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THE “WHAT” AND “HOW” OF MARKETING PERFORMANCE MANAGEMENT

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THE “WHAT” AND “HOW”
OF MARKETING PERFORMANCE
MANAGEMENT

Sorina-Diana MONE
Abstract. The paper is aimed at Faculty of Economics and Business
offering a synthesized, but
comprehensive review of the relevant Administration, Babes-Bolyai University
marketing performance management Teodor Mihali St. 58-60, Cluj-Napoca,
literature. While many contributions Romania
to measuring and improving e-mail: [Link]@[Link]
marketing performance have been
advanced, little previous research has
focused on offering a complete
overview of marketing performance
management domains. Marius D. POP
Our paper attempts to do so, by first Faculty of Economics and Business
exploring the most popular concepts Administration, Babes-Bolyai University
in marketing performance: marketing
metrics, KPIs, dashboards, Teodor Mihali St. 58-60, Cluj-Napoca,
scorecards and marketing Romania
performance management systems. e-mail: [Link]@[Link]
Then, based on the marketing
productivity model proposed by Rust
et al. (2004a), marketing
performance domains are identified
and analyzed, providing a complete Nicoleta-Dorina RACOLŢA-PAINA
approach to measuring and Faculty of European Studies,
managing marketing performance, Babeş-Bolyai University
from marketing strategy to impact on Em. de Martonne St. 1, Cluj-Napoca,
financial results. To our best
knowledge, this may be the first study Romania
in marketing literature from e-mail: [Link]@[Link]
Romania, addressing marketing
performance management from a
holistic perspective.

Keywords: marketing performance, Management and Marketing

marketing accountability, marketing Challenges for the Knowledge Society
metrics, marketing dashboards, (2013) Vol. 8, No. 1, pp. 129-146
marketing scorecards.
Management & Marketing

1. Introduction

Marketing performance management has been one of the most prominent streams
in recent marketing research and practice. In fact, the Marketing Science Institute has
ranked marketing accountability, return on marketing investments and marketing
performance management systems among the top 10 research priorities after 2002 and
top priority for 2008-2010 (Lamberti and Noci, 2010).
Many valuable contributions have been brought to this field of research, concepts
such as marketing metrics (Gupta and Zeithaml, 2006; Reibstein et al., 2006; Kotler et
al., 2009), marketing dashboards (Pauwels et al., 2008), marketing performance
management systems (Ambler, 2003; Lamberti and Noci, 2010) and marketing
productivity (Rust et al., 2004a) being advanced. Notwithstanding these recent
developments, there is little consensus as to what marketing performance management is
and how it should be done. Our paper aims to bring together the most important recent
developments in the research and practice of marketing performance management,
offering a holistic approach to analyzing and managing marketing performance.
Furthermore, based on the marketing productivity chain (Rust et al., 2004a), we identify
the most important domains of measuring marketing performance, exploring the most
popular concepts and practices for each.

2. Marketing performance management

2.1. The sphere of marketing performance management

To correctly define what marketing performance management envisages, a

clarification must be done regarding two, sometimes used interchangeably, concepts:
performance management and performance measurement. In a broad sense, performance
management can be seen as the overarching process that deals with performance, thus
including sub-processes such as performance planning, measuring, reporting and
decision-making for improving performance. Performance measurement represents a
component of performance management, dealing with the identification, monitoring and
communication of performance results with the use of performance indicators (Brudan,
2010, p. 111). Hence, marketing performance management includes not just the
monitoring and assessment of marketing results (marketing performance measurement),
but also marketing planning, execution, and, highly important, use of marketing results
for performance improvement. In fact, it is argued that the real value of performance
measurement relies not in the performance indicators or reports, but in the decisions and
actions generated from using them (Neely et al., 1995, in Meekings et al., 2009, p. 13).
Drawing the attention of not only marketing scholars, but also that of marketing
practice, it is worthwhile noting that both have been active in proposing definitions and
concepts to advance progress in marketing performance management. In fact, we would
appreciate that marketing performance management is one of the marketing streams
with the most prominent contributions from practice. For example, CMG Partners and
Chadwick Martin Bailey (2010), two marketing consulting firms, define marketing

