Market Metrics in Measuring Performance

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Introduction

This paper gives an illustration of how market metrics are used in measuring performance of marketing strategy means, used in different businesses. Marketing metrics are statistics measures covering marketing activities, and which an organisation engages in to determine the effectiveness of a company’s market programs (Arikan, 2011). This paper is a presentation of five companies with their respective marketing strategy means, measured in marketing metrics. The five companies belong to two different types of market industries in the United Kingdom. These two types of industry markets include a beer industry, and a media industry. The companies that are analysed in the beer industry are Martson Beer Company, Green King brewery and Heineken Beer Company, while the companies that are analysed in the media industry are Thomson Reuters and Virgin Media Company. The classification of the companies in to the two different industry markets will help in evaluating the competitive position of each company, with regard to their respective marketing activities. The marketing strategy and the analysed marketing metrics are as shown in the excel spreadsheet attached.

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Marketing metrics analysis

Percentage of company’s market share to market size: the metric shows the domination of a company within the industry market it is located in (Bragg, 2010). A company with a high market share dominance means that, its brand has attained great loyalty from the consumers. Thus, such a company is likely to enjoy high sales revenue in the market. From the metrics attached, Martson Company has a market share size of 36%, Green King brewery 24%, while Heineken has a market share size of 28%. The ratios show that Martson dominates the beer market industry than Heineken and Green King companies. This means that, the Martson brand name has higher number of loyal customers as compared to Heineken and Green King brewery. With a higher dominance level than that of a competitor, it is much easier for a company to penetrate the market than it is for the competitor. This means that, Marston’s cost of penetrating the market is expected to be lower than that of Heineken and Green King brewery. This is because the company enjoys a higher customer loyalty, which makes it easier for it to relate with new emerging market, than that required by the two other companies to position themselves. Thomson Reuters has a higher market size than that of Virgin media meaning that, Reuters enjoys a higher following in the media sector than Virgin media. This is to say, Reuters has a greater advantage in commercial airwave broadcasting than Virgin, as it has a smaller audience to make it attract commercial adverts like its competitor. The two companies with higher market share are supposed to come up with measures that will make sure they do not lose their competitive advantage over their competitors. The two companies with a lower market share percentage should carry out massive campaigns in the market, to promote their products, and to beat the competition.

Percentage change in company’s market size: the metrics help an organisation in realising the rate at which it is gaining or losing customer loyalty. This helps the company in coming up with ways of maintaining a gaining trend, or recovering lost market share (Bendle, 2006). Also, it helps the organisation in reviewing its marketing strategy likely to enhance effectiveness in market share expansion. From the metrics attached, all the companies have a positive market share, which means that, the companies did not lose their market share from previous market shares. This is a positive trend for all companies though; the rate in customer growth is different in the different companies. Heineken and Virgin Company have a higher market share increase, meaning that the companies are attracting more customers than their rival companies. The metric measure is an assurance indicator to the two companies that, their campaigns to attract loyal customers is working more effectively than that of their competitors. Martson and Virgin needs to increase their customer service campaigns, so as to match their competitors in customer level increments.

Percentage change in sales revenue: the metric measures the sales revenue trend, so as to identify the rate at which the organisation is increasing or falling, in making sales, from the previous period’s sales revenue earned. This helps the company in determining the prospects of future sales’ cash flow. The five companies under evaluation show a trend of increasing sales revenue from the previous period. The rate at which the companies are increasing their sales revenue is not the same. This is because some of the companies have a higher rate in percentage change in sales revenue relative to that of their competitors. Martson and Thomson have higher sales revenue cash flow increments than their respective competitors. This is an indication that the two companies sales revenues are expected to rise in future in a higher rate than that of their competitors.

Sales revenue to sales volume: the metric is used to measure how much, on average; units are sold to generate the total sales revenue. This helps the company in determining the price policy to adapt, in deciding whether to cut or increase the prices. The five companies have different selling levels in respect to their competitors. This means that, some companies have a window advantage of increasing their prices, while some can only lower their prices to prevent the loss of customers. Heineken and Virgin have the advantage of increasing their price levels, while Martson and Thomson can only adopt the policy of lowering their prices.

