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Marketing Success Defined

How do you personally define success? High income? Substantial net worth? A fine home? Peer recognition?

On a personal basis, there are likely almost as many definitions of success as there are people in the world.

In marketing, though, there are just four measurable elements of success:

Profitability, Market Share, Customer Satisfaction and Customer Retention.

Profitability requires little explanation. The very reason businesses exist is to make a profit, or generate more revenue than they pay out. Profitability may be increased by reducing overhead and the cost of goods sold—or by increasing the price to the buyer.

But prices can only be raised so much. Per the laws of price elasticity, as prices rise, unit sales tend to decline, as does Market Share; which brings us to our next measure of marketing success.

Market Share, as a measure of success, is important to marketers since the greater the share, the more stable the brand’s performance is in the marketplace. A product with 65% market share is a force with which to be reckoned. A product with 3% share is vulnerable to a variety of market factors such as competitive pricing, promotions, loyalty to better