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The “what” and “how” of marketing performance management

performance management as the discipline and practice of measuring, learning from and
improving marketing strategies and tactics over time. Patterson (2007, p. 271) proposes
a definition of marketing performance management as the practice of managing
efficiency and value in marketing by aligning people, processes and systems towards a
common set of goals.
Related to the sphere of marketing performance management, a problem that is
often cited and seen in practice refers to being able to make an accurate separation
between marketing and other functional areas, especially marketing and sales. Although
theoretically the responsibilities of these two departments are relatively well defined, in
practice it can often happen that these are conflicting (due to internal competition
between departments) and not work towards common goals, or they can even be
overlapped, which makes accountability problematic. Nevertheless, “firms will have to
give up on separating sales to marketing to customer service” (Woodburn, 2004, p. 65),
especially considering that this separation has lead for so long to a counter-productive
internal competition. On the other hand, it is quite difficult to assume that outcomes such
as customer satisfaction or sales volume can be attributed exclusively to an individual
department, thus making accountability accurate (Woodburn, 2004).
Another situation often cited in relation to marketing performance measurement
refers to actually defining what it is measured, depending on what marketing is
considered to be, especially in companies where there is no marketing as specific
department. In this context, Ambler (2003) proposed three approaches towards
marketing:
• Marketing as intrinsic orientation (often unconscious) of the whole company
towards obtaining customer preference and, ultimately, high returns for the shareholders
(pan-company marketing);
• Marketing as functional area or department, which may or may not assume
profits, products, pricing policies and so on (functional marketing);
• Marketing as expenses, most often advertising and promotional spending
(budget marketing). In general, when speaking about return on marketing investments,
this latter approach is envisaged.
Our opinion is that marketing performance measurement and management must
refer to marketing as a company-wide orientation (since high level marketing outcomes
cannot be attributed to marketing exclusively) and to marketing as process (the success
of the marketing department in implementing the marketing mix).

2.2 Core concepts in marketing performance management

An important element in marketing performance measurement refers to the tools

used in this process. We believe that the most popular such tools are the following:
marketing performance indicators, marketing dashboards and marketing performance
management systems.
Related to the performance indicators, in general, terminology includes other
concepts such as performance measures, metrics and Key Performance Indicators

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Management & Marketing

(KPIs). Reibstein et al. (2006, p. 1) define metrics as tools that “quantify a trend,
dynamic or characteristic”. Parmenter (2009) identified four types of performance
measures:
• Key results indicators (KRI), which reflect performance related to a critical
success factor;
• Result indicators (RI), which reflect what was done, what was achieved;
• Performance indicators (PI), which reflect what needs to be done;
• Key performance indicators (KPI), which indicate what needs to be done in
order to increase performance dramatically.
Kotler et al. (2009) use the terminology of “marketing metrics”, defined as a set
of performance measures that help companies quantify, compare and interpret their
marketing performance. Good marketing metrics have to:
• Be as quantifiable financially as possible, so as to “speak the same language”
with the other departments in the organization;
• Be future oriented (leading), rather than to reflect past performance (lagging);
• Allow a granular analysis of marketing performance (down to the level of
individual client);
• Offer objective data, to enable accountability and benchmarking.
Generally, scholars admit that there is no “silver” metric, meaning a performance
measure that is perfect and sufficient alone in reflecting marketing performance. Thus, it
is recommended to use a portfolio of performance indicators to have multiple
perspectives on marketing performance and to see connections between the multiple
dimensions. Such a portfolio of marketing metrics constitutes a marketing dashboard.
The dashboard concept comes from the business intelligence (BI) area, being a form of
BI solution that enables the management of a volume of data and the generation of
performance reports based on this data. According to Rasmussen et al. (2009), data
warehousing and analytical processing represent the two major pillars of a dashboard
solution, and implicitly of a marketing dashboard. Such a dashboard offers business
logic to a large amount of data, it enables synthetical visualization of some indicators or
reports that can be updated even in real time and offers the possibility to drill-down for
detail. Pop (2002) argues that the dashboard must contain the core business indicators
(to respond to information needs of first level managers) and a “signaling” system which
draws attention when indicator values are below thresholds. Additionally, there has to be
available analytical data in order to enable the analysis of causes for poor performance.
Patterson (2007) suggests a “metrics continuum” with marketing performance
indicators at five levels:
• Activity indicators, which have a statistical nature, not reflecting strategic
dimensions (e.g. website visits, number of leads etc.);
• Operational indicators, which are related to the management of marketing as
business entity (marketing department). They reflect the efficiency of investments (e.g.
cost per lead, people per program, marketing campaign rentability etc.), but do not
reflect business performance;