Sales volume to cost of advertisement: the metric measures the effectiveness of advertisement programs of an organisation, in making sales. The metric helps an organisation in reviewing how an advertisement is influencing the demand of its product in the market. A very high figure is an indication that, the company is spending a lot of resources in selling a single unit. The metric measures in the beer industry show that, the volume of sales made is influenced, almost at the same rate, by advertisements (Davis, 2009). This means that, each company has to increase its advertising budget, to protect its product demand levels. The media industry metric measures show that, the effectiveness of each dollar used in advertising, is different in the two companies. The ratio measures show that, Thomson spent one dollar in advertisement, to sell 37 units while, Virgin Company spent one dollar to sell 55 units. This is to indicate that, Virgin’s advertisement program is more effective than that of Thomson Company. Thus, Thomson Company has to review its advertisement to ensure that the cost incurred in advertisement is more effective in creating demand for its products.

Sales revenue to cost of advertisement: the metric measures the effectiveness of advertising cost in generating organisation sales revenue. The metric measures of the five companies show that advertisement is influencing almost at the same level the sales revenue cash flows. This means that the companies should increase their advertising budget, in order to increase their sales revenue cash flow.

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Cost of distribution to sales volume: the metric shows how much an organisation, on average, spends in terms of distribution, to make a sale of one unit. The ratios attached show that, the five companies spend at different levels, with regard to making sales. Martson and Thomson companies spend less than their respective competitors, in the distribution cost per unit sold. This means that, Heineken and Virgin companies need to review their distribution strategies for them to be more competitive.

Sales volume to cost of customers’ call: the metric measures the effectiveness level of customer calls in making sales. The metric helps an organisation to realise the benefits of making direct calls to customers. The metrics show the companies’ effectiveness in using the customer call strategy to be different. In the beer industry market, the Heineken company has being more effective. This is indicated by the metric value, which shows that, the company spends one dollar in customer calls to make a sale of 32 units, while Martson spends one dollar to make a sale of 21 units. In this case, the company should invest a lot in making direct customer calls to defend its advantage (Farris et al., 2010). Thus, Martson needs to review how it interacts with its customers, through direct calls to improve its effectiveness. In the media market industry, Thomson is effective in the customer call strategy, as it makes 375 units by spending one dollar in customer calls, while, Virgin Company spends one dollar to make a sale of 275 units.

Sales revenue to sales force cost: this metric is used to measure how much the organisation spends in each dollar, for each sales person to generate a given sale revenue (Kotler, 2010). The metric ratio shows that the companies have different sales person efficiency level (Jeffery, 2006). In the beer industry, Heineken has more efficient sales persons than the Martson Company. This is because, Heineken spends one dollar for each sales person to generate sales revenue of up to 67 dollars. Martson Company, on the other hand, spends one dollar for each sales person to produce sales revenue of 64 dollars. Thus, Heineken should invest more in the sales force, to remain competitive in the industry.Martson Company needs to review its sales force approach strategy in the market, to be able to increase its efficiency. In the media sector market, Thomson Company’s sales force demonstrates a very efficient unit compared to that of Virgin. The company’s sales force produces sales revenue of 89 dollars, for every dollar invested in the sales force department. Virgin Company generates sales revenue worth 33 dollars, for every dollar invested in the sales force department. This means that, Virgin Company needs to invest a lot in sales force training, for it to become more competitive.

Sales volume to size of sales force: the metric shows how efficient a sales force is, in making sales (Kimmel, 2010). The metric helps a firm to gauge how effective its sales force is, as compared to that of its competitors. From the metric values, Heineken Company’s sales force has been more effective in making sales than Martson Company’s sales force. The figures show that, on average, each of Heineken’s sales person makes a sale of 1640 units, while in Martson, each sales person makes a sales volume of 1133 units.

