Market Performance Measures Research Articles

THE PROBLEMS OF MARKETING PERFORMANCE MEASUREMENT

The presented article deals with the problems of marketing performance measurement. In order to measure marketing performance we should determine the costs of marketing activities as well as the volume of revenues generated in the process of their implementation. There are different indicators that can be used to determine the effectiveness of marketing decisions (activities), the one of particular importance being Return on Marketing Investment. ROMI is defined as a financial surplus generated by a marketing investment in relation to the costs incurred in the process of this investment (undertaking). Marketing performance measurement is strictly related to the concept of marketing control. In order to avoid potential overlapping of marketing control and marketing research it is of key importance to precisely define the notion of ‘marketing control’ and the scope of its content.

What Counts versus what can be Counted: The Complex Interplay of Market Orientation and Marketing Performance Measurement

Market orientation (MO) and marketing performance measurement (MPM) are two of the most widespread strategic marketing concepts among practitioners. However, some have questioned the benefits of extensive investments in MO and MPM. More importantly, little is known about which combinations of MO and MPM are optimal in ensuring high business performance. To address this research gap, the authors analyze a unique data set of 628 firms with a novel method of configurational analysis: fuzzy-set qualitative comparative analysis. In line with prior research, the authors find that MO is an important determinant of business performance. However, to reap its benefits, managers need to complement it with appropriate MPM, the level and focus of which vary across firms. For example, whereas large firms and market leaders generally benefit from comprehensive MPM, small firms may benefit from measuring marketing performance only selectively or by focusing on particular dimensions of marketing performance. The study also finds that many of the highest-performing firms do not follow any of the particular best practices identified.

English

The measurement of marketing function is vitally important to establish the performance of the brand. The aim of this study is to investigate the marketing performance measurement practices in the Hatfield Volkswagen group with reference to the following elements: the awareness of the importance of effectively measuring the marketing activity, the satisfaction with the current marketing performance measurement, the marketing performance measures considered by the company’s top management, the timeframes of gathering of the marketing performance measures, the significance that top management attaches to the marketing performance measures, the different kinds of benchmarks used to extract meaning from the marketing performance measurements, the measurement and timing thereof of the marketing asset and the challenges if any faced by the managers. The data represents the extent and status of the marketing measurement and evaluation in the Hatfield Group, by examining each departmental manager’s understanding, perception and challenges towards measurement and evaluation of marketing performance. Findings indicate that departmental managers are unsure about the measurement methods needed to determine the performance value of their marketing efforts. Top management measures the success of marketing with “financial measures” and place very little significance on non-financial measurements. Key words: Marketing performance measurement, measurement practices, methods and time frames of measurement, brand performance, sustainable demand, and marketing asset terminology.

Under new management: Equity issues and the attribution of past returns

There is a strong link between measures of stock market performance and subsequent equity issues. We find that management turnover weakens the link between equity issues and the returns that preceded the new chief executive officer (CEO). Moreover, there is a discontinuity in the distribution of equity issues around the specific share price that the CEO inherited, while there is no discontinuity around salient share prices prior to turnover. The evidence suggests that capital allocation involves an attribution of past returns not only to the firm but also to its CEO. A corollary is that a firm with poor stock market performance may be better able to raise new capital if its current CEO is replaced.

The influence of corporate governance on corporate performance: evidence from Palestine

The objective of this study is to explore the relationship between corporate performance and corporate governance by companies listed on the Palestinian Stock Exchange. Accounting and market performance measures were used to proxy corporate performance. Corporate governance represented by the board of directors' size, the frequency of the annual meetings of the board, existence or otherwise of an audit committee, institutional investors ownership and foreign ownership. To achieve the objective of the study, all non-financial companies listed on the exchange and published their annual reports during the period between 2010 and 2012 were used. The result of the analysis revealed that corporate performance is negatively associated with corporate governance. This implies that the result is inconsistent with agency theory. This might be due to the fact that corporate governance in Palestine is still at its infancy stage.