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The “what” and “how” of marketing performance management

• Outcome indicators, which allow the focus on dimensions that are related to
value;
• Leading indicators;
• Predictive indicators.
Based on these indicators, a marketing dashboard is created, which enables the
visualization of the metrics, progress and impact on business performance. The
marketing dashboard has several characteristics (Patterson, 2007): it reflects how
marketing “moves the needle” of the business; reflects what works and what doesn’t;
enables marketing alignment to the other business areas; transforms complex indicators
in comprehensive, actionable data. In this same context, the author argues that there has
to be an evolution from what marketing usually measures (traffic on the website,
response rates etc.) to more complex performance measures related to three critical
aspects: client acquisition (e.g. share of audience), client retention (e.g. share of wallet)
and client value increase (e.g. price premium).
Another popular concept in the area of marketing performance management is the
marketing performance management system (MPMS), defined as set of processes and
tools that deal with evaluating the performance influenced or driven by marketing
(Lamberti and Noci, 2010, p. 141). The authors argue that there are three variables
influencing such a system: the typology of the performance dimensions under
evaluation, the typology of the indicators used and control systems (how the managers
evaluate performance and use the information generated by the marketing performance
management system). In what concerns the typology of marketing performance
indicators used, the authors (2010) identify the following types:
• Financial output indicators, which compare the results of the marketing actions
to the costs associated to implement the actions (e.g. profits, sales, cash flow);
• Non-financial output indicators, such as market share, customer satisfaction
and so on;
• Input indicators, which reflect marketing performance in terms of effort (e.g.
marketing budget and marketing assets) or marketing unit behaviour (marketing audits);
• Multiple, hybrid indicators which evaluate macro dimensions related to
efficiency, effectiveness and interdependence of the multiple dimensions of the
marketing performance management system.
The most popular performance management system is the Balanced Scorecard,
which can be implemented at organizational level and translated at operational levels,
including that of the marketing department. Kaplan and Norton (2001) describe such a
system as emerging from the vision and the mission of the organization (and implicitly
that of the marketing department), based on which performance objectives are
formulated (on the four perspectives: financial, customer, internal processes and learning
and growth). Further on, the accomplishment of the objectives is monitored through the
performance indicators (grouped in a marketing performance scorecard) and through
performance improvement initiatives. Therefore, such a system comprises the strategic
level (mission, vision, marketing objectives), as well as the operational or tactical level
(marketing metrics and marketing performance improvement initiatives).

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Management & Marketing

3. Marketing performance management domains-what and how to measure

and improve

The analysis of marketing performance management literature allows a certain

delimitation of marketing performance domains, in the context of several authors
proposing different approaches, more or less detailed or comprehensive. Some authors
build their discourse on a specific domain (such as customer satisfaction), whereas
others treat marketing performance by using different dimensions. In some cases,
scholars suggest models for measuring and improving marketing performance.
We believe a model that is highly complex in this context is the model proposed
by Rust et al. (2004a), built upon the concept of marketing productivity, a concept that
refers to how marketing activities lead to creating value for shareholders. The model of
marketing productivity enables the analysis of how the non-financial marketing
indicators lead to short and long term financial results, the premises of the productivity
chain being the following (see Figure 1):

Marketing actions The firm

Tactical actions: advertising, Strategies: promotion,

product improvements etc. distribution etc.

Impact on the customers: Marketing assets: brand,

attitude, satisfaction etc. clients

Impact on the market: Market position: market

competitive position, sales etc. share etc.

Financial impact: ROI, EVA Financial position: profits,

etc. cash flow etc.

Impact on firm value: MVA Firm value: capitalization etc.

etc.

Figure 1. Marketing productivity chain (Rust et al., 2004a, p. 77)

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The “what” and “how” of marketing performance management

• Marketing strategies, and implicitly, marketing tactics impact on the customers

(in terms of attitudes, behavior, satisfaction etc.);
• The impact on the customers influences firm position on the market;
• Firm competitive position determines the financial results and, consequently,
impact of marketing on value for shareholders.
Measuring marketing performance must be done at all these levels and, ideally,
must reflect correlation among them to finally enable the evaluation of marketing impact
on financial results and shareholder value. In what follows, we will analyze each of the
levels in the marketing productivity chain, exploring the most popular concepts and
measurement practices corresponding to these domains.

