Marketing Performance Metrics: Coca-cola

Marketing Performance Metrics: Coca-cola Marketing Performance Metrics Abstract The purpose of the study was to investigate the marketing performance metrics with a specific reference to Coca Cola Company and Net Marketing Contribution over the Life Cycle. The study will assist many companies in formulating strategies to be used as benchmark or the strategies to improve NMC. Marketing Performance Metrics Introduction Measuring marketing performance is an external activity that helps to understand the customer’s perception and the competitor’s position in the industry. Many organizations sets different tools to use as benchmarks so as to identify the staffs’ performance and the rate of income. ROA and ROI are the main used financial measures to measure the internal financial statues. Part 1: Discuss Three Measures of Marketing Performance Marketing metrics are the numeric data that allows the marketers to analysis their performance against the organizational objectives. The metrics help to take corrective measures in case there is a deviation between the targeted plans and the achieved performance of staffs (Neely, 2001). They have various measurement elements that includes number of produced products, net sales billed, design registrations and a research on the brands to determine to determine the brand’s awareness. Metrics makes it easy for marketers to justify their budget that is based on sales returns. Three Measures of Marketing Performance The activity-based metrics among the popular metrics used in analyzing performance. It involves statistical calculating and reporting. The main type of activity-based metrics includes tracking website visitors, downloads and attendees at the firm’s events. This approach rarely link the marketing operations to the business outcomes. Instead, the business results like the customer value, market share and adoption of a new product provides an improved correlation. The main focus of MPM is to measure aggregated efficiency and effectiveness of the marketing firm. These specific metrics have some categories that includes the marketing effect on the preference shares, the average order quantity, the rate of customer acquisition, the growth of consumer’s buying rate, business share, loyalty and net advocacy, margin, growth rate compared to market competition and the total customer engagement. MPM is also used to determine the rate at which operational efficiency and the outside performance. If Coca Cola Company decides to manage its marketing activities it uses the operations performance metrics. The firm will hire extra personnel to work as marketing finance directors and marketing operations director. Basically the marketing team will collect data about program-to-people ratios, cost-sales, awareness-to- demand rate and the rate of conversation. This metrics primarily provides the firm with different ways of rationalizing the marketing investments but this strategy fails to correlate marketing to business performance and strategy. The approach helps marketers to find out how the firm’s resources are utilized. The external performance are aligned with the firm’s outcome and helps to determine the firm’s value to its customers and the firm’s performance in relation to its competitors (Neely, 2007). If Coca Cola Company wants to determine the key performance indicator (KPI), top-down approach is the best approach to use. The first step in this approach includes making decisions that defines the scope. To come up with KPI and metrics, the marketers predicts on the likely results they are trying to influence. Asking opposite questions follows (Shaw et al, 1997), the answers help to determine the relationship between the questions and the outcome. The data that is required to answer the question is then determined. Marketers then searches for this data and determines the corrective measures to be taken. The measures undertaken aims at making it possible to achieve the goals. The organization needs to continuously monitor and analyze its marketing performance metrics. This gives the organization intelligence in competition, have a chance to assess their market weaknesses and strengths and come up with a calculated budgetary opinions through the marketing mix. This will give the organization competitive advantages over its competitors. The profits of the firm will also increase. The Major brands use return on marketing investment (ROMI), return on marketing objectives (ROMO) and the marketing return on investment (ROI) to prioritize and distribute their marketing investments. They help them to decide on the most profitable portfolio. A firm needs to analyze the ROMI, ROMO and ROI of a project for more than a year. This will protect the firm’s investigations. The method selected in monitoring the marketing process must be easy and cheap to implement. Training should be carried out to train the staffs on the best benchmark and how it is used. Staffs should take part in determining the best benchmark to use. This brings a sense of belonging and appreciation of the worker to the company and management when you nvolve them in management roles. Part 1: Analyze Metrics Used to Evaluate the Measures The above measures can be measured using the following metrics (Leroy, 2011): Correct quantity, measuring the weight, counting the units and weighing the contents are the main used types of measurement. Supplying customers with the right quality will strengthen the level of trust with your customers hence making it easy to retain them. An independent team is set aside in an organization to measure the products quantity and to make sure the