Marx-Keynes on involuntary unemployment and alternative labour market indicators

The paper revisits Marx and Keynes' notion of involuntary unemployment and discusses how to account for this phenomenon by developing a series of alternative labour market indicators. Both Marx and Keynes treated the 'reserve army of labour' or 'involuntary unemployment' phenomenon as a consequence of the long-run capital accumulation and as an inevitable outcome of the deficient decentralised capitalist market economy. The goal of this paper is to survey the latest developments in labour force statistics to see whether a series of alternative indicators of labour markets fare well with Marx and Keynes' analysis of involuntary unemployment. The survey in this paper shows that the labour (under-)utilisation framework that the International Labor Office (ILO) has proposed is one of the broadest measures of labour market performance, and that it allows us to examine the relative size and different type of the presence of the reserve army of labour and involuntary unemployment in our contemporary economies.

Mergers and acquisitions: A comparative review of literature

The paper aims to review scholastic research on the effect of M&As on firm performance and present a comparative analysis of Indian M&As vis­a-vis those occurring in other nations. 108 articles in referred journals published between 2005 and 2015 have been surveyed with a focus on comparing firm performance parameters prior and post the M&A. Firm performance has been inspected via three measures i.e. accounting measures, stock market performance measures and qualitative measures. On the basis of these three measures, literature on mergers in India with those occurring in another 23 countries was compared. The review has shown that irrespective of the nation, M&As may impact the accounting and stock market performance measures of the acquirer and target firms in a positive, negative or mixed manner. M&As in nations other than India have received more academic attention with respect to the effect on qualitative issues like cultural compatibility, downsizing and innovation. Cultural incompatibility and downsizing are problems of M&As in India as well as other nations. Indian domestic M&As have resulted in greater market share whereas majority of the M&As in other nations have lost customer base. Although literature studying the outcomes of M&As on firm performance from a pre-post perspective are multifarious, a comparative assessment of the studies on M&As occurring in India with those carried out in other nations of the world is a novel attempt.

The Attitude of Romanian Industrial Companies towards the Market during the Transition

The paper presents the evolution of the market orientation of Romanian industrial companies in the first two decades of the post-communism period. While in the first decade of transition the market orientation was almost in-existent, at the end of the second decade a strong commitment towards marketing performance has been identified. The dimensions of marketing performance that emerged as most important were market performance, customer performance and marketing's financial performance. However the companies' average ability to measure marketing performance was slightly less than adequate.

Family Involvement in Business and Financial Performance: A Panel Data Analysis

Executive Summary The economic backdrop of most nations remains dominated by family businesses. Family control is common in publicly traded Indian companies. Such controlling families often hold large shareholdings and for the most part have representation at the top management level as well as on the board. Consequently, an overarching question that emerges is whether and how family ownership, management, and governance affect corporate performance. This article attempts to discern the relationship between family involvement in business (FIB) and financial performance (FP) of companies included in the S&P BSE 500 Index during the period 2006–2010. In addition, an attempt has been made to examine the difference in accounting and market measures of FP for family companies (FCs) vis-à-vis non-family companies (NFCs). A two-way fixed-effects panel model was used to examine the FIB–FP relationship with fixed effects being dummy variables for each year of the sample and dummy variables for each two-digit National Industrial Classification (NIC) code. Finally, to test for the ‘reverse causation’ between FIB and FP, the instrumental-variable—two-stage least-squares (IV-2SLS) regression was applied. The results confirm that FCs are a predominant form over a number of industries in a large sample, S&P BSE 500 Index. In addition, founding families are often involved in the actual management of the companies. Controlling for company-specific, industry affiliation, and corporate governance variables, the cross-sectional longitudinal analyses show that FIB is associated with superior FP. Furthermore, FP is higher for FCs vis-à-vis NFCs. Based on the market performance measure, FC appear to be better performers with higher outside board representations. On further analysis of the profile of independent directors, it was observed that they had a diverse background and expertise. The impact of firm size and unaffiliated blockholdings on FP was found to be significantly negative. Finally, the estimates from the IV-2SLS were found to be consistent with the preliminary results that FIB is associated with better FP. This article joins the evolving concurrence on the diversity and heterogeneity of family businesses by differentiating between family-owned, family-managed, and family-governed companies. It distinguishes itself from previous studies on the subject, as it uses different typologies based on the extent of FIB as well as presents multiple theoretical perspectives rather than a mono-theoretical view to empirical findings in the present study. Keeping this distinction in perspective is imperative for family business researchers, practitioners, and policymakers.

