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Managing Marketing Assets for Sustained Returns

  • ID: 42931
  • October 2003
  • 113 pages
  • American Productivity & Quality Center, APQC
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Based on a consortium benchmarking study, this report follows the 2001 Best-practice Report Maximizing Marketing Return on Investment. The focus of this new report is broader in nature to examine how leading organizations manage brand and customer assets by using processes for a sustained return on their marketing investments. Key findings focus on:

1. Understanding marketing assets by identifying and valuing assets and defining stewardship over assets;

2. Leveraging assets by using marketing ROI metrics to develop and adjust a marketing budget aligned with the brand/asset value and leverage potential; and

3. Creating synergy for marketing assets by tracking asset performance and evaluating where interactions among marketing programs may lead to shortfalls or unexpected successes.

This Best-practice Report takes a different approach from our traditional benchmarking reports in that the key findings section brings in additional research from ARF and includes information concerning the history of market research and development in measuring marketing ROI.

Best-practice Organizations:

Citigroup Inc.
Duracell
Hewlett-Packard Co.
Kraft Foods Inc.
National Instruments Corp

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Contents of Report

A. Managing marketing assets for sustained returns - Chapter 1

In an ARF survey in 2000, CEOs identified "enhanced return on marketing investment" as one of the primary competencies that they wanted in their ideal market research function and it ranked just below "recommendations that impact strategy," "anticipating the future," and "risk reduction."

B. Managing marketing assets for sustained returns - Chapter 2

When the typical finance function at an organization is asked what return the organization earns on its capital, finance employees can usually answer very quickly in terms of tangible capital assets such as cash and equipment. But asking finance about the return on marketing assets will not likely generate a ready answer.

C. Managing marketing assets for sustained returns - Chapter 3

The people aspect is the most important part of a successful ROMI initiative. Discussions of ROMI programs often focus on metrics, statistics, and data processing issues because ROMI ties together the quantitative disciplines of marketing analytics and finance.

D. Managing marketing assets for sustained returns - Chapter 4

The study's partners systematically and thoroughly measure marketing activities and outcomes to improve decision making. They do differ in the resources and time invested in ROMI initiatives and, consequently, in their accomplishments.

E. Managing marketing assets for sustained returns - Chapter 5

A frequently, and not entirely undeserved, criticism of marketing mix models is that the undervalue the contribution of advertising because they are more sensitive to the short-term movements in market response.

F. Managing marketing assets for sustained returns - Chapter 6

Market research has made tremendous strides in the measurement of ROMI since 1990. The current situation can be described in three dimensions: metrics, number of brands, and the time horizon.

G. Managing marketing assets for sustained returns - Citigroup Inc.

This five-page case study centers on Citigroup Inc., the second-largest financial services firm in the world, with 5,600 locations.

H. Managing marketing assets for sustained returns - Duracell

This 13-page case study focuses on Duracell, a unit of the Gillette Company, which manufactures and sells batteries, including those for a variety of consumer electronic devices, hearing aids, cell phones, and home security systems.

I. Managing marketing assets for sustained returns - Hewlett-Packard Co.

This 18-page case study focuses on Hewlett-Packard Co., the computer hardware manufacturer.

J. Managing marketing assets for sustained returns - Kraft Foods Inc.

This 12-page case study focuses on Kraft Foods, the No. 1 food company in the United States. Kraft had $33.9 billion in revenue in 2001.

K. Managing marketing assets for sustained returns - National Instruments

This 10-page case study focuses on National Instruments, a Texas-based manufacturer of electronic test and measurement instruments.

L. Managing marketing assets for sustained returns - Index

This seven-page section is the index for the Managing marketing assets for sustained returns study. It includes section headings and figure titles.

Sponsor and Partner Organizations
A listing of the sponsor organizations in this study, as well as the best-practice (“partner”) organizations that were benchmarked for their performance and practices in managing marketing assets.

Executive Summary
A bird’s-eye view of the study, presenting the study focus, the methodology used throughout the course of the study, and a profile of study subject matter experts. The findings are explored in detail in following sections.

Key Findings
An in-depth look at the marketing industry. Study findings are supported by quantitative data and qualitative examples of practices employed by the partner organizations.

Partner Organization Profiles
Background information on the partner organizations as well as their innovative practices in managing marketing assets.

Index

Sponsor Organizations

- Bank of America Corp.
- Eastman Kodak Co.
- Frito-Lay Inc.
- IBM Corp.
- LifeWay Christian Resources
- Motorola Inc.
- Nestlé Purina Petcare Co.
- Ortho-McNeil Pharmaceutical Inc.
- Pepsi-Cola North America
- Pfizer Inc.
- PNC Bank Corp.
- PricewaterhouseCoopers
- Texas Instruments Inc.
- TheraSense Inc.

Partner Organizations

- Citigroup Inc.
- Duracell
- Hewlett-Packard Co.
- Kraft Foods Inc.
- National Instruments Corp.