customer gets what they specify in terms of size. Elasticity to respond to unanticipated demands, this refers to the ability of a firm to adjust so as to meet the current demand. A metric will be used to measure the degree of change, this makes it easy to identify the level at which the firm is flexible. Quality level, TQM is a tool to measure quality. The metrics will make sure the level of a product’s level is standardized. Controlling quality can also be done by the state authority to ensure a firm offers its customers with quality products. Firms that offer less standardized products are fined for the same. The total quality management is employed to control the quality of a good or service. The staffs who produce quality products are rewarded with gifts and appraisals. The staffs whose products are below the standard are trained and encouraged to produce quality products. Existence of accreditation or other certification, after completion of a training a firm is issued with a certificate to show its participation. The certificates act as a measure of qualification and experience attained. Customers prefer to contract a firm that has experience and is highly rated in the industry. On-time delivery can be used to measure how a firm values its customers. If a firm supplies its products on time this shows the supply chain is well managed. In a case of failed or late delivery, less care is taken on the customer and the likeliness to loss the customer is high. Part 1: Case Study that Exemplifies Best Practices of each Measure. Coca-Cola Company is an example of a company that demonstrates the best practices of the above measures. According to the company’s website they put their customers to be the king and aims at providing the best so as to retain the customers and to attract new customers. Coca-Cola Company has an independent department that deals with quality control. The unit makes sure quality is maintained through the supply chain from when raw materials are obtained from the supplier to when they are delivered to the customer. The team tests the product at each level of manufacturing to make sure the right contents and composition are used. The team is also involved in ensuring quality services are offered to the customers. They establishes feedback programs as a way to allow the customers to get back to them. The company parks its drinks in containers of different sizes. A team is established in the company to make sure only the correct quantity is supplied to the users. The team weighs at random the already packed products and in case of a deviation the whole pack is weighed and repacking is done. Customers have trust in Coca-Cola because there products are correctively packed. Elasticity to respond to unanticipated demands, the company produces its products in great volumes. The products are then stored in its outlet’s warehouse. If the demand is low the supply is kept low but if the demand changes and more of their products are demanded the firm supplies more. They have special facilities to store their products for a long period. The firm is certified and customers are confident in its products. It has been in the market for a long time hence gathering more experience on the type of products to produce. The company has learnt different ways of surviving in the market and how to win more customers. They now provide different types of soft drinks. Coca-Cola Company has set outlets all over the world. This makes it easy to meet the buyer’s order on time with no dely. Transportation of the product from their warehouse to your premises is very fast. The drinks will be transported in crates or packed in cartons to avoid breakages and maintain a deliverable state. Part 2: Short-Run Marketing Strategy Short-run marketing strategy refers to a duration of time which only few factors can be changed as there is no enough time for changing the other variables in marketing strategies. Marketing Strategy is a detailed and specific tactics that are established and designed to be used over a period of time depending on the range of the plan (Neely, 2001). Advertising and media relations strategies used by the Coca Cola Company have an effect on the net marketing contribution both in short-term and in long-term. In short-term, once the firm has decided to increase its efforts in advertisements commercial so that it reaches many people. There will be an increase in the product awareness and hence increase in the sales level. Once the sales are high the NMC will be high. In case the public fails to respond in a positive manner the firm will suffer loss as the advertisement costs will be very high compared to the income from the goods sold (Tanzania Society, 1966). In short-term a lot of advertisement will be profitable to the firm as the sales will be high. The media relation refers to how a firm uses the media including the social media to market its products. In short-run using the media will be expensive as it needs time to gain publicity. This in return will lead to a fall in NMC. Many large beverage companies like Coca Cola were late in entering the product-markets of bottled water, fruit drinks, sports drinks, iced coffee, and energy drinks due to SHORT-TERM VISION. Part2: Analyze Net Marketing Contribution in the Introductory Stage During the product introductory phase the net marketing contribution is negative as no profits are made from selling the product. The income obtained is used to cover the high costs of advertisement and promotional costs incurred. The firm incurs loss (Louw, 2012). With proper advertisement the product survives this stage and the NMC start to raise as the product has