An industry analysis of the power of human capital for corporate performance: Evidence from South Africa

Even in industrialised emerging economies, the value-generating competencies of a workforce, known as its human capital efficiency, are a key resource for commercial success. The objective of this research is to empirically investigate the relationship between human capital efficiency (as measured by value-added human capital) and the financial and market performance of companies listed on the Main Board and Alternative Exchange (ALT-X) of the Johannesburg Stock Exchange. Return on assets, revenue growth and headline earnings per share were used as financial performance indicators; while market-to-book ratio and total share return were used to measure market performance. Multivariate regressions were performed, with panel data covering 390 companies in the financial, basic materials, consumer services, consumer goods, industrial and technology industries from 2001 to 2011. First, human capital efficiency was found to have no effect on the market performance of listed companies in South Africa. Secondly, higher human capital efficiency was found to result in the extraction of greater returns from both tangible and intangible assets in all industries. Thirdly, higher profitability was found to be associated with higher human capital efficiency in almost every industry in South Africa, with the exception of the technology industry, where human capital efficiency was found to be independent of headline earnings per share. Finally, higher revenue growth was found to be positively associated with human capital efficiency in those industries which are not consumer-driven. In the consumer-driven industries, human capital efficiency contributes to bottom line profitability even though it is not a driver for revenue growth. Overall, the results of this study confirm that human capital efficiency enhances a company’s financial performance, whether it be through a greater capacity for production and service delivery, tighter cost controls or better use of company resources. Management in all South African industries are encouraged to develop the value-creating abilities of their employees through employer-driven personnel enrichment and training programs and by incentivising workers to pursue further education.

Project-Based Market Competition and Policy Implications for Sustainable Developments in Building and Construction Sectors

Building and construction sectors are significant contributors to the global economy, but their energy consumption necessitates greater commitment to sustainable developments. There is therefore a growing demand for green innovation in the form of cleaner production and policies to meet the modern requirements of sustainability. However, the nature in which public work is undertaken is in an environment of project-based market competition, whereby contractors routinely bid for contracts under specific project awarding systems, and variations are accompanied with the unique scope of individual projects before the final goods or services are delivered. A comprehensive understanding of the characteristics and contractors’ behavior in systems could help to identify the leverage points of policies. This paper proposes a system dynamics model, with quantitative analysis and simulations, to demonstrate the problems of a system with different project awarding systems and ineffective market performance. The framework of market efficiency and performance measures has been proposed to evaluate the project-based competition mechanism. Managerial policy implications for market efficiency and sustainable developments can thus be systematically discussed and compared through iterative computer simulations and scenario analysis.

How Best-in-Class Marketers Serve as Value Creators

Even though marketers continue to plug away at measurement, marketing leaders still struggle with how to demonstrate the impact of marketing on business. Numerous studies have been conducted on the topic over nearly two decades. Is there anything new left to learn? There is, and as a result, this article shares the insights Demand Metric and VisionEdge Marketing learned from the fourteenth century annual marketing performance measurement and management study conducted with over 360 business executives and marketing professionals from around the world across all industries. The study sought answers to three questions: How much progress, if any, have marketers made in being able to measure contribution, value and impact? Which marketers are making progress? What are the marketers who are excelling at marketing performance management (MPM), doing better and differently?

Marx-Keynes on Involuntary Unemployment and Alternative Labor Market Indicators

The paper revisits Marx and Keynes’s analysis of involuntary unemployment and discusses how to account for this phenomenon by developing a series of alternative labor market indicators. Both Marx and Keynes treated (un-)employment as a function of the long-run consequence of capital accumulation and the presence of a certain type of unemployment as an inevitable outcome of the deficient decentralized capitalist market economy. The goal of this paper is to survey the latest developments in labor force statistics and indicators to see whether a series of alternative indicators of labor markets fare well with Marx and Keynes’s involuntary unemployment. The survey in this paper shows that the labor (under-)utilization framework that the International Labor Office (ILO) has proposed is one of the broadest measures of labor market performance, and that it allows us to examine the relative size and different type of the presence of the reserve army of labor and involuntary unemployment.

