of contractors, the firm boasted a customer base of around 45 clients, amongst which a large proportion of the worlds major automobile manufacturers figured highly. Approximately 75 per cent of its customers were considered to be regular repeat purchasers, especially in relation to the published reports. Revenues had remained fairly flat at 900,000. The firms financial aspirations were to grow revenue by 20 per cent per year, to raise 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 a previous level of near 23 per cent.

4.2 Marketing mix effectiveness assessment In November 2005 a marketing mix effectiveness assessment was undertaken. 4.2.1 Stage 1 communications effectiveness ranking. Communications effectiveness is the term used within the tool to cover how well the firm uses marketing communications tools in the context of its market (customers, potential customers and competitors) and is assessed using internal information provided by the firm. The firms use of marketing communications is assessed separately to the other mix components (which are assessed collectively in Stage 2), because data for communications use and results are better sourced internally. Whereas judging the effectiveness of product, price and so on is better sourced externally (through customer interview, competitor review, practitioner knowledge and market norms). Figure 1 gives an example of the categories that were used to assess how well the firm was using marketing communications to influence potential customers, typically a main focus for small-firm marketing activity (Simpson et al., 2006), as well as existing customers, which is often a neglected area. The categories can be changed to suit the nature of the firm and to aid with management dialogue. Similarly the number of categories can be varied, provided that the answer at the bottom is an average of the scores expressed as a percentage. The role of the practitioner is to assess the available information for each category and, 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 existing customers. Whilst the principal source of information for completing this stage is the firm itself, during subsequent customer interviews and competitor research, the practitioners derived assessment for each category can be verified. Firm Xs current use of marketing communications was ranked poorly (at 33 per cent overall from nine of the ten categories hence the 90 maximum score in
Communicating the offer
How well are you communicating with the market How good you are at using these activities to Advertising Brochures/printable Direct marketing Sales force Telephone Sales promotions Press Web Exhibitions and conferences Sales channels Total (out of 90 maximum) Communicate with potential customers 1 7 5 3 0 0 3 7 8 34 Average 33 Score out of ten for each (appropriate) activity Communicate with existing customers 0 6 5 5 0 0 1 3 5 25 Percent

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Figure 1. The communication effectiveness ranking of firm X

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Figure 1), though it was noted that unlike many other small firms they did pay roughly equal attention to communicating with existing customers as well as potential customers. The ranking scores calculated by the practitioner were based on a wide range of input derived from structured interviews with a number of senior staff, including the managing director, and a member of staff from the marketing function, and were headlined as follows:
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Advertising the firm advertised only sporadically with little quantified response. Brochure/printable material the firm had a range of materials available, however, they were extremely variable in content and insight, and rarely mentioned the firms prestigious customer list. Direct marketing the firm used professionally written e-mail newsletters to announce the availability of specific reports which were known to generate a number of sales, but little other use of direct marketing was identified. Sales force executives acted as the prime sales force for both research reports and project consulting. However, being busy and not specifically sales trained, their contribution lacked sufficient diligence and adherence to core sales processes. Telephone no outbound activity. Sales promotions no activity. Press the firm did release ad hoc information to the press but did not retain a PR agency nor a clipping service. Executives had not been media trained. Web the firms web site was professionally designed and included a cut-down variant in an oriental language. The site had been optimised for search-engine ranking and came in Googles top ten for a few (very specific) business-relevant phrases, 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 events globally mostly just as delegates, but also as an exhibitor when deemed important. When available the firm would take a speaking slot as this generated good interest amongst delegates and it generally achieved three to four speaking engagements 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 uses the total marketing mix, excluding marketing communications (already addressed in Stage 1) in the context of its market that is how attractive the firms offer is viewed relative to customer needs and competitive propositions. The prime data source for this 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 proxies are plotted on a 2 2 matrix with cells named Defocus, Monitor or Desist, Improve and Promote to provide a visual overview of the current ranking for each.

