Measuring marketing outcomes

Article

Katsikeas, C. S., Morgan, N. A., Leonidou, L. C., & Hult, G. T. M. “Assessing Performance Outcomes in Marketing.” Journal of Marketing 80 (2015), 2: 1-20.

Reviewer

Dr. Bhagyashree Katare, Assistant Professor, Department of Agricultural Economics

Summary

Authors aim to establish a theoretical framework to evaluate contribution through marketing outcomes in firm’s performance. They apply this theoretical framework to assess performance outcomes in 998 previously published empirical studies from 1998 to 2014. Their results provide critical review of performance outcomes related to marketing in the literature over the years. They present a marketing-performance outcome chain as a guide to managers in decision making related to performance evaluation. This paper enquires about the impact of marketing on the firm’s operational function.

What this means for agribusinesses

Measuring firms’ performance outcomes with respect to marketing is an important aspect of decision making for managers in all industries—especially in food and agribusiness. This study provides insight in designing marketing control systems and also provides tools for managers to explore the causal relationship between firms’ marketing efforts and financial and accounting performance matrices. This research gives managers a mechanism for improving firms’ performance in the future.

According to the evaluative framework developed in this paper, the creation and operationalization of a firm’s marketing performance is a result of the activities a firm performs to deliver value through its services or product—also known as the firm’s value chain network. Customers’ perception of the value offered by the firm’s products and services is influenced by the firm’s marketing strategic plan, which in return influences customers’ buying and post-purchase behavior. Investors evaluate the current and future value of the firm by closely observing its value chain network, which is an indicator of how customers are evaluating the firm. The marketing performance outcome chain suggests that firms with better performance invest in developing a strong marketing strategic plan and reinvest their resources in reinventing, structuring and maintaining a successful marketing strategy. This implies that marketing performance should not only be measured by revenue outcomes, but also by customer and investor perceptions.

The authors have found that there are different aspects of performance outcomes. For instance, accounting indicators of profit and sales revenue and market share are the most commonly used outcomes in performance measures for marketing. Customer behavior outcomes are measured by customer share, retention and acquisition. Market share is a commonly used outcome for product-market measure. Stock market-related measures have recently been used outcomes for financial market measures. For agribusiness firms there is an increasing interest in evaluating marketing performance. Research shows that most of the marketing performance is based on single measurement outcome. However, measuring performance outcomes is a complex task, and firms should consider a combination of different aspects of performance measures.

This research provides three main insights for agribusiness managers. First it provides a detailed guideline for assessment of marketing performance for researchers, which can be implemented by organizations, such as the American Marketing Association, to develop a set of core suggestions for conceptualizing and operationalizing marketing performance outcomes for managers. Second, it establishes a marketing performance outcome chain and gives a set of protocols to managers for designing marketing control systems and marketing dashboards. Third, it provides marketing managers with a useful tool for measuring marketing performance outcomes through different performance measures (ex: accounting measures; product-market measures), to communicate the link between marketing measures and accounting and financial measures with the senior management. Considering the emphasis on marketing in the agribusiness industry, this research suggests a need for creating system for measuring marketing performance, as this will enable managers to set up more realistic marketing goals and generate quick investment returns by setting better tradeoffs.