3.1. Strategic marketing performance

Marketing’s strategic role refers to contributing to defining the strategic direction

of the firm and directing marketing investments so as to create sustainable competitive
advantage (Rust et al., 2004b). In this context, performance analysis of marketing
strategies should enable the understanding of how marketing decisions influence
financial results and their consequences on the firm’s cash flow. Thus, at this level, the
firm needs marketing strategy analysis models which are more complex than the simple
input - output analyses and can offer answers to questions such as: When can the brand
asset be used to obtain a price premium? Can the value of marketing research be
quantified in terms of more efficient processes within the supply chain, for example?
(Rust et al., 2004b, p. 78).
An important element in the context of measuring marketing strategy
performance is represented by the marketing audit. Kotler et al. (1989) define the
marketing audit as a comprehensive, systematic, independent and periodical
examination of the marketing environment, objectives, strategies and activities with the
purpose of determining issues and opportunities and recommend a plan for improving
the company’s marketing performance. The authors advise that the marketing auditor
must verify if the marketing strategy and objectives are well formulated and adequate in
the context of the company’s threats and opportunities. In what concerns the benefits of
a marketing audit, Taghian and Shaw (2008) have proven that conducting such an audit
and implementing the recommendations may result in a positive change of market share,
but for such a change to happen, the audit must be periodical, not occasional.

3.2. Tactical marketing performance

Measuring and managing marketing performance at tactical level refers to the

marketing mix. Ambler argues (2003) that to explore performance at the level of
particular elements from the marketing mix is as sensitive as the analysis of directions
when one does not know where to head to. Instead, we have to analyze the complete
marketing mix and context. The categories identified by the author as being relevant
from this point of view are:

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Management & Marketing

Table 1
Marketing mix KPIs
Marketing mix dimension Performance indicators Comments / Cautions
$ Cost per thousand Allocating advertising budget
Advertising # Gross rating points Analyzing campaign results and separating them
# Frequency of exposure from other marketing mix elements
# Page views
Online and direct The ease of monitoring in all stages (prospecting,
# Visits
marketing purchase, re-purchase)
% Conversion rate
$ Cost per event
PR techniques differ from advertising, but
Public relations # Exposures per event
objectives are similar
# Positive media exposures
% Participation rate
Loyalty programs Differentiate based on client categories
# Purchase frequency
# Customer engagement
CRM and customer service Synergy between people and technology
% Customer satisfaction level
$ Cost per promotion
Sales promotion % Coupon conversion Difficulty to create loyalty and long term relations
# Samples
Difficulty to evaluate innovation from a
New product development % Revenue from new products
quantitative perspective
Source: Ambler (2003) .

Reibstein et al. (2006) offer in their book titled “Marketing Metrics: 50+ Metrics
Every Executive Should Master” a comprehensive collection of tens of marketing
performance indicators. Based on a taxonomy of marketing mix activities, each indicator
is broadly described in terms of definition and calculation, as well as limitations and
aspects that need to be considered when using it. This is probably the most exhaustive
catalogue of marketing performance indicators in the specialized literature. Essentially,
it envisages marketing mix elements (product, price, promotion, distribution), customer
portfolio (profitability, satisfaction etc.), market analysis and marketing impact on
financial results (see Table 2).
In the services domain, performance has mostly been studied from a service
quality perspective. In this context, the most popular model is SERVQUAL, proposed
by Parasuraman et al. (1988) and refined in the following decades. SERVQUAL relies
on measuring customer service expectations and customer service perceptions’ based on
five dimensions: credibility, responsiveness, assurance, empathy and tangibles, service
quality being a function of the magnitude of the gap between expected service and
perceived service (Idem).
Another similar approach is the SERVPERF model that was proposed as an
alternative to SERVQUAL. This model conceptualizes not only the quality of service,
but also the relationship between service quality, customer satisfaction and purchase
intentions. It is argued that service quality is an antecedent of customer satisfaction and
that customer satisfaction has a significant impact on purchase intentions, but service
quality has a less significant impact on purchase intention than customer satisfaction has
(Cronin and Taylor, 1992 in Gilmore and McMullan, 2009).

