CHAPTER 15
Marketing Metrics, Performance, and Strategy Implementation
A Fortune Magazinestudy suggests that 70 percent of
the CEOs who fail do so not because of bad strategy,
but because of bad execution.
— Source: R. Charan and G. Colvin
“Why CEOs Fail,” Fortune Magazine,
June 21,1999
In another study of 200 companies in the Times 1000,
80 percent of directors said they had the right strategies
but only 14 percent thought they were implementing
them well. That only a small percentage of directors
believedthat they were doing a good job of
implementation is no doubt linked to another finding
that, despite 97 percent of directors saying that they
have a “strategic vision,” only 33 percent reported
achieving “significant strategic success.”
— Source: I. Cobbold and G. Lawrie,
2GC Ltd., “Why Do Only One-Third
of UK Companies Achieve Strategic
Success?” Times 1000, May 2001
These statistics could be useful in pointing out the importance of strategy implementation. Building a marketing
plan and a well-thought-out strategy does not guarantee success. Success also relies heavily on the proper
implementation of the plan.
Introduction
In the early 1960s, Honda sent two managers from Japan to develop the U.S motorcycle market. The company
had a less-than-superior product (small and leaked oil), inappropriate channels (lawnmower and bicycle
shops), a poor image (biker perceptions), and limited marketing resources. But Honda had a strategy
penetrate the U.S. market.
As we know, Honda’s strategy was clearly successful. But it was Honda’s ability to adapt and persist with a
regional rollout that brought about success. In Los Angeles, a UCLA advertising class came up with the
positioning strategy targeted at a younger, more active audience: “You meet the nicest people on a Honda.”
The positioning strategy was followed by product improvements, product line expansion, and the establishment
of Honda motorcycle dealerships in the U.S.
Discuss how starting only in Los Angeles helped Honda adapt its strategy with limited marketing resources.
Discuss the need for commitment (persistence) and adaptation (continuous improvement).
Discuss the need for marketing performance measurements, particularly the process metrics, in tracking
theimplementation of a market strategy.
Teaching Objectives
Discuss the importance of allowing for adaptation in marketing planning.
Present and discuss the criteria that contribute to the successful implementation of a marketing plan.
Demonstrate how variance decomposition of the results of a marketing plan can help identify key windfallsand
failures with respect to achieving a desired level for the net marketing contribution.
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Harvard Business School Case Studies
Johnson Wax: Enhance (B). HBS Case 9-584-009. After the initial ASSESSOR indicated problems in
formulation, product position, and advertising copy, ENHANCE was modified and retested using
ASSESSOR. Compares the new results as well as presenting teaching study data. Enhance is well below
predicted share. Is the fault in the product, strategy, or execution of the plan? Teaching Note: 5-592-101.
Network Computing at Sun Microsystems. HBS Case 9-198-007. This case examines the implementation
of Web technology and how it evolved from an ineffective use of company resources to the centerpiece of
Sun’s market strategy.
Becton Dickinson & Co.: Vacutainer Systems Division (Condensed). HBS Case 592-037. Becton
Dickinson, a phenomenally successful company with an 80 percent market share in the blood collection
needles and syringes market, faces an issue that has increased the buyer power of its customers (cost
containment pressures at hospitals). This forces a reevaluation of the company’s highly successful product
policy and channel strategy. One of the company’s largest customers threatens to leave because Becton
Dickinson refused the customer’s request for a lower price. It is obvious to students that giving in to this
customer’s threat would compromise the company’s “value-added” thrust, yet the level of business at stake
makes it difficult to be inflexible.
Frito-Lay, Inc. (A). HBS Case 9-582-110. The president and the executive vice president of marketing and
sales give differing accounts of the reasons that Frito-Lay excels at marketing. Overviews the snack industry,
Frito-Lay’s position in it, and the company’s marketing methods. Concludes with a “day in the truck” of a
driver-salesperson. Two Teaching Notes: 5-583-136 and 5-591-087.
Market-Based Strategic Thinking
1. Why would training in the area of marketing metrics for Campbell Soup Company help improve
marketing performance and company profits?
Tracking marketing performance would provide Campbell’s Soup a set of performance metrics, many of
2. How would a company like General Motors use marketing metrics to improve company profits?
Many customer metrics, such as customer satisfaction, retention, and customer lifetime value, are closely
tied to company profitability. Managing these metrics to high levels of performance would enable GM to
3. How would you recommend a company like United Airlines get started using marketing metrics to
better manage its marketing performance and profitability?
UA needs to start with its customers. The airline’s level of customer satisfaction and retention,as well as its
4. Why are forward-looking marketing metrics important to a business like Starbucks?
Forward-looking metrics, such as customer satisfaction and intentions to rebuy, would provide an early
signal of sales and profit declines if these metrics are trending downward. Product awareness and product
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5. How do backward-looking marketing metrics help a business like McDonald’s better understand its
marketing performance?
Market share, customer retention, revenue per customer, customer complaints, and marketing ROI each
6. Why is implementation of a marketing plan as important as plan development in achieving
marketing success?
Careful and thorough development of the marketing plan is important, but it is only half of what is needed
7. How do detailed action plans contribute to individual ownership of a marketing plan?
A detailed action plan calls for specific action and personal responsibility for each key aspect of the
8. Why does a marketing plan need a champion or an ownership team?
Resources and support are needed from senior management. For the marketing plan to succeed, it needs
9. How should abusiness tie compensation to successful implementation of a marketing plan?
Those most responsible for implementation of the marketing plan should have compensation in the form of
10. Why is “time to succeed” an important part of implementing a marketing plan?
Successful implementation of a marketing plan takes time. Too often, businesses set unrealistic time
horizons for overall performance, with no periodic applications of performance metrics. This creates two
11. What signal is senior management sending when it does not take the time to review the marketing
planning process and the performance of the plan after implementation?
The senior managers are saying it is not important. The marketing function reacts with: “Since what we are
12. What is meant by persistence in terms of commitment? What is meant by the term adaptive
persistence as it is used to describe the Japanese style of marketing plan implementation?
Most marketing plans will not succeed as originally conceived. They need to be adapted at various stages
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13. Why are continuous improvement and feedback measures important aspects of the successful
implementation of a marketing plan?
Not all elements of the situation analysis can be accounted for during the strategy development process. In
14. What are the advantages and disadvantages of a regional rollout of a marketing plan?
confusion among customers, and the opportunity to better gauge market response and adjust manufacturing
needs.
market.
15 What roles do resources, organizational communications, and training play in the successful
implementation of a marketing plan?
Three elements are key to supporting a marketing plan. First, without argument, if sufficient resources are
not provided, the plan has little chance of success. Second, the marketing plan needs to be communicated
16. Why are performance metrics important to the implementation process?
Performance metrics set internal (or financial) and external (or marketing) performance benchmarks from
Market-Based Management Copyright © 2012
Sixth Edition –42– Pearson Education, Inc.
Instructor’s Manual– Chapter 4 Publishing as Prentice Hall