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EXECUTIVE SUMMARY

This report follows our first consortium benchmarking study on the subject of marketing return on investment, Maximizing Marketing Return on Investment (2001). In Maximizing Marketing ROI, the benchmarking team learned that return on marketing investment (ROMI) programs, like many areas of marketing and research collaboration, experience high and low points of contribution, management support, and momentum. The focus of the 2003 report, based on the findings from a consortium benchmarking study, is broader in nature in order to examine how leading organizations manage brand and customer assets by using ROMI-based processes for a sustained return.

STUDY FOCUS

We identified three key areas for research. These areas guided the design of the data collection instruments and study focus.

1. Understand marketing assets by identifying assets, valuing assets, and defining stewardship over assets.

2. Leverage marketing assets by using ROMI metrics to:
- develop the overall marketing budget to match brand/asset value and leverage potential,
- allocate the marketing budget in accordance with the brand/asset value and leverage potential, and
- monitor and adjusting the marketing budget.

3. Create synergy for marketing assets by:
- identifying over- and under-performing marketing assets (according to models and management judgment) and
- evaluating where interactions among marketing programs may have led to shortfalls or unexpected successes.

STUDY PARTICIPANTS

Nineteen organizations participated in the consortium benchmarking study by attending a series of planning sessions, completing data gathering surveys, and/or attending or hosting on-site interviews. Of those 19 organizations, 14 sponsored the study (“sponsors”). Five organizations were identified as having strong processes to manage their marketing assets for sustained returns and were invited to participate in the study as best-practice partners(“partners”).

BENCHMARKING METHODOLOGY

Our benchmarking methodology was developed in 1993 and serves as one of the premier methods for successful benchmarking in the world. It was recognized by the European Center for Total Quality Management in 1995 as first among 10 leading benchmarking organizations’ models. It is an extremely powerful tool for identifying best and innovative practices and for facilitating the actual transfer of these practices.

Phase 1: Plan

The planning phase of the study began in the winter of 2002. During that period, secondary research conducted was used to help identify candidate organizations to participate as best- practice partners. In addition to this research, we identified potential participants based on their own firsthand experiences, research, and sponsor recommendations. Each recognized organization was invited to participate in a screening process. Based on the results of the screening process, as well as organizations’ capacity or willingness to participate in the study, the final list of five best-practice partners was developed. A kickoff meeting was held in February 2003, during which the sponsors refined the study scope, gave input on the data collection tools, and indicated their preferences
for site visits to best-practice partner organizations. Finalizing the data collection tools and piloting them within the sponsor group
concluded the planning phase.

Phase 2: Collect

Three tools were used to collect information for this study.

1. Screening questionnaire—qualitative questions designed to identify best practices within the partner organizations

2. Detailed questionnaire—quantitative questions designed to collect objective data across all participating organizations

3. Site visit guide—qualitative questions that parallel the areas of inquiry in the detailed questionnaire, which served as the structured discussion framework for all site visits

All partner organizations responded to the screening questionnaire, and all partners and sponsors completed the detailed questionnaire. All partner organizations also hosted site visits attended by sponsors and members of the study team. The study team prepared written reports (case studies) of each site visit and submitted them to each respective partner organization for validation and approval.

Phase 3: Analyze

Both the quantitative and qualitative information gained from the data collection tools was analyzed. The analysis concentrated on examining the challenges organizations face and lessons learned in the three focus areas. An analysis of the data, as well as case studies based on the site visits, is contained in this report.

Phase 4: Adapt

Adaptation and improvement stemming from the best practices identified through a consortium study occur after readers apply key findings to their own operations.

Staff members are available to help create action plans appropriate for an organization based on the study findings.

ORGANIZATION OF REPORT

This Best-practice Report takes a different approach from our traditional benchmarking reports in that the key findings section brings in additional research from ARF and includes information concerning the history of market research and development in measuring ROMI. In addition to this intensive expert insight, the case studies detail, in-depth, best practices from the partner organizations.

SUBJECT MATTER EXPERTS

Jim Spaeth
Spaeth, ARF president, served as one of three subject matter experts from the ARF for this project. He is a member of the Video Electronic Research Council, Copy Research Council, and the Research Quality Council, and he recently co- authored Market Research Matters (John Wiley & Sons, 2000). A former member of the ARF
board of directors, Spaeth previously served as vice chair of ARF’s Media Communications Council.

Bill Cook
Cook, ARF’s senior vice president of research and standards, also served as subject matter expert. He oversees ARF’s research activities and the program to produce and disseminate principles, guidelines, and standards. Cook has co-authored articles for numerous publications, including the Journal of Consumer Research.

Vijay Talluri,
Talluri, ARF’s associate research director, also served as subject matter expert. He manages several ARF research activities such as the Global Research Online Workshop. Talluri has co-authored several articles in respected marketing and business journals.

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