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The “what” and “how” of marketing performance management

Table 1
Marketing mix KPIs
Marketing mix element Performance indicator examples
Product and portfolio Year on year increase; Trial; Cannibalization; Repeat sales; Frequency of purchase
management
Price analysis and profitability Margin per unit; Average price per unit; Variable costs; Marketing expenses from
sales
Pricing strategy Price premium; Good value; Price sensitivity
Distribution channels Numerical distribution; Out of stocks; On time delivery; Value of discounts
management
Sales force Potential sales; Sales force effectiveness; Prospects in pipeline
Sales promotion Coupon conversion; Sales with coupons; Campaign profitability
Advertising and online Gross rating points (GRP); Target rating points (TRP); Cost per thousand; Click-
marketing through; Cost per order; Cart abandon rate
Source: Reibstein et al., 2006.

In general, scholars believe that there are important difficulties in measuring

service quality, especially at the level of three aspects: dimensions of quality, variations
in terms of customer perceptions and tools used for measurement (Lewis, 1995, in
Davies et al., 1999). Moreover, Gilmore and McMullan (2009) argue that measuring
services performance should consider the complete delivery process (prior, during and
after delivery), tangibles as well as intangibles and the specific context of the service
delivery.

3.3. Measuring the impact of marketing activities on consumer behavior

The impact of marketing activities on consumer behavior and attitudes cannot be

ignored, a series of dimensions being essential in this context (Ambler et al., 2002, in
Rust et al., 2004):
• Awareness – the ease at which consumers recognize the firm and its products;
• Associations – strength, favourability and uniqueness of the firm and brand
attributes;
• Attitudes – global evaluation of the firm and brand in terms of quality and
satisfaction;
• Engagement – loyalty for the firm and the brand;
• Experience – the extent at which consumers use the product, speak about it,
search for information or promotions etc.;
Reibstein et al. (2006) introduce the “awareness – attitudes – consumption” chain
as a hierarchy of effects of the marketing activities on the customers (see Figure 2):

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Management & Marketing

Awareness
Consumers must be aware of the
existence of the product, then ….

Attitudes
Develop attitudes related to the product
and finally ….

Consumption
Purchase and consume the product

Figure 2. Awareness – Attitudes – Consumption: Hierarchy of Effects

of the Marketing Activities (Reibstein et al., 2006)

Table 2
Sample Questions for the Hierarchy of Effects of the Marketing Activities
Hierarchy of effects Sample questions
Awareness Have you heard about brand X?
(awareness and knowledge)
Attitudes Is brand X suitable for me?
(beliefs and intentions)
Consumption Have you used brand X this week?
(purchase habits and loyalty)
Source: Reibstein et al., 2006.

Gupta and Zeithaml (2006) analyze consumer behavior performance indicators,

grouping them in two categories:
• Observable indicators, which measure visible purchase and consumption
behavior (such as new clients acquired, client retention, frequency of purchase etc.);
• Non-observable indicators, which measure perceptions (e.g. quality of
service), attitudes (e.g. customer satisfaction) or intentions (e.g. purchase intentions).
Usually, these types of indicators are measured by means of surveys.
The model proposed by these authors reflects the links between the marketing
activities, impact on consumer behavior and financial results, being therefore a
somehow simplified productivity chain (see Figure 3). Our addition to the original figure
(link in blue) reflects that what firms obtain in terms of financial results leads to what
firms do in a subsequent cycle, as in most of the cases, marketing strategies and actions
are influenced and recalibrated by the results from previous planning and execution
cycles.
One of the most popular marketing performance indicators is customer
satisfaction, some of the reasons probably being its generic construction and universal

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The “what” and “how” of marketing performance management

applicability, both for goods and services, and both for firms and non-profit and public
sectors. Event though it does not have a unanimously accepted definition, satisfaction
can be easily understood by customers and easy to communicate to managers. In
general, customer satisfaction measures the customers’ perception related to the extent at
which the product fulfills their expectations (Gupta and Zeithaml, 2006). Nigel Piercy
(1996) argues that, in the area of customer satisfaction measurement, literature has
focused mostly on developing satisfaction concepts that can be quantified and on
developing systems for data collection and reporting, whereas research firms have
focused on offering a variety of surveys, focus groups and technology solutions to
manage this process. Nevertheless, the vital issue of measuring the impact of customer
satisfaction on the internal processes (service strategy, employee behavior and so on)
has been neglected.