The position of each proxy is calculated according to horizontally how important it is to customers in their purchasing decisions and vertically how much better (or worse) the customers feel that firms offer is than competitors in respect to that factor (the central horizontal line represents equality with competitors). The practitioners competitive research/knowledge should be used to sanity check the customer 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 the visual communication of the final assessment, the practitioner is recommended to select 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 include the significant marketing mix elements as well as STP aspects, but also to ensure useful communication with the organisation subsequently. The practitioners decision at this point can either positively or adversely affect the usability and insightfulness of the ranking tool, so appropriate care must be taken. Firm Xs market offer and the way that it was delivered was ranked quite highly based 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 sourced internally from recorded customer comment and anecdotal sales evidence. However, in using this tool with other participating firms, three-four customer telephone interviews would typically be conducted, though as many as six have been delivered in some instances. Customers are nominated by the firm but requested to offer a representative mix. In all cases, competitor and other market research is performed by the marketing practitioner 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 the tool calls for the consolidation of the communications effectiveness and offer
The offer and its delivery How the market views the offer High
Completeness of offer Ease of purchase

Judging marketing mix effectiveness 507

Defocus
Relative competitive strength

Promote
Independence Image/brand reputation Customer care Proximity to customer

Offer quality

Offer features and functions Price

Customer relationship depth

Monitor or desist

Improve
Figure 2. The offer and delivery effectiveness ranking of firm X

Low Low Importance to customers High

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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 the firms management, has quadrants named somewhat emotively so as to underline their significance. To define the ranking, a Now bubble is plotted by the practitioner vertically using the 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 the predominance 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 in communicating with the firms management because it heavily aggregates the component scores to arrive at the final effectiveness rank, so a few misplaced scores will have little effect. The practitioner can then plot the Possible bubble to represent what the firm could achieve at a future point in time with an improved marketing programme. Firm Xs overall marketing mix effectiveness ranking (Figure 3) put them in the Room for significant improvement quadrant. The vertical positioning reflected their somewhat low-key approach to marketing communications as a whole, whilst the horizontal positioning reflected the competitive quality and independence of the market offer, as well as the nature of their customer successes. The Possible bubble was plotted to indicate where the ranking could be moved to within a two-year planning horizon should the current marketing weaknesses be addressed. 4.3 Outcomes As a result of the assessment and its recommendations, the firm strengthened its marketing resources by hiring an experienced marketing professional to manage a small team and giving marketing more air time at board meetings. In addition, a dedicated sales person was hired to reliably undertake the sales process basics ahead of introducing the executives to prospective customers when needed. The web site and downloadable materials were significantly improved, integration with the opt-in e-mail newsletters was increased and the technology was changed to allow for immediate self-updating by firm X staff. It now carried many more news

Marketing mix effectiveness rank The offer and its delivery Ineffective Effective Effective

Squandering money
Communicating the offer

Fine tune for excellence Possible

Figure 3. The offer and delivery effectiveness ranking of firm X

Wasting money
Ineffective

Now Room for significant improvement

items and links to popular Web 2.0 environments, and formed a much more integral part of the firms communication strategy (although customers still cannot buy reports directly from the site [y] ). The firm has continued with e-mail marketing as the major outbound activity, but with integrated linkage to their CRM system. Attendance at international events was reduced for budget reasons but increased in impact through better focus, coordination and follow-up. In addition, the firm worked to broaden its knowledge and influence within existing customers as well as establishing contacts with non-competitive firms who also supply existing customers and defined targets. The revised marketing activities undertaken by the firm proved fruitful until the global 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 integrated fashion thus improving its value for money and respect within the firm. Since the original assessment at the end of 2005, the firms marketing activity has been reviewed twice to check on progress and fine tuning. The basic understandings and common language that was developed during the original assessment still brings value to these reviews, several years later, thus proving one element of its residual value. 5. Conclusions and ongoing requirements Having reviewed a number of marketing effectiveness measures, this research concluded 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 authors assert that many metrics do not enjoy currency, or sometimes even applicability, for small firms. The principal issues being data paucity (Ambler, 2003), skills deficit and cultural dogma (Gilmore et al., 2001). This has lead to the case example of a pragmatic practitioner-developed tool that works with whatever data are available (factual/anecdotal), supplemented with customer interviews and competitor review, to aggregate an effectiveness judgement that SME management can accord with and thereafter plan from. The tool focuses on the marketing mix, rather than the total marketing process, to better match the common SME view of what marketing is, work within the practical constraints of specific SMEs and to deliver recommendations that are more easily understood and implementable. The tool has been used a number of times in the last few years with small firms in B2B markets. Each time it has (anecdotally) delivered well in establishing a common view amongst business management of the current effectiveness of their marketing activity, expanding their view of what marketing should include, and setting an agenda for future marketing investment. The tool has evolved as a practical response to the situational problems found in small firms (Gilmore et al., 2001). As such it exhibits some concerns which need to be addressed before being considered entirely robust: (1) Completeness concerns for reasons already detailed, the tool focuses on the marketing mix, but within that currently provides incomplete coverage of the mix elements. For example, the tool does not mandate that all elements be considered and where they are, they are equally weighted in assessment. Further development is required to provide broader and more consistent mix coverage but without compromising the usability and communicability.

