Marketing Metrics: Will we ever have the perfect dashboard?

Student Id: 90426817

In 2004, a Bloomberg article titled, Making Marketing Measure Up, provided the context, if not rational for establishing marketing metrics:

“For years, corporate marketers have walked into budget meetings like neighborhood junkies. They couldn’t always justify how well they spent past handouts or what difference it all made. They just wanted more money — for flashy TV ads, for big-ticket events, for, you know, getting out the message and building up the brand”. (Bradey & Kiley 2004)

Brady & Kiley went on to explain that the new marketing mantra was “measurement and accountability”, especially in relation to ROI figures to satisfy “fed up CEOs and CFOs”. It discussed the cutting edge use of dashboards by the likes of consumer-product giants (Proctor and Gamble) to collect multiple performance measures.  It was clear that financial metrics were the focus.

Since 2004 a vast array of marketing research, literature and textbooks (Farris, 2009, Farris 2015, Ambler & Roberts 2008, Mintz & Currim, 2013, Kotler & Keller 2012) argue the benefits of using a wider range of metrics, including non-financial metrics such as customer loyalty and brand awareness to measure marketing performance. Choosing metrics that are relevant to the business and its strategy and ensuring the metrics are relevant to what the organisation is trying to measure (indeed first figuring out what should be measured) is cited as critical for obtaining any meaningful evaluation. Nevertheless,  it is apparent from recent marketing trade articles such as “How Nivea delivered a better ROI on marketing spend”, that in the wider business world, the use of a single metric or a number of  financial measures ‘combined’ to create a silver metric (Ambler & Roberts 2008) is still de rigueur.

ROI

What is apparent when researching literature on the topic of marketing evaluation, is that the focus is often on promotional and media activities or specific advertising campaigns, without much consideration of the other 3Ps in the marketing mix. The use of ROI, or even the adapted ROMI (Return on Marketing Investment) and consideration of both short term and long term ‘returns’, essentially ‘positions’ marketing as an investment that is being made by the organisation; one where there is a choice and risk associated with that investment. Certainly this can apply to advertising and other specific promotional activities, but not as neatly to broader marketing activities: Ambler & Roberts (2008) define marketing as “what the whole company does to satisfy customers and thereby create shareholder value” (p734).

From this standpoint, Ambler & Roberts (2008) reasonably argue that one of the (many) problems with using ROI to evaluate marketing is that by regarding marketing as an investment instead of a ‘maintenance’ essentially “creates another problem for marketers, namely the expectation that marketing will always create incremental sales and profits”(p736).

As identified by one marketing authority, Professor Ujwal Kayande,  the now prevalent use of  “analytics to calculate the ROI and impact of every marketing activity being undertaken” is also a cause for concern; “The problem is that it then forces the CMO and their team to start doing things on which you can measure the ROI, and which you can attribute clearly to your activities to (…) As a result, innovation starts becoming stifled” (Kayande, U, 2015).

Also apparent in the literature is the vast number of metrics available to calculate marketing performance. Author and marketing metrics authority, Paul Farris, published: “Key marketing metrics: the 50+ metrics every manager needs to know” in 2009. More recently, Farris et al. (2015) actively refuse to offer a ’key set’ or ‘top 10’, citing the importance of selecting the right metrics for the type of organisation and its specific needs. The authors do however note that the most popular metrics amongst managers are the financial metrics of net profit, ROI and margin (but not necessarily for good reason), with customer satisfaction the most popular non-financial metric.

Farris et all. (2015)  offer a holistic graphical representation to demonstrate the interlocking nature of all marketing metrics (and marketing programs) and the central role of the customer:

 

Farris 2015

Marketing metrics is a minefield for the uninitiated and it is understandable is our fast-paced business world that silver metrics are sought by managers. Considerable work is being undertaken by companies to find the perfect dashboard and further work to standardise the marketing metrics. But even the ‘perfect dashboard’ of cleverly selected metrics may still prove elusive, something Bradley & Kiley identified back in 2004:

“For all the effort to bring science to marketing, the art component will never go away. Figuring out how much of a product’s appeal is due to marketing and how much stems from innovative features or quality is often hard to pin down, even for individual consumers. They don’t know why they like it, they just do. That’s the human factor — and so far, no one has found a way to measure that”.