What firms obtain Financial performance (profit, firm value)

What consumers do Behavioral (observable) indicators

What consumers think Perception (non-observable) indicators

What firms do Marketing actions

Figure 3. Links between consumer behavior indicators and financial performance
(adapted from Gupta and Zeithaml, 2006)

More recently, a new indicator called Net Promoter Score (NPS) is being
promoted as a simple and efficient method for measuring customer satisfaction.
Reibstein et al. (2006) name this indicator as “willingness to recommend”, as it aims to
measure the customers’ willingness and likeability to recommend the product or the firm
to people they know. The method has been developed and proposed by Satmetrix
Systems and Bain & Company, in collaboration with Reicheld (2006-2011). Essentially,
each firm’s customers are divided in three categories: Promoters (who are enthusiasts
with the product and would recommend it), Detractors (who are not satisfied and can
influence negatively what is being said in the market about the product) and Passives
(who do not experience insatisfaction with the product, but are vulnerable to
competition). Taxonomy is done based on a survey that consists of a single question -
How likely is that you would recommend the product to a friend or colleague? – with
Likert scale answers from 0 to 10 (0 - not at all likely, 10 - very likely). Although
calculation is facile and although it has been widely adopted by companies worldwide
(such as General Electric, Symantec etc.), other authors appreciate that arguing that NPS

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can be the single marketing measure necessary to top management is not supported by
empirical evidence (Pauwels et al., 2009), nor is it conformant with the rigors of
academic research (Gupta and Zeithaml, 2006).
In general, it is argued that indicators that measure perceptions and attitudes (non-
observable indicators, as defined by Gupta and Zeithaml, 2006) are premises for
observable behavior. The authors (2006) suggest three observable indicators of
consumer behavior of critical importance in marketing performance measurement:
• Customer acquisition - when a customer (or even lost customer) acquires a
product from the firm for the first time;
• Customer retention - refers to the probability of retaining customers and that
they continue buying from the firm;
• Cross selling - when the firm tries to sell complementary products to existing
clients.
Another important indicator in this context is customer loyalty. This requires a
particular attention since although it is commonly defined as the percentage of
customers that have a certain frequency of purchase, some other take the analysis
further, suggesting that:
Loyalty implies a solid commitment to continue purchasing a preferred product,
despite situational factors and despite pressure from competitors (Oliver, 1999);
The existence of loyalty is indicated by a set of behaviors that signal motivation
in the relationship with the company, including a high “share of wallet”, repeat
purchases and recommendations (Zeithaml et al., 1996, in Gupta and Zeithaml, 2006).

3.4. Marketing assets (clients and brand) performance

3.4.1. Measuring and managing brand performance

The asset represented by the brand, also know as brand equity is considered to be
a concept so complex that there are difficulties in the very fact of describing it. Tim
Ambler (2003) emphasizes on the difference that should exist between the asset (brand
equity) and its measurement (brand value). The brand concept started being popular in
1991, when Aaker proposed five dimensions of the brand as marketing asset: brand
loyalty, brand awareness, perceived brand quality, other brand associations (besides
quality) and intellectual property (Ambler, 2003).
Keller defines (1998) the brand asset as the added value to the product given by
what consumers think, speak and act. The sources of brand value generally emerge from
what consumers know of the brand – brand knowledge, which refers to the thoughts,
perceptions and experiences of consumers with the brand (Keller, 1998). Two important
components of the brand knowledge are the brand awareness and brand image. For
calculating these brand measures, both qualitative techniques (open questions such as
“What does Rolex watch represent for you?” and prospective techniques that use
comparison or interpretation tasks), and quantitative techniques (usually with scales) are
employed. Quantitative techniques usually explore evolutions in terms of brand
awareness, recognition and recall.