Judging marketing mix effectiveness 509

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(2)

510
(3)

Environmental concerns the operating environment of the tool is often defined 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 a marketing professional will affect results and thus managements view of it. The tool has only been exercised in B2B markets so far, where customer interviews can be conducted by telephone and in some depth. Analytical concerns due to the lack of objective data, much of the analysis and scoring are subjectively controlled by the practitioner. In mitigation, the tool heavily aggregates to arrive at the final effectiveness rank, thus a few misplaced scores will have little material effect, but a continuous bias would distort the results. Equally, the tool currently weights factors in each stage equally, whereas it would be more realistic to use relative weightings according to different industry characteristics. In addition, the selection of factors could be pre-populated by industry type if suitable benchmark data were available. Presentational concerns to avoid complex or jargon-ridden charts, the tool uses very simple presentation grids, which does mean that precision is exchanged for an overall impression. This has communication benefits, but can mask more subtle implications. Whilst competitive factors are considered by the practitioner, the firm does not really have a way to see how they compare with competitors. The ability to draw an industry norm chart (an average of competitors) would be a helpful addition to scope the extent and urgency of remedial actions.

(4)

Despite these concerns the tool makes a valuable addition to the B2B SME practitioners toolkit by fostering the development of a mutually acceptable framework for judging past marketing mix effectiveness which in turn lays the ground for future marketing planning on a more holistic rather than ad hoc or gut-feel basis. The tool could be further enhanced by addressing the following areas of research. Industry benchmark data 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 weightings made available and relative competitive strengths viewable against objective norms. Testing in B2C markets the tool allows for customer feedback to be acquired through survey questionnaires where telephone interviews are not practical however, this has not been tested thus far. Improved communication the scaling of the final rank position and the potential future rank position could be better aligned to tangible results, such as sales growth percentages or returns on investment bandings, thus aiding a clearer cost-benefit view of potential marketing changes. Practitioner acceptability and usability to date the tool has only been used by this papers authors. Monitored use by a wider community of practitioners will help refine/improve usability and ultimately the acceptability of this as a practical tool. Nevertheless, the tools pragmatism has repeatedly demonstrated sufficient benefits to outweigh its limitations and it therefore makes a significant contribution to solving the practical problem of assessing marketing mix effectiveness in SMEs where there might otherwise be no assessment made at all. By making use of this tool, SME owner/managers will be better equipped to understand the strategic linkages between marketing mix elements, customer groups and the outcomes of past

marketing actions, leading to a more considered approach to future marketing decisions in line with business objectives.
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Further reading Jayawardhena, C. (2010), The impact of service encounter quality in service evaluation: evidence from a business-business context, Journal of Business & Industrial Marketing, Vol. 25 No. 5, pp. 338-48. Stewart, S. (1993), The Stern Stewart Performance 1000 Database Package: Introduction and Documentation, 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 Brookes University and at the Business School of Brunel University, as well as running his own marketing consultancy business focused on small business in the home counties of the UK. His research interests are directed towards understanding and improving the practical application of marketing theory in a small business context. Before his involvement with Oxford Brookes University, he had over 20 years experience as a marketing practitioner working in senior positions with multi-national organisations in the IT and high-technology sectors. Neil Brooks is the corresponding author and can be contacted at: nbrooks@brookes.ac.uk Lyndon Simkin is Professor of Strategic Marketing at Oxford Brookes University. Previously he was at Warwick Business School, where he was Director of the MSc in Marketing & Strategy and versions of Warwicks MBA Programme. In addition to many journal articles, he has authored numerous books, including Marketing: Concepts and Strategies, Marketing Planning, Market Segmentation Success and Marketing Essentials. He is consultant to many blue chip corporations, including EDF Energy, GfK, Fujitsu, Raytheon and IKEA, plus he is a recognised High Court expert witness in cases of marketing and business planning litigation. He is also co-chair of the Academy of Marketings Special Interest Group in Market Segmentation. He has published 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.

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