Controlling marketing and the measurement of marketing effectiveness 505
reflected very rapidly in declining sales reven-
ues and profit streams.
These different objectives and time-scales
mean that different financial evaluation and
control techniques should be applied to devel-
opment and maintenance activities. The control
process must be tailored to the needs of the
business.
This tailoring process is particularly
important in designing the appropriate finan-
cial planning and control system for the organi-
zation. There are widely differing competitive
strategies which can be implemented, even in
the same industry at the same time, and these
differing strategies require suitably tailored
control processes and performance measures.
There is a need for a hierarchy of both economic
and managerial performance measures for all
businesses, but it is critical that some of these
performance measures incorporate indications
of how well the business is doing in terms of its
long-term objectives.
It is particularly important that the per-
formance measures are tailored to the key
strategic thrusts of the business; if these change,
the financial control process may need to be
changed as well. One common strategic market-
ing thrust is to develop strong brands as a source
of sustainable competitive advantage. A bran-
ded strategy requires a good brand evaluation
process if the high brand expenditures are to be
properly financially evaluated and controlled.
Brands can be based on either products or
customers, but other types of marketing strategy
can also be customer led or product based.
In a customer-led strategy, the long-term
customer relationship should be regarded as a
critical asset of the business; thus, development
expenditure is invested to win the customer and
maintenance expenditure is needed to retain the
relationship for its full potential economic life.
Life cycle customer account profitability analy-
sis is therefore important in such a relationship
marketing-oriented business.
Similar issues occur with product-based
strategies and a suitably tailored response is
required. Product life cycle costing is quite a
well-developed technique in some industries. It
uses the concept of the experience curve to
establish the long-term decline in real per-unit
costs over time as cumulative volume increases.
This declining cost analysis can be used to
develop a marketing strategy where current
pricing is based on anticipated long-term costs
rather than the current much higher short-term
costs. Resulting short-term losses can be regar-
ded as an investment in developing a sustain-
able competitive advantage based on the faster
progress down the experience curve, which
could lead to a sustainably lower cost position
in the long term.
The need for closely integrated involve-
ment of finance and marketing managers cre-
ates the opportunity for a marketing finance
manager to work in the marketing area. Such a
role can help immensely with the important
financial evaluation of marketing expenditures
and their subsequent control. It can also act as
the focus for co-ordinating the important strate-
gic competitor analyses which require inputs
from many parts of the business.Potential for conflict
In many businesses, the marketing function and
the finance function can often find themselves in
apparent direct conflict, due to the lack of the
kind of close working relationship which
finance has developed with other areas of the
business, such as operations or production.
Indeed, it can be the case, in some companies,
that marketing managers feel that their finance
colleagues’ main interest in marketing is to try to
stop them spending money. Conversely, it can
appear to these same finance managers that the
principal objective of their marketing colleagues
is to spend as much money as possible on
increasingly esoteric advertisements, very
expensive trade and consumer promotions,
higher customer discounts, etc.
Clearly, if the business is to achieve its long-
term objectives, it is essential that its marketing