By M. Isi Eromosele

Apart from driving sales directly, marketing is considered to be an important driver of brand equity, which itself is considered an ‘intangible asset’.

Marketing is assumed to have a benevolent impact on brand equity, and brand equity itself supports the brand through incremental leverage and increased marketing effectiveness.

Brand equity leverages marketing and media that targets all consumers in a “buy and hold” approach, even if they are not customers today, with the expectation that the stored equity will provide an added leverage when these consumers are ready to become customers.

Branding on the other hand traditionally require large amounts of investment of both time and money based on just the expectation that a positive attitude is being built towards increased brand awareness in the minds of consumers.

This has created differences in opinion between brand-managers who base their decisions on qualitative factors and the financial stakeholders of companies, who measure investments based on the expectation of a future return on this investment.

Today, a firm can no longer just amortize the premium they paid for an acquisition over a 40 year period. Instead, they have to calculate every year if the goodwill, and hence brand equity/value has eroded or been impaired, which requires the measurement of brand value and how the year’s marketing activities have affected it.

Marketing ROI as it is most commonly measured today has an Achilles heel; standard marketing-mix models only account from the short-term sales lift due to marketing.

In fact, there is a longer-term effect of marketing on sales resulting in either an improved baseline or an improved profit margin

Consistent and quality marketing effort tends to build increased awareness and premium associated with a brand, which results in increased ‘brand equity’.

Brand equity is defined as the marketing effects or outcomes that accrue to a product with its brand name as compared to the outcomes if that same product did not have the brand name.

Long-term effects of marketing can be divided into quantity premium and margin premium. Most of the variation in brands’ quantity premiums (a brand’s incremental sales relative to brands that are priced and promoted the same way) is due to marketing and advertising.

Most of the variation in brands’ margin premiums (the inverse of the absolute price elasticity) is due to distribution and product quality.

Most standard marketing-mix models and pricing and promotion analysis measure the impact of marketing and promotions via the short-term effects route.

This measures the immediate effect of brand management activities on sales and enables development of tactical strategies to enhance the performance of the brand in the short-term (3 months to 1 year out).

Apart from the short-term impact, some marketing activities have a long-term impact, which accumulates over time into an overall awareness about the product or the brand and helps to differentiate the brand from other brands.

TV is very impactful in the short-term, it is very visual and delivers the marketing message very quickly and very succinctly. Magazine on the other hand delivers it message in a more gradual manner, but in much greater detail, plus it stays around for a lot longer than TV.

So in the short-term TV could have a higher return than Magazine, but in the long run this may not necessarily be so.

The solution lies in measuring Marketing ROI as a function of both the short-term and the long-term.

Different marketing measures impact short-term and long-term brand sales differently and adjusting the marketing portfolio to maximize either the short-term or the long-term alone will be sub-optimal.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

By M. Isi Eromosele

In applying an optimized approach to marketing investment, it is necessary to acquire great input information in order to make us of the output one. In order to create your marketing investment program, you must consider your future direction.

The first step toward determining where to place your marketing assets is to develop an expansive selection of potential marketing investments, looking for ways to stimulate your brand by using optimal marketing mix and every customer touch point.

One of the major drivers that would help make investment decisions should be the information gathered from the implementation of previous marketing programs, which could include such components as specific profiles of leads that was generated.

Determine not just how many leads were created from a particular marketing investment, but also how many were converted at each stage of the sales process. The mere exercise of requiring marketing managers to treat all marketing spending as investments will pay almost immediate positive results in the quality of thought and approach process.

The goal is not to engender impossible accuracy, but to comparatively evaluate marketing investments against each other. This enables the creation of an ROI profile for each market investment.

Additionally, the marketer should identify non-financial metrics that give a more complete picture of the potential investment and could also serve as a great indicator of how the investment will perform. These additional metrics can mean the difference between seizing a great opportunity and wasting a lot of capital.

Inherent in every marketing investment is a set of assumptions. These are the assumptions that drive the initial decision whether to make the marketing investment or not.

• Sales cycle conversion factors - These conversion factors form the core of your company’s customer management program and are an excellent indicator that determines whether you marketing investment is going to succeed.
• Channel perspective - The key here is to align sales input to historical results. This is simply to make sure your marketing channels are aligned with your customer demand attributes.
• Investment risk - It is crucial to capture some of the vague qualities of marketing investments that are difficult to measure. This risk evaluation can play a vital role in helping you determine where to place your marketing investments.
• Historical performance - The company’s experience in previous marketing investment vehicles must be evaluated.

When you treat marketing expenditures as investments, you often have the opportunity to reevaluate in midstream. You can evaluate how your investment is faring against your original budget and in essence, rethink whether it is the best allocation of money.

Armed with a process to measure the impact of your marketing investments, you will be well optimally equipped to practice Enterprise Marketing Management when positioning your marketing assets to drive profitable sales.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

By M. Isi Eromosele

Marketers face the significant decision of where to position their marketing assets in order to drive profitable sales. The solution is to create a brand experience blueprint, an aggregation of all potential customer interactions across the current components of the company’s marketing mix and customer touch points.

It is a compilation of all the opportunities the company has to communicate with and engage its customers. Thinking horizontally across the entire brand experience, the company can then identify those areas where marketing investments make business sense. It is imperative that marketers only invest in those campaigns and initiatives that drive sales for the company.

Outsourcing strategy to an advertising agency, continuing to support investments in marketing events or paying for sponsorships that have no relationship to sales are three instances of investments that could be potentially wasteful. Marketers need to apply an analytical approach to better understanding what drives sales and what doesn’t.

Marketing is closely connected to the largely dynamic business marketplace. This means what was effective this year might not be so next year. This constant makes the discipline of marketing terrifically thrilling.

Marketers have to be able to discern which investments pay out and which ones don’t. Additionally, they need to be able to rank-order marketing mix investments to reveal which ones perform better than others. When proposing marketing investments, managers need create a financial profile of their proposed investments, with specific indication of where they expect to make cash outflows and how much sales inflows is expected.

In making the decision of where to invest its marketing dollars, the company could use the previously created brand experience blueprint as its portfolio, since it adequately lays out all of the current customer interaction points in such a way that communicate the brand’s benefits. Questions that should be asked include:

• What handles should be pulled to activate the brand?
• Where should the company invest its marketing dollars?
• Should differentiation of offerings be based on geography or targeted market segment?

To drive profitable sales, certain steps must be taken by marketers before marketing investment can be implemented:

• Ensure alignment with the business strategy that the marketing supports
• Identify where the brand experience blueprint helps to create a marketing investment program
• Implement a process for evaluating the progress and ROI of all marketing investments.

A critical part of any marketing investment is to plan for what would happen. Equally as important is the necessity to measure the results of what is happening and learn from it.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group