gained customers. The advertisement costs are now low. Part2: Analyze Net Marketing Contribution in the Late Growth Stage As the product moves through its lifecycle, NMC will reach the break-even point, then grow, to peak, flattens and then starts to decline due to decrease in the market demand. At the end-growth stage the NMC starts to flatten as the product is now in the market and has gained its customers. When a new substitute product is introduced into the market, many customers will shift their preference. This will lead to decrease in demand of the product causing NMC to start falling. If the firm fails to add flavors to the product it might die and overtaken by the new product (Northern Marianas College.). The graph below shows the movement of the NMC along a product lifecycle. Conclusion In conclusion we can summarize the above by saying that a firm must choose the most profitable portfolio to invest. Investment affects both the profitability and the NMC of a firm. The firm needs to understand the product cycle so that it determines the type of advertisement to use. References Neely, A. (2001). Business performance measurement: Theory and practice. Cambridge: Cambridge University Press.  Ã‚   Top of Form Neely, A. D. (2007). Business performance measurement: Unifying theories and integrating practice. Cambridge: Cambridge University Press. Bottom of Form Shaw, R., Mazur, L., FT Retail Consumer Publishing. (1997). Marketing accountability: Improving business performance. London: FT Retail Consumer Publishing Tanzania Society. (1966). Tanzania notes and records. Dar es Salaam: Tanzania Society. Louw, A. (2012). Ambush marketing and the mega-event monopoly: How laws are abused to protect commercial rights to major sporting events. The Hague: T.M.C. Asser Press. Northern Marianas College. (n.d.). Performance report on strategic master plan implementation and assessment of institutional effectiveness. Saipan, MP: Northern Marianas College, Office of Institutional Effectiveness. Leroy, G. (2011). Designing user studies in informatics. London: Springer. Books.google.com,. (2015). isbn:1607522330 Google Search. Retrieved 8 January 2015, from https://books.google.com/books?isbn=1607522330 Electricity and Transportation: Decreasing Energy Consumption Electricity and Transportation: Decreasing Energy Consumption Consider one of these two sectors: electricity or transportation. What policies do you suggest for the sector to decrease energy consumption? What is the rebound effect associated with each of the suggested policies? How would you quantify these rebound effects so that you are certain that the suggested policy results in a net benefit? How do you evaluate the effectiveness of your suggested policy with respect to the generated rebound effect? What policies do you suggest for the sector to decrease energy consumption? In 2008, transportation accounted for 28% of the energy consumption and 33% of the CO2 emission, but a much larger 71% of the consumption of liquid fuels in the US [1]. To reduce the magnitude of energy consumption from the transportation sector and help prevent its bad effect on the environment, a proper policy must be put in place. US Congress specifies that CAFE standards must be set at the â€Å"maximum feasible level given consideration for technological feasibility, economic practicality, effect of other standards on fuel economy, and need of the nation toconserveenergy [2]. In this term paper, I would suggest combination of CAFE standards combined with carbon tax on fuel price. What is the rebound effect associated with each of the suggested policies? One advantage of CAFE standards over fuel is that the standards provide a quantitative target whose effects on energy consumption can be reasonably well predicted [1]. However, the standard has rebound effect. The rebound effect refers to the social and behavioral responses to the introduction of more energy efficiency technologies and processes by which there is a corresponding increase in energy service demands. In general, rebound is thought of as a ratio of the lost energy savings as it might compare to the total expected savings from efficiency. A comprehensive measure of rebound includes both direct and indirect effects which can occur at both the micro level (within households, businesses and organizations) and at the macro level (economy-wide effects). Direct rebound effects are those that result from an increase in the use of a device that is deemed more energy efficient. Cars provide the best examples. When a more efficient car results in an increase in vehicle miles traveled, the lost energy savings are considered to be direct rebound effects. Indirect rebound effects are those that have less direct causal chains and result from increases in consumerism (acquisitiveness) by buying new vehicle, increased vehicle production, and increased air pollution [3]. How would you quantify these rebound effects so that you are certain that the suggested policy results in a net benefit? Some studies in macro and micro economic have shown that rebound effect value range is between 0% and 100% with formulation expressed below. Value of rebound effect 0% means that the expected savings were achieved through reduced consumption, whilst 100% means that no energy savings were realized and energy efficiency program was failed. The backfire effect happen when consumption has been increased more than extent or in other word rebound effect more than 100%. It is also possible to have a negative RE, such that the energy savings are greater than originally anticipated, for behavioral or technical reasons, or both [4]. Based on the above