Measuring and Managing Consumer Sentiment in an Online Community Environment

As social media and virtual communities increase in popularity, the spread of word of mouth becomes easier, challenging firms to measure and manage the success of marketing initiatives in online community environments. This research examines how consumers react to firms' active participation in consumer-to-consumer conversations in an online community setting. The authors develop a tailored community-matched measure of consumer reaction (consumer sentiment) and analyze more than 115,000 consumer posts from ten online forums with active firm participation. The results indicate that consumers show diminishing returns to active firm engagement, which, at very high levels, can undermine consumer sentiment. Further subgroup analyses by conversation type indicate that these relationships hold for conversations that address consumers' functional needs but do not hold for conversations that address social needs. Finally, the results show diminishing returns to firm engagement for consumers primarily interested in product-related support but show no relationship for consumers primarily interested in inspiration and entertainment. These findings provide insights for marketing performance measurement and resource allocation in online communities.

Advertising vs. R&D: Relative effectiveness on brand equity

This study examines whether advertising can contribute directly to brand equity and, if it can, determines how much value advertising can deliver to brands and firms using the secondary data from various sources. The findings show that advertising can not only work to improve market performance measures but also to develop and maintain brand equity. R&D is also found to positively affect brand equity. With regard to the relative effectiveness of advertising and R&D, R&D is more effective than advertising in contributing to brand equity when measuring absolute effects of expenditures. When measuring simple changes in brand equity, however, changes in advertising are more effective than changes in R&D.

Brand luxury index: a reconsideration and revision

Purpose– The purpose of this paper is to improve the original Brand Luxury Index (BLI) developed by Vigneron and Johnson to provide a practical tool for assessing consumer’s perception of the luxurious of a brand.Design/methodology/approach– The original BLI was revised through three stages: an initial scale-item generation employing a qualitative method (i.e. focus group interviews), scale purification process using statistical techniques (i.e. exploratory factor analysis and confirmatory factor analysis (CFA)), and scale verification process using CFA. Data (249 for scale purification, 253 for scale validation) were collected with the help of E-rewards, a marketing research company.Findings– The modified BLI contains five dimensions (i.e. quality, extended-self, hedonism, accessibility, and tradition). The number of the dimensions remained the same as the original conceptualization (i.e. conspicuousness, uniqueness, quality, hedonism, extended-self), however, the contents of those dimensions differed.Practical implications– The modified BLI can be used to monitor and manage a prestige brand in the market place. Not only can marketers of prestige brands use the index to assess consumers’ perception of the luxuriousness of their brands but also to position their brand along the desired dimension of luxuriousness.Originality/value– The modified BLI can be used to measure marketing performance of luxury brands.

Executive Compensation: A Firm Life Cycle Analysis

This study uses the firm life cycle framework to extend our understanding of firm contracting practices. First, based on the theory of firm characteristics and the nature of firm transactions in each life cycle stage, we document significant differences in both the level and mix of executive compensation across firm life cycle stages. We next use economic predictions of the sensitivity and precision (signal-to-noise ratio) of accounting and market measures of performance across life cycle stages to examine variation in the weighting of underlying performance measures used in compensation contracting. Consistent with theory, we find that compensation is most sensitive to accounting measures in the mature stage when these measures are stable and informative of manager effort. Alternatively, forward-looking measures of performance are most heavily weighted in the early and late stages of a firm’s life cycle when historical accounting performance measures are less timely and relevant. Additionally, we allow the relation between economic determinants and total compensation to vary by life cycle stage and find that stage-specific compensation models more fully predict total compensation (i.e., larger adjusted R-squared, smaller residuals). Finally, we expand traditional excess compensation and rent extraction models to allow for life cycle variation and find our inferences on rent extraction change significantly. Overall, our results suggest that across life cycle stages, firms operate in different contracting environments that lead to differences in the executive compensation contract design. Our results suggest care should be taken in evaluating compensation on a broad cross-section of firms in different life cycle stages.

