attention away from using only labor or material standard costs to allocate full cost,
and toward capturing the actual costs of supporting individual products, customers,
and other entities.
EFFICIENCY CONTROL
Suppose a profitability analysis reveals that the company is earning poor profits in
certain products, territories, or markets. Are there more efficient ways to manage the
sales force, advertising, sales promotion, and distribution in connection with these
marketing entities?
Some companies have established a marketing controllerposition to improve mar-
keting efficiency. Marketing controllers work out of the controller’s office but spe-
cialize in the marketing side of the business. At companies such as General Foods,
DuPont, and Johnson & Johnson, they perform a sophisticated financial analysis of
marketing expenditures and results. They examine adherence to profit plans, help pre-
pare brand managers’ budgets, measure the efficiency of promotions, analyze media
production costs, evaluate customer and geographic profitability, and educate mar-
keting personnel on the financial implications of marketing decisions.^31
Sales Force Efficiency
Sales managers need to monitor the following key indicators of efficiency in their ter-
ritory:
■ Average number of calls per ■ Percentage of orders per
salesperson per day 100 sales calls
■ Average sales call time per ■ Number of new customers
contact per period
■ Average revenue per ■ Number of lost customers
sales call per period
■ Average cost per ■ Sales force cost as a
sales call percentage of total sales
■ Entertainment cost per
sales call
When a company starts investigating sales force efficiency, it often finds areas for
improvement. General Electric reduced the size of one of its divisional sales forces af-
ter discovering that its salespeople were calling on customers too often. When a large
airline found that its salespeople were both selling and servicing, they transferred the
servicing function to lower-paid clerks. Another company conducted time-and-duty
studies and found ways to reduce the ratio of idle-to-productive time.
Advertising Efficiency
Many managers believe it is almost impossible to measure what they are getting for
their advertising dollars. But they should try to keep track of at least the following
statistics:
■ Advertising cost per thousand target buyers reached by media vehicle
■ Percentage of audience who noted, saw or associated, and read most of each
print ad
■ Consumer opinions on the ad’s content and effectiveness
■ Before and after measures of attitude toward the product
■ Number of inquiries stimulated by the ad
■ Cost per inquiry
Management can take a number of steps to improve advertising efficiency, in-
cluding doing a better job of positioning the product, defining objectives, pretesting
messages, using computer technology to guide the selection of media, looking for bet-
ter media buys, and doing posttesting.
chapter 22
Managing the
Total Marketing
Effort^705