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The “what” and “how” of marketing performance management

In what concerns the benefits or the impact the brand has on firm success, the
areas of added value are diverse: differentiation, increased customer loyalty, decreased
vulnerability of customers to competition, lower price sensitivity (Keller, 1998). These
are usually measured by means of comparison analyses consisting of experiments that
analyze consumer responses to changes in marketing actions and changes in brand
identification elements.
In a more holistic context, another brand performance concept is brand valuation,
meaning the quantification of brand value in monetary terms, especially in situations
where it is necessary for mergers, acquisitions or licensing.
A popular methodology in this context is Interbrand’s Brand Strength, which
represents the score obtained by the brand at ten criteria: internal commitment (brand
investments), legal protection, clarity of positioning, responsiveness to market changes,
authenticity, relevance to consumer needs, consumer understanding of brand traits,
consistency, presence and differentiation (Interbrand, 2011).
The research firm Ipsos-ASI introduces the concept of Brand Health, composed
of three dimensions: Brand Asset (perceptions in terms of Relevance, Popularity,
Clarity, Uniqueness and Familiarity), Consumer Engagement (Brand sensitivity, Substi-
tutability) and Price / Value ratio (Price comparison, Price evaluation) (Walker, 2002).
Finally, Young and Rubicam use the Brand Asset Valuator methodology,
according to which brand value is determined by the following dimensions, based on the
stage in brand life cycle: differentiation (first generator of value), relevance (as the brand
matures) and to create long term engagement, esteem and brand knowledge are crucial
(Ambler, 2003).

3.4.2. Measuring and managing customer asset performance

More recently, attention has been transferred from the brand to the customer, as
final beneficiary of the product or service. Bălan (2007) argues that companies that aim
to exploit at full the relations with their customers must monitor a very important
indicator - customer lifetime value (CLV), defined as the net present value of future cash
flows generated by a client. Research in the area of CLV has known different
approaches. For example, Reicheld suggests that client retention is the most important
factor in maximizing client value, whereas Reinartz and Kumar suggest that customers
with high lifetime are not necessary the most valuable (Gupta et al., 2006). The
calculation formula for the customer lifetime value is the following:

T
( p t − ct )rt
CLV = ∑ − AC
t =0 ( 1 + i )t
Pt = price paid by the customer at moment „t”;
Ct = cost of serving the customer at moment „t”;
i = cost of capital (discount rate);
rt = probability that the customer purchases at moment „t”;
AC = cost of customer acquisition;
T = time horizon for estimating CLV.

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Management & Marketing

Pelău and Fufezan (2009) propose an innovative approach to measuring customer

lifetime value that aims to surpass the relatively static character of the common
approaches prior suggested. Essentially, the authors introduce the concept of “dynamic
value of a customer”, as a function of ten variables (both monetary, such as revenues or
costs corresponding to that customer relation and non-monetary, such as frequency of
purchase or recommendations made by the customer), each variable having a “weight”
in an average, based on its importance in the overall function.
Although it is difficult to accurately calculate it in practice, customer lifetime
value is an important indicator for identifying profitable customers and allocating
resources accordingly.
In the context of maximizing customer lifetime value, share of wallet and
customer equity, an aspect that must not be neglected refers to relationship marketing. In
the area of relationship marketing, it is argued that the use of performance measures
serves various purposes, such as: help organizations use resources more effectively by
allocating them differently to various customers and identifying deviations from
objectives, setting priorities for marketing efforts and supporting rewards policies based
on comprehensive information (Lages et al., 2008). In other words, performance
management can support constant monitoring and improvement of relationship
marketing. Lages et al. (2008) suggest a scale for measuring relationship marketing
performance, based on five dimensions:
• Relationship practices and politics (ground rules of the relationship);
• Trust (i.e. the willingness of one side to rely on the other side in the relation);
• Commitment (i.e. the desire to develop long term relations, even at the
expense of short term sacrifices);
• Mutual cooperation (i.e. when each side thinks it will have greater benefits
through cooperation, rather than independently);
• Relationship satisfaction (determined by cognitive and affective evaluations at
all phases of the relationship).
Each of these dimensions is evaluated using a unique set of questions with
answers in scale. Although useful, this approach may have two limitations: on one had,
the scale being addressed solely to customers, it only reflects their perspective on the
relationship, neglecting the providers’ perspective; on the other hand, answers may be
too diluted, if not transformed in indicators, with targets, correlated to the company’s
objectives and monitored in time. Moreover, Gupta and Zeithaml (2006) argue that
aspects such as trust and commitment are difficult to qualify, reason for which these
measures have know a low popularity among companies and researchers.