References

Ambler, T and Roberts, J 2008, ‘Assessing marketing performance: don’t settle for a silver metric’, Journal of Marketing Management, Vol. 24, Iss 7-8, 2008

Bradey, D  & Kiley, D 2004,’Making Marketing Measure Up Taking the guesswork out of ad spending’ Business Week -New York-, 3912, pp. 112-113, British Library Document Supply Centre Inside Serials & Conference Proceedings, EBSCOhost, viewed 25 May 2016.

Cameron, N 2015, Why marketing analytics is not about ROI calculation, but innovation, CMO, viewed 24th May 2016, http://www.cmo.com.au/article/585507/why-marketing-analytics-about-roi-calculation-innovation/

Farris, P, Bendle, N, Pfeiffer, P, Rubstein, D 2015, Marketing Metrics: The Managers Guide to Measuring Marketing Performance, Pearson Education

Kotler, P, & Keller, K 2012, Marketing Management, Pearson Education.

Muntz, O and Currim, I.S 2013, ‘What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities?’ Journal of Marketing, , Vol. 77, pp. 17-40, 2013

Williams, A 2016,  How Nivea delivered a better ROI on marketing spend, CMO,  viewed 24th May 2016 http://www.cmo.com.au/article/595988/how-nivea-delivered-better-roi-marketing-spend/

The handbag that money can’t buy

Student Id: ID: 90426817

With the price of a Hermes Kelly bag starting at $11,200 (The Herald Sun, 24th April 2016, p15), one might expect that a Hermes sales assistant would be pouring all over you, should you have the wherewithal to purchase one. But no, you’re likely be told you’re not ‘allowed’ to purchase one…well, not if your strategy is simply to ‘hand over the cash’. There is a much higher price you need to pay should you wish to own an iconic Hermes Kelly or Birkin bag.

Hermes have taken the luxury brand attributes of ‘exclusivity and tight control of distribution’ (Okonkwo, U 2007, p. 105) to new heights with their Kelly and Birkin bags. “Ordinary women are banned from purchasing them unless they have already spent thousands of dollars in Hermes and built up a relationship with a sales a2AE91B8000000578-0-image-a-54_1461541603356ssistant” (The Herald Sun, 24th April 2016, p15). Even then, according to various blog sites which compare and provide pricing details for the exclusive bags (purposely not readily available on the Hermes website), your annual quota is limited to two Hermes bags per annum, of which only one can be a Kelly or Birkin (should you be so lucky to find a store which actually has one in stock).

“Scholars argue that the true meaning of a luxury lies in its uniqueness, rarity, and the inability of the masses to obtain it.
” (Dubois & Paternault, cited in Kastanakis, M, & Balabanis, G 2012, p1399). Attributes of rarity and exclusivity are certainly coveted by Hermes customers (and collectors) and Hermes gives these VIP customers what they want; a product that others can’t have. A Hermes Birkin bag is the epitome of the status symbol worn proudly by the likes of Lady Gaga, Op337E95E900000578-3556882-Celebrity_fans_Victoria_Beckham_clearly_has_the_connections_to_g-m-5_1461571457316rah Winfrey, Victoria Beckham and (of course) The Kardashians;  a badge of wealth, for want of a better phrase, for the super-rich.

