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Use brand equity measure marketing effectiveness

If marketers have been telling their board of directors that marketing expenditure is an investment, not a cost, the board is entitled to see the resulting asset and its valuation. The asset created by effective marketing has often been referred to as ‘brand equity'. The Marketing Metrics research found that about one‑third of UK companies had no language for this concept. Of those who did, about half regularly quantify brand equity.

The 1999 Marketing Forum, comprising leading UK marketers, found that those claiming to measure marketing expenditure effectiveness grew from 75 per cent to 83 per cent between 1995–7, but of those, only 14 per cent, growing to 21 per cent, had measures of brand equity. Part of the problem here is language: some measure brand equity but do not call it that. Some companies may have systems for major brands but not for minor ones. Measuring the concept can be expensive, especially where a firm operates globally.

  1. Marketers may argue against having their effectiveness measured too closely by pointing out that marketing is the business of the whole company, and so they cannot be held specifically accountable.

  2. Marketers are often too busy fighting the next battle and this should take priority over worrying about the last one. Most promotions, for example, have pre‑set targets but only a minority of those are formally compared with results.

  3. Creating new measurement systems takes too long. The current marketing team will have moved on by the time it reports.

It is important to note that measuring overall marketing performance is not the same as measuring marketing expenditure effectiveness. Some marketing‑led organizations, such as Marks & Spencer, have managed with only minimal marketing expenditure budgets. More importantly, the effectiveness of the marketing expenditure budget cannot be assessed without measuring the change in the asset of brand equity.

  • Having a shared language internally and with advertising and other marketing service agencies.

  • Developing a more realistic set of targets than sales.

  1. Given the importance of measuring marketing effectiveness, how do you explain the success of apparently intuitive marketers such as Richard Branson?

  2. What is the difference between marketing efficiency and marketing effectiveness?

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