3.5. Measuring market performance

Results obtained at brand and customer levels determine, by comparison to

competitive firms and brands, the company’s performance and position in the market.
The most popular market indicator is the market share, defined as the percentage of the
market accounted for by the firm, whether in terms of sales volume, or in terms of sales

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The “what” and “how” of marketing performance management

value (Reibstein et al., 2006). Other performance measures that reflect market
performance and are somehow derived from the market share are:
• Relative market share (the firm’s sales, as a ratio from the sales of the market
leader);
• Market share rank (the position of the firm in the hierarchy of the market
shares of the main competitors).
In this context, we would outline two limitations that are very common in
analyzing market performance. The first one refers to the actual definition and
identification of the target market and the second one refers to having access to accurate
data from the market, related to the sales figures of the other firms.

3.6. Marketing impact on financial performance

Marketing performance analysis is only complete when there is an evolution of

the marketing efforts from a financial perspective. The most popular performance
indicator in this context is the return on marketing investment (ROMI). Rust et al.
(2004b) propose a model for analyzing the return on marketing investments from a long
term, strategic perspective and not just to calculate the financial results obtained from a
marketing program or campaign. Although in general ROMI is used to comparatively
analyze different investment options or possible allocations of the marketing budget
(Ambler, 2003), Rust et al. (2004b) consider ROMI as the ration between the increase in
customer equity generated by the marketing investment and the value of the investment
itself.
Another perspective to analyze marketing impact on financial performance is
given by the shareholder value theory, which argues that the purpose of any business is
to generate value for the shareholders, value which represents the cash flow expected
from implementing a particular strategy. The value of the cash flow that a brand or firm
has the capacity to generate is a function of four factors: volume of the cash flow, the
speed at which it is created, the time it will flow in the firm and the risk associated to
these future in-flows (Doyle, 2001). It is argued that successful brands have the capacity
to obtain a price premium (thus a high level of cash flow), faster response from the
consumers (thus a higher speed of in-flows), as well as lower vulnerability in front of
competitors (thus lower risks). Therefore, brand performance has the potential to
determine financial performance in the sense of creating shareholder value.

4. Conclusions and implications

Exploring recent literature on marketing performance management, our paper

offers a holistic view on the subject, bringing together different approaches of various
authors in the field. Based on the model proposed by Rust el al. (2004a), we explore
marketing performance management domains, starting with marketing strategy, to
operations (marketing mix), marketing assets and marketing impact on financial
performance.

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Management & Marketing

From a theoretical perspective, we contribute to the marketing performance

stream of literature, enriching existing knowledge with an articulate synthesis and
discussion of existing concepts and models. In the literature developed in Romania,
from our best knowledge, this may be one of the first research efforts to address
marketing performance management as an overarching process.
From a practical perspective, our paper offers insights for marketing managers
and professionals interested in measuring and improving marketing performance, a
domain that is rather young in Romanian organizations. Key concepts are identified and
discusses and comprehensive lists with marketing metrics are presented, all these being
useful resources for any professional interested in marketing performance. We believe
that as marketing matures in Romanian organization, performance management
practices will play a major role. In this context, we echo calls for academic research to
contribute with further studies in this field.

Acknowledgements

This work was possible with the financial support of the Sectoral Operational
Programme for Human Resources Development 2007-2013, co-financed by the
European Social Fund, under the project number POSDRU/107/1.5/S/76841 with the
title „Modern Doctoral Studies: Internationalization and Interdisciplinarity”.

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About the authors

Sorina-Diana MONE is a PhD student at the Marketing Department from

the Faculty of Economics and Business Administration, Babeş-Bolyai University,
Cluj-Napoca. Having a background in both marketing and management, her research
interests include marketing performance measurement and management, as well as
marketing and entrepreneurship in small and mid-sized enterprises and start-ups.

Marius D. POP is a professor of Marketing at the Faculty of Economics and

Business Administration, Babeş-Bolyai University, Cluj-Napoca. From 2008 he is
PhD coordinator in the field of Marketing. Having a background in marketing, his
research interests include marketing research and international marketing.

Nicoleta Dorina RACOLŢA-PAINA is an Assistant Professor in Fundamentals

of Management, Management of SMEs and Services Marketing at the Faculty of
European Studies, Babeş-Bolyai University, Cluj-Napoca. Her research interests
include organizational management, marketing and management in small business and
start-ups as well as services marketing.

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