Standard Chartered Bank has been sponsoring the annual Marathon in Singapore for the past couple of years. Standard Chartered is a global financial institution based in London. Now, banking is not directly or indirectly related to an event such as a marathon. But the bank still spends money on organizing, publicizing and recruiting participants for the event and even recognizing and rewarding the winners.
So how should it measure the return on money invested in the sponsorship? Would it be wise to assume that the participants would (due to the event) take a strong liking towards the bank and become customers? Can the return be measured in terms of increased sales, increased retail traffic or some other financial measure?
If companies want to gain an accurate insight into how marketing investments bring in results, they will have to use both financial metrics (traditional measures of sales, profitability and market share, among others) and nonfinancial metrics. Unlike many other functions such as production or finance, where results are more tangible and can be easily quantified, marketing is a function that studies people’s behaviors, attitudes, intentions, satisfaction and loyalty. These variables cannot be quantified very easily. As such, to gain a complete understanding, nonfinancial metrics should be used simultaneously, three in particular:
Customer impact: This refers to the extent to which any marketing investment (such as ads and sponsorships) has made a positive impact on consumers’ perceptions, attitudes and experience. Such an effect may not result in immediate sales or increased market share but will certainly enhance the company’s image in the eyes of consumers. Standard Chartered’s marathon sponsorship may be classified as a failure if its productivity is measured in terms of the traditional financial metrics, but as a successful marketing investment if measured in terms of its potential to create a long-term positive customer impact.
Market impact: The power of marketing communications is such that it not only impacts the customers at whom it is targeted but also helps the company send out strong signals to the market and the competitors. When Nike recently decided to hire Asian celebrities to endorse the brand in the East, it not only helped Nike to create strong associations for consumers there but also helped signal its seriousness in the Asian market to other local competitors. The return on such investments must also be measured in terms of the effect it has had in the market, helping the company in the long run.
Brand impact: Companies worldwide are slowly realizing that the most important corporate asset is the brand. A strong brand has the power of attracting more customers, warding off competitors, gaining favorable treatment from distribution channels and commanding a higher price. As such, companies should ideally invest in those activities that would enhance the equity of the brand.
To assess the return on marketing investments, they should also measure the impact of marketing investments on brand equity and customer-brand relationships (such as brand awareness, brand switching, brand loyalty and eventual brand purchase). In the example of marathon sponsorship, the bank may not gain immediate sales, but such community events positively impact consumers’ perception toward the bank, which may increase brand awareness, and ultimately enhance the bank’s brand equity. But these advantages would not be assessed if companies restrict themselves to just financial metrics.
By including nonfinancial outcomes in measuring this, companies would have taken the first step towards solving the marketing productivity measurement problem.
So how should it measure the return on money invested in the sponsorship? Would it be wise to assume that the participants would (due to the event) take a strong liking towards the bank and become customers? Can the return be measured in terms of increased sales, increased retail traffic or some other financial measure?
If companies want to gain an accurate insight into how marketing investments bring in results, they will have to use both financial metrics (traditional measures of sales, profitability and market share, among others) and nonfinancial metrics. Unlike many other functions such as production or finance, where results are more tangible and can be easily quantified, marketing is a function that studies people’s behaviors, attitudes, intentions, satisfaction and loyalty. These variables cannot be quantified very easily. As such, to gain a complete understanding, nonfinancial metrics should be used simultaneously, three in particular:
Customer impact: This refers to the extent to which any marketing investment (such as ads and sponsorships) has made a positive impact on consumers’ perceptions, attitudes and experience. Such an effect may not result in immediate sales or increased market share but will certainly enhance the company’s image in the eyes of consumers. Standard Chartered’s marathon sponsorship may be classified as a failure if its productivity is measured in terms of the traditional financial metrics, but as a successful marketing investment if measured in terms of its potential to create a long-term positive customer impact.
Market impact: The power of marketing communications is such that it not only impacts the customers at whom it is targeted but also helps the company send out strong signals to the market and the competitors. When Nike recently decided to hire Asian celebrities to endorse the brand in the East, it not only helped Nike to create strong associations for consumers there but also helped signal its seriousness in the Asian market to other local competitors. The return on such investments must also be measured in terms of the effect it has had in the market, helping the company in the long run.
Brand impact: Companies worldwide are slowly realizing that the most important corporate asset is the brand. A strong brand has the power of attracting more customers, warding off competitors, gaining favorable treatment from distribution channels and commanding a higher price. As such, companies should ideally invest in those activities that would enhance the equity of the brand.
To assess the return on marketing investments, they should also measure the impact of marketing investments on brand equity and customer-brand relationships (such as brand awareness, brand switching, brand loyalty and eventual brand purchase). In the example of marathon sponsorship, the bank may not gain immediate sales, but such community events positively impact consumers’ perception toward the bank, which may increase brand awareness, and ultimately enhance the bank’s brand equity. But these advantages would not be assessed if companies restrict themselves to just financial metrics.
By including nonfinancial outcomes in measuring this, companies would have taken the first step towards solving the marketing productivity measurement problem.
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