Increasing demands for marketing accountability have created a renewed sense of urgency for marketers to obtain and analyze the right metrics to drive performance and demonstrate marketing’s value in the C-suite (a corporation’s most senior executives, such as chief executive officer, chief financial officer, chief marketing officer, chief information officer, and so forth). Marketing academics and practitioners have long debated the value of different metrics when measuring the effectiveness of marketing on brand performance. They remain divided by the battle line between hard numbers and softer measures, such as consumer perceptions, attitudes, and intentions, also known as “mind-set metrics.”
In this article, the authors merge the two tracks and analyze the added explanatory value of including customer mind-set metrics in a sales response model that already accounts for short- and long-term effects of advertising, price, distribution, and promotion. Integrating and assessing the impact of marketing initiatives on brand performance from both perspectives—a hard number perspective together with softer measures—provides an important opportunity to understand marketing’s impact on brand performance.
The current application focuses on brand sales performance in France during a seven-year period, using data from Prométhée, a brand performance tracker developed by Kantar Worldpanel, that reports the relevant metrics for four-weekly periods. For the period between January 1999 and May 2006, the authors analyzed more than 60 brands in four categories: cereal, bottled water, fruit juice, and shampoo. Data came from four different sources: (1) a nationally representative panel of households surveyed weekly on awareness, liking, inclusion in the consideration set, and purchase intentions at the brand level in a given product category; (2) a nationally representative household panel with 12,000 households to measure purchases and prices paid; (3) a panel of 500 distribution points to track distribution presence and promotional actions; and (4) an audit of media expenditures from Kantar Worldpanel. Vector autoregressive modeling and forecast error variance decomposition show that advertising awareness, brand consideration, and brand liking account for almost one-third of explained sales variance. Notably, competitive and own mind-set metrics make a similar contribution.
Important to managers, the analyzed mind-set metrics are leading indicators of brand performance. Moreover, they take more than two months to reach their peak effect on sales, while this wear-in time is less than two months for advertising, price, and promotions. Therefore, mind-set metrics can be used as advance warning signals that allow enough time for managerial action before market performance itself is affected. Specific marketing actions affect specific mind-set metrics, with the strongest overall impact for distribution. The findings suggest that modelers should include mind-set metrics in sales response models, while branding experts should include competition in their tracking research.
Overall, this study should help strengthen marketers’ case for building share in customers’ hearts and minds. Metrics of this share of heart and mind predict sales, can be used as advance warning signals of sales decline to trigger corrective measures, and help understand how the marketing-mix influences purchases.
Shuba Srinivasan is Associate Professor of Marketing and Dean’s Research Fellow at Boston University. Srinivasan’s research focuses on strategic marketing problems, in particular linking marketing to financial performance, to which she applies her expertise in time-series analysis and econometrics. Her current research focuses on marketing’s impact on financial performance and firm valuation and on metrics for gauging marketing performance. Her research won the 2001 EMAC best-paper award, and her papers have been published in Journal of Marketing Research, Marketing Science, Management Science, Journal of Marketing, Harvard Business Review, International Journal of Research in Marketing, and Journal of Advertising Research, among others. Before joining Boston University in January 2009, Srinivasan served as an associate professor at the University of California, Riverside. She serves on editorial boards for Journal of Marketing Research and International Journal of Research in Marketing.
Marc Vanhuele is Associate Professor of Marketing at HEC Paris, where he started his academic career after receiving his PhD in Management from the University of California, Los Angeles. Since 2005, he has also served as Associate Dean of Research. He teaches marketing orientation and the management of customer value to different executive audiences. His research and consulting activities currently focus on two distinct domains: information processing of price information and the use of marketing metrics. His work has been published in Journal of Marketing, Journal of Consumer Research, and International Journal of Research in Marketing, among other outlets. He recently coauthored Consumer Behavior. Applications in Marketing, a book based on the latest recent research findings and targeted toward master’s students.
Koen Pauwels is Associate Professor of Marketing at Ozyegin University, Istanbul, where he teaches and researches return on marketing investment. He won the 2001 EMAC best-paper award, the 2007 O’Dell award for the most influential paper in Journal of Marketing Research, the 2008 Emerald Management Reviews Citation of Excellence, the 2009 Davidson award for the best paper in Journal of Retailing, and the 2009 Varadarajan Award for Early Career Contributions to Marketing Strategy Research. Current research projects include the predictive power of market dashboard metrics and marketing effectiveness in turbulent times and emerging markets. Koen is on the advisory board of YouCastr, AIMark, and MarketingNPV. He received his PhD in Management from University of California, Los Angeles; was previously Associate Professor on the Tuck School of Business at Dartmouth College; and serves on the editorial boards of International Journal of Research in Marketing, Journal of Marketing, Journal of Marketing Research, and Marketing Science.
Journal of Marketing Research, Volume 47, Number 4, August 2010
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