Running a business without monitoring brand and product performance is a recipe for disaster. At what point will we break even? What constitutes a ‘good’ month? Is the brand growing? How does our product perform compared to our competitors? And most importantly, what do our customers think of a brand? How loyal are they? These are all questions that could be answered with some basic and some more complex health measurement strategies.
For a brand such as Omega which sells premium watches at an average price of $6,000, but some costing a measly $300,000, it is important for them to understand how their metrics will differ from chocolate bars or other fast moving consumer goods (FMCG). One watch sale per week per store may be the break-even point, compared to 500 chocolate bars. Purchase frequency might be low because the high-involvement, high-priced purchase is considered to be ‘once in a lifetime’, compared to some consumers purchasing mars bars multiple times per week. This might transfer into 100% loyalty for Omega which is unheard of for FMCG’s. Product availability for a chocolate bar is vast, with Cadbury dairy milk available at every supermarket, petrol station and newsagency, compared to Omega watches only being found in the rarest of watch stores overseas, and no prices displayed on their online stores, creating an image of exclusivity.
While metrics can be split into categories: financial, marketing, behavioural, memory, physical availability and customer profile, they all intertwine to give an overall picture of brand and product health (Knowles, 2003). For example, if consumers generally hold a positive attitude towards Omega, the brand has built equity (memory metric), and brand equity often means consumers are willing to pay more for a product than a competitor’s even if the cost to produce was the same, resulting in a higher profit margin (financial metric) (Stahl et al, 2011). Higher profit margins and positive brand equity can influence Omega to avoid discounting as a promotional tactic, which can reduce the image of a brand and the accumulated equity (Wood, 2000). Metrics help management make informed, smart business decisions.
But most importantly, the incorporation of metrics by management has been found to increase the effects of the marketing mix (Mintz & Currim, 2013) by enhancing accountability and increasing knowledge of metrics and brand health, consequently arming them with the tools to be strategic in their marketing decisions and campaigns. Monitoring performance metrics provides managers with a foundation for future decisions including budgeting and forecasting, one of the biggest and most difficult tasks of upper management today (Rust et al, 2004). Omega would not be one of the most sought after, prestigious watch brands in the world if it weren’t for a series of well-educated decisions surrounding the marketing-mix, which could only stem from effective performance tracking using relevant metrics.
Omega is a brand to watch.
Stahl. F, Heitmann. M, Lehmann. D, and Neslin. S (2011) The impact of brand equity on customer acquisition, retention and profit margin, Marketing Science Institute, pp. 1-50
Wood. L (2000) Brands and brand equity: Definition and management, Management Decisions, Vol 38, Issue 9, pp. 662-669
Mintz. O & Currim. I (2013) What drives management use of marketing and financial metrics and does metric use offer performance of marketing mix activities?, Journal of Marketing, Vol. 17, pp. 17-40
Rust. R, Ambler. T, Carpenter. G, Rajendra. K, Srivastaka. K (2004) Measuring marketing productivity: Current knowledge and future decisions, Journal of Marketing, Vol. 68, Issue 4, pp. 76-89
Knowles. J (2005) Value-based brand measurement and management, Interactive Marketing, Vol. 15, Issue 1, pp. 40-50
Danniella McGowen, 216223021