For some products, premium pricing is an indicator of quality (Kotler, P, & Keller, K 2012, p. 410). Additionally, for some consumers, the higher the price, the more appealing the purchase (Iacobucci, D 2013, p 116). In contrast to the standard demand curves that see demand decrease as prices increase, for many luxury items, the higher the price, the higher the demand until a threshold is eventually reached that starts to see demand slow. Marketers and retailers of luxury goods would typically seek to find this optimum threshold point. Hermes, however, appears to be turning even this on its head with a pricing strategy that, one could argue, has pushed past this point to slow overall demand, and in doing so, increase demand from its very high-end target market. A key component of this strategy is the clever measure (tactic) of restricting and ‘holding back’ the product from customers.

Although it could be (weakly) argued that the stratospheric pricing and long waiting lists are due to the use of premium quality raw materials and the lengthy time (up to several days) for a single artisan to hand craft each double stitched bag, the additional restricted supply to ‘approved customers’ is no doubt part of a clever plan (tactic) to ward off what Kastanakis, M, & Balabanis, G describe as  ‘bandwagon luxury consumption’ (2012, p 1399). For the aspirational buyer looking to join this elite set of Birkin and Kelly bag owners, the cost is extremely high. There are even guidance sites providing strategies on how to get your hands on one. Others have resorted to more extreme measures… Hermes handbags worth $1 million stolen from Brighton home.
There are of course those buyers for whom social status needs do not play any role in their purchase of these conspicuous products (Zheng, J, Chiu, C, & Choi, T 2012, p 827). Purported to be a better investment than gold  a brand new Hermes Birkin bag appreciates in value as soon as you step out of the gleaming store door. In January this year, a particularly rare and diamond studded Birkin sold for $US298,000 ($389,000), breaking the previous year’s record for a resold handbag of $222,000, which was also a Birkin.

Needless to say, if you do manage to make it onto the Birkin or Kelly waiting list or, lo and behold, to the point of sale in a Hermes store, far from expecting to be lavished with attention from the sales assistant, the Hermes marketing mix will no doubt have worked its magic and you will instead be thinking yourself extremely lucky to have the opportunity to spend $11,200 on a handbag! Plus you have reached the easy bit; your cost in getting to this point has far exceeded what is about to hit your Amex card.

Hermes  1_tcm87-18582

TV Ratings – do they really know what we’re watching?

Melinda Chapman | Student Id: 90426817

Most of us have heard of the TV rating boxes (people meters) that some people have in their homes to capture and report who in their household is watching what and when. It’s a long shot, but you may even belong to one of the 6000 households across Australia providing TV programmers and advertisers with the much anticipated ratings figures that reflect the viewing choices of Australia and which largely determine where programming and advertising dollars are spent. Interestingly, if you do belong to one of these households, you won’t tell us because you are not allowed to.  A key participation criteria is anonymity. As outlined in a recent news.com.au article by Debbie Chipp (Feb, 2016), households participating are asked not to disclose their identity so they cannot be unduly influenced or targeted by those interested in achieving a particular rating result. Ensuring market research data is valid is integral to it being relied upon for the purposes of, in this case, spending billions of advertising dollars each year.

  Continue reading

Anyone for a Smaller, Cheaper iPhone?

Anyone for a smaller, cheaper iPhone?        

By Melinda Chapman Student Id: 90426817 | WordPress Username:meljchapman

With the recent launch of Apple’s iPhone SE (21st March 2016) we were presented with an ‘old is new again’ product; an iPhone with no groundbreaking features or updates, but one positioned as “the most powerful 4inch phone ever”. It is effectively being marketed as having the same power, camera quality and aesthetic design of its bigger ‘iPhone 6’ brother, but all tucked into the compact iPhone 5 body. Apart from the smaller screen, only a couple of features (notably 3D Touch and the high resolution ‘selfie’ camera) are not on par with the latest iPhone 6s. At $399 in the US for the 16GB model ($679 in Australia), it’s also the cheapest iPhone ever launched.

Cheaper but not for the budget buyer

Regardless of its cheaper price in comparison to others in the iPhone line-up, the SE is still a premium product and is not targeting those in the market for a ‘cheap’ (~$200 AUD) smartphone. It may nevertheless hold extra appeal to those who are a little more cost sensitive and research from Slice Intelligence indicates it is attracting more android users and those who have not purchased a new phone in over 24 months.