formula, the rebound effect measurements can be made à ¢Ã¢â€š ¬Ã¢â‚¬ ¹Ãƒ ¢Ã¢â€š ¬Ã¢â‚¬ ¹directly and indirectly. Direct measurement is based on a survey of how big the success rate of the CAFE program. One study by Sorrel in 2009, the rebound effect estimation is between 10% and 30%. Meanwhile other study by Greening, Greene and Difiglio in 2010 show rebound effect for transportation below 10%. Geller and Attali study in 2005 also support this number as shown in Table 1 [5]. CAFÉ standards and fuel tax could reduce 10%-30% value range when the fuel price is taxed according to released carbon emissions. This is equal to externalities generated by fossil fuel. High fuel price with tax could suppress the rebound effect due to need of having energy efficient car. In addition, changes in behavior based on strong motivation to reduce energy consumption become appropriate step anticipating rebound effect [5]. For indirect estimation, the rebound effect with energy price elasticity is defined as the change in demand according to the decrease in price. To calculate elasticity, transportation energy use, price and income of buyer are required. It is important to know that there is limitation of the calculation since it doesn’t consider the capital outlay of the technology that would lower rebound effect [4]. Research that estimates indirect and economy-wide effects is limited. An often cited source of economy-wide rebound analysis is the National Energy Modeling System (NEMS) designed and implemented by the Energy Information Administration (EIA). Using NEMS, a scenario of accelerated technology whereby the national energy intensity is 6.5 percent lower than in the base case, produces a total energy demand that is 5 percent less (Greening 2000, citing Kydes 1997). This suggests that improved energy efficiency (part of the accelerated technology assumption) leads to an economy-wide reb ound in the order of 25 percent [6]. Many researchers suggested that RE on CAFÉ standard should be balanced with other policy. The other policy should account many factors affecting RE value and incorporate RE value into the target. The RE is not always detrimental. RE could stimulate economic growth in developing countries rather than developed ones. The rebound effect can be reduced when the CAFE standards coupled with carbon tax policy, where the price of fuel is taxed according to the carbon emissions released [7]. This is equivalent to externalities generated by fossil fuel. The key of rebound effect is the behavior of driver tends to driver more because of fuel saving car. The carbon tax would increase the price and make consumers drive less [8]. It is important to realize that all taxes can be invested to public transportation. Energy efficiency get from each car and energy efficiency resulted from mass transit can be benefit to reduce overall consumption. At the same time, public transportation will reduce private vehicles. How do you evaluate the effectiveness of your suggested policy with respect to the generated rebound effect? The rebound effect can be evaluated based on the percentage of the success rate of the policy. Direct rebound effect could be seen directly from the increased mile travelled or increased sales of the vehicles. Indirect rebound effect or wide economy effect can be seen from the increase in the gross domestic product (GDP) and an increase in private income in the transportation sector. Moreover, the success of this policy can be observed by comparing the desired CO2 reduction with the actual result during the policy implementation period. If there is a difference of more than the desired decrease, it means that the rebound effect takes place [9]. The evaluation of the rebound effect also works indirectly as a result of the additional energy demand for the energy efficient equipment or services. For example; the energy cost saving may be used by the producers to increase the output, thereby increasing consumption of the capital, labor and materials, all of which require energy. Another example is that energy efficiency and reduction in energy costs may disproportionately reduce the cost of energy-intensive goods and services, encouraging consumers to disproportionately increase their demand for such products and services [3]. The combination between the fuel standard and the Carbon tax with the encouragement of public transportation will anticipate the rebound effect and specifically reduce the energy consumption in transportation. In addition, the policy will reduce the GHG emission. The small rebound effect could not reduce the order of magnitude from the reduced energy consumption that give more benefit compared with the rebound itself. References http://www.rff.org/Documents/Features/NEPI/RFF-BCK-Small-AutoPolicies.pdf http://en.wikipedia.org/wiki/Corporate_Average_Fuel_Economy http://www.aceee.org/files/proceedings/2010/data/papers/2142.pdf http://www.erc.uct.ac.za/Research/publications/10-Davis_Rebound_effect.pdf http://eng.sut.ac.th/transportenergy/data/paper4web/Energy%20policy%20in%20transport%20and%20transport%20policy.pdf http://policyintegrity.org/files/publications/The_Rebound_Effect.pdf http://www.sciencedirect.com/science/article/pii/S0301421509005187 http://www.gao.gov/new.items/d07921.pdf http://www.unternehmenssteuertag.de/fileadmin/user_upload/Redaktion/[emailprotected]/Projektpartner_Ergebnisse/macroeconomicRebound.pdf http://www.rand.org/content/dam/rand/pubs/conf_proceedings/2009/RAND_CF256.pdf http://en.wikipedia.org/wiki/Fuel_tax http://en.wikipedia.org/wiki/Vehicle_miles_traveled_tax http://aida.econ.yale.edu/~nordhaus/homepage/documents/small_dender_rebound.pdf Appendix