Conclusion

Beer industry market analysis

The two industries’ marketing strategy has worked relatively well in generating incomes for the respective companies (Gunelius, 2011). The effectiveness and efficiency of the means used in the marketing, is experienced differently in the two companies. The benefits enjoyed in the companies are highly influenced by the market share that each company enjoys (Keown, 2006). Martson Company has benefited a lot from the consumer loyalty it enjoys at the market level, than Heineken and Green King Companies. From the metrics values’ finding, Heineken is gaining share market level at a higher rate than Martson Company. This means that, Heineken’s rate of increasing market share poses a huge threat to Martson Company, as the company is likely to take over the top (McDonald, 2011). This will shift the market benefits from Martson to Heineken, which is now enjoying a low market share. Martson Company’s sales revenue growth is higher than that of Heineken Company, meaning that, it sales revenue is expected increase much higher than that of its competitor. This indicates that, Martson Company’s profitability will be higher than that of Heineken in the future. This will be advantageous to the shareholders of the Company, as they will benefit from higher dividends in the future, than those of the Heineken Beer Company. Heineken Company, on the other hand, enjoys the advantage of having more effective and efficient means in the market industry. This advantage is expected to benefit the company in attracting more sales volume than that of its competitor, in the future. The company has a very effective sales force that will be able to reinforce it, in the competition to win more loyal customers. Heineken’s average price level places it at an advantageous position, when it comes to adding its price level, which its competitor does not enjoy (Patterson and Pauwels, 2008). This means that, the company has the opportunity to increase its price levels, and to maximise its sales cash flows in the future. In this case, the investors in the company are likely to benefit in the future due to the efficiency and effectiveness of the company’s resources.

Advertisement has influenced the sales revenue generation, almost at the same level, in the two companies. This is to mean that, the company’s willingness to invest more on advertisements is likely to highly benefit the sales revenue cash flows in the future. This is because, even with one company having its average price being high, advertisement returns remain the same in the two companies. Thus, the future profitability of the two companies depends on the share market each company is to attain, and the efficiency of each company’s sales force.

Media market industry metric analysis

The media industry’s profitability is influenced by the market share of each individual company in the market (Raman, 2005). Thomson Reuters Media Company is enjoying a relative advantage in the market share size. This has made the company more successful in the sector and in terms of sales revenue generation, as compared to its competitor Virgin Company (Tadajewski, 2009). The company enjoys a very efficient and effective sales force that makes it out perform its competitor, with regard to, making huge sales volume and revenue size. The contribution cost of the company is used more effectively to generate higher sales revenue, as compared to how Virgin Company utilizes its distribution funds. This has helped increase the number Thomson Company’s loyal customers. It is as a result of the many clients, that the company enjoys high economies of scale, for example, higher average prices.

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References

Arikan, A 2011, Multichannel marketing: metrics and methods for on and offline success, California, Telso publishers.

Bendle, N 2006, Marketing metrics: 50+ metrics every executive should know, London, Oxford press.

Bragg, S 2010, Cost reduction analysis: tools and strategies, Chicago, Chicago press.

Davis, J 2009, Measuring markets: 100 key metrics, Oxford, Oxford press.

Farris, P, Bendle, N et al, 2010, Marketing metrics. The definitive guide to measuring marketing performance,Wharton, Wharton school of publishing.

Gunelius, S 2011, Content marketing for dummies, Chicago, Chicago publishers.

Jeffery, M 2006, Data driven marketing: The 15 metrics you should know, London, Oxford press.

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Keown, A 2006, Foundation of Finance, California, Telso publishers.

Kotler, P 2003, A framework for marketing management, Chicago, Chicago publishers.

Kotler, P 2010, Marketing strategies for the masters, Chicago, Telso publishers.

Kimmel, A 2010, Connecting with consumers: marketing for new marketplace realities, Oxford, Oxford press.

McDonald, M 2011, Marketing accountability: how to measure marketing effectiveness, Oxford, Oxford press.

Patterson, L and Pauwels, K 2008, Marketing metrics in action: creating a performance driven marketing, California, Telso publishers.

Raman, A, 2005, Cim coursework 05/06 analysis and evaluation, Chicago, Chicago publishers.

Tadajewski, M 2009, The sage handbook of marketing theory, Chicago, Chicago publishers.

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