Is there even a market for a 4 inch smartphone?

30 millWith the popularity of large screen smartphones, where, according to The Guardian, even the iPhone 6s is one of the smallest, the high performance iPhone SE is bucking the trend of ‘bigger is better’. But during the keynote, Apple highlighted that it sold around 30 million 4-inch iPhones last year alone. Clearly, a significant market does exist, at least for now.

“Some simply love smaller phones” touted Apple’s Greg Joswiak, VP of Product Marketing, further indicating that the phone is an important addition to the existing line up and a response to its customers’ demands. He went on to state that for approximately one third of those 4inch phone buyers, it was their first iPhone. In China, this percentage increased to two thirds. The keynote made it clear China was a key regional market for the SE. Interest in the iPhone SE from China and India has been higher than elsewhere; within a week of the launch, CNBC reported that three retailing sites in Beijing already had 3.4 million pre-orders.

Made for China or missing the mark?

apple_china

With China the largest smartphone market and India now topping the US as the second and fastest  growing, some, including The Atlantic have suggested that the iPhone SE would enable Apple to further expand into China and emerging Asian markets where people’s stature, and subsequently hand size is generally smaller than their Western counterparts. Obviously a more affordable iPhone would also gain traction here. However, with the Apple iPhone SE now price competitive with some android brands, CNBC reported that the big debate in China was now “Do you want an Apple iPhone or do you want a larger screen? It would seem that the cheaper price is appealing but not the small size. As reported, the Chinese may love the iconic status of Apple but they also like to watch movies on their phone. The Chinese, like the rest of the world, prefer the larger screens. “Smartphones are often the main connection to the digital world, and a big screen is highly valued.” (Fortune, 2016)

So who is it for then?

As an ‘iPhone loyal’ myself, one of the 61% of iPhone owners who stick with Apple when upgrading to a new device (Deloitte, 2015), I was admittedly somewhat reluctant to switch from my smaller iPhone 5, where I could comfortably access all areas of my phone with one hand, to the 4.7 inch iPhone 6. If it wasn’t for the battery issue at the time, or more truthfully, my inability to resist getting the latest iPhone each time my contract is up, I may have become one of Tim Cook’s estimated 60% (worldwide) still using Apple’s smaller iPhone 4 & 5 models.

That 60% is a large potential market and no doubt a key target for the iPhone SE. Certainly, encouraging this resistant group to upgrade to a phone that has the same internals as the iPhone 6 means the number of hardware variants Apple has to support would significantly reduce.

So who are they? I personally know two: my 21 year old daughter who has tiny hands and defiantly refused to upgrade to the iPhone 6 when she had the chance; and my 49 year old husband, who despite having huge hands, doesn’t like change. But he does like the fact that his iPhone 5 fits easily in the front pocket of his jeans and interestingly, fits the demographic of those more likely to buy an iPhone SE according to Slice Intelligence:

More than one fifth of SE buyers are in the 45-54 age demographic, versus 18 percent for all iPhone buyers; and 77 percent of SE buyers are men, versus 69 percent… Only 39 percent of new SE owners have a college degree, whereas 46 percent of those who pre-ordered an iPhone 6 or 6S did.

iphone-se-52 male

Given neither my daughter or husband have experienced a larger screen size, the SE is a likely to be a winner, but it’s not for everyone. Those like me, accustomed to the larger screen are unlikely to go back.

According to Computerworld, in early sales, the SE has recorded only 3 percent of the sales compared to the iPhone 6. But this is not surprising given the ‘laggard nature’ of this target market. Far from being early adopters more akin to the stereotypical Apple fan, this niche market who simply prefer a smaller phone or perhaps can’t be bothered with change and updates, is not going to be beating down doors to get their hands on the SE. Next week, next month maybe…when they’re good and ready.