Page 76 - Foundations of Marketing

Planning, Implementing, and Evaluating Marketing Strategies | Chapter 2 43

marketing mix is implemented, marketers can be reasonably
certain that the marketing mix was effective at reaching the
target audience. Information from sales data alone is not
sufficient, however. To provide useful information, market-
ers must compare current sales data with forecasted sales,
industry sales, specific competitors’ sales, and the costs
incurred from marketing efforts to achieve the sales volume.
For example, if Renova, the paper company in the ad above,
had forecasted $ 550,000 in sales for next quarter but nets
$ 600,000 , marketers can assume that the advertisement had
a positive impact on sales. This is especially true if more
sales than expected were from the company’s website, since
the advertisement directs customers there. Furthermore, if
the advertisement came in under budget because there were
no props or actors required, marketers may deem this a very
effective advertisement indeed.
Although sales may be measured in several ways, the
basic unit of measurement is the sales transaction. A sales
transaction results in an order for a specified quantity of
the organization’s product sold under specified terms by
a particular salesperson or sales team on a certain date.
Organizations should record all information related to a
transaction so that they can analyze sales in terms of dollar
volume or market share. Firms frequently use dollar vol-
ume in their sales analyses because the dollar is a common Courtesy of Renova
denominator of sales, costs, and profits. A marketing man-
ager who uses dollar-volume analysis should factor out the
effects of price changes, which can skew the numbers by
Performance Evaluation
making it seem that more or fewer sales have been made
Measuring the cost of an advertising campaign is not difficult.
than is the case.
Evaluating the effectiveness of an advertising campaign is
A firm’s market share is the sales of a product stated as challenging.
a percentage of total industry sales of competing products.
Market share analysis lets a company compare its market-
ing strategy with competitors’ strategies. The primary reason for using market share analysis
is to estimate whether sales changes have resulted from the firm’s marketing strategy or from
uncontrollable environmental forces. When a company’s sales volume declines, but its share
of the market stays the same, the marketer can assume industry sales declined because of out-
side factors. However, if a company experiences a decline in both sales and market share, it
should consider making changes to its marketing strategy to make it more effective.
Even though market share analysis can be helpful in evaluating the performance of a
marketing strategy, the user must exercise caution when interpreting results. When attrib-
uting a sales decline to uncontrollable factors, a marketer must keep in mind that factors
in the external marketing environment do not impact all firms equally because firms have
varying strategies and objectives. Changes in the strategies of one company can affect the
market shares of one or all companies in that industry. Within an industry, the entrance
of new firms, the launch of new products by competing firms, or the demise of estab-
lished products also affect a firm’s market share. Market share analysts should attempt to
account for these effects. Apple, for example, caused its competitors to reevaluate their
marketing strategies when it introduced the iPad, spurring competitor innovation and revised
marketing strategies.

Marketing Cost Analysis

Although sales analysis is critical for evaluating the performance of a marketing strategy, it
provides only a partial picture. A marketing strategy that successfully generates sales may not

Copyright 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.