The implications of the revised code of corporate governance on firm performance

Purpose – The purpose of this paper is to examine the impact of corporate governance and ownership structure attributes on firm performance following the revised code on corporate governance in Malaysia. The study presents a longitudinal assessment of the compliance and implications of the revised code on firm performance. Design/methodology/approach – Two data sets consisting of before (2006) and after (2008-2010) the revised code are examined. Drawing from the largest companies listed on Bursa Malaysia (BM), the first data set contains 92 observations in the year 2006 while the second data set comprises of 282 observations drawn from the largest companies listed on BM over a three-year period, from 2008-2010. Both accounting (return on assets and return on equity) and market performance (Tobin’s Q) measures were used to measure firm performance. Multiple and panel data regression analyses were adopted to analyze the data. Findings – The study shows that there were still cases of non-compliance to the basic requirements of the code such as the one-third independent non-executive director (INDs) requirement even after the revised code. While the regression models indicate marginal significance of board size and independent directors before the revised code, the results indicate all corporate governance variables have a significant negative relationship with at least one of the measures of corporate performance. Independent chairperson, however, showed a consistent positive impact on firm performance both before and after the revised code. In addition, ownership structure elements were found to have a negative relationship with either accounting or market performance measures, with institutional ownership showing a consistent negative impact on firm performance. Firm size and leverage, as control variables, were significant in determining corporate performance. Research limitations/implications – One limitation is the use of separate measures of corporate governance attributes, as opposed to a corporate governance index (CGI). As a result, the study constructs a CGI based on the recommendations of the revised code and proposes for future research use. Practical implications – Some of the largest companies did not even comply with basic requirements such as the “one-third INDs” mandatory requirement. Hence, the regulators may want to reinforce the requirements of the code and also detail examples of good governance practices. The results, which show a consistent positive relationship between the presence of an independent chairperson and firm performance in both data sets, suggest listed companies to consider appointing an independent chairperson in the corporate leadership. The regulatory authorities may also wish to note this phenomenon when drafting any future corporate governance codes. Originality/value – This study offers new insights of the implications of regulatory changes on the relationship between corporate governance attributes and firm performance from the perspective of a developing country. The development of a CGI for future research is a novel approach of this study.

Price and Quantity 'Collars' for Stabilizing Emissions Allowance Prices: An Experimental Analysis of the EU ETS Market Stability Reserve

This paper reports the results of a laboratory experiment with financially motivated participants that is used to compare alternative proposals for managing the time path of emissions allowance prices in the face of random firm-specific and market-level structural shocks. In this setting, market performance measures such as social surplus are enhanced by the use of a price collar (auction reserve price and soft price cap). Comparable performance enhancements are not observed with the implementation of a quantity collar that adjusts auction quantities in response to privately held inventories of unused allowances. In fact, in some specifications, the quantity collar performed worse than no stabilization policy at all. The experiment implemented a specific set of structural elements, and extrapolation to other settings should be done with caution. Nevertheless, an examination of the observed behavioral patterns and deviations from optimal behavior suggests that a price collar has an important (although perhaps not exclusive) role to play in constructing an effective market stability reserve policy.

The Relationship between Audit and Risk Management Committees on Financial Performance of Non-financial Companies in Nigeria: A Conceptual Review

In recent years, cases of dissatisfaction from shareholders in reflection and recording of corporate financial activities, this has given rise to establishments of Audit and risk management committee and inclusion in the governance code as one of the governance mechanism for companies. It has become very serious issues of fraudulent practices by management, hence the need for audit system to signal any form of information asymmetries. This paper is purely conceptual review of past articles on corporate governance mechanism, board committees and Corporate Governance Code in Nigeria. The code defines what is needed for establishment of audit Committee by Corporations. The conceptual framework on audit and risk management committee is proposed for further study looking at Tobin q and ROA as measure of accounting and market performance respectively. DOI: 10.5901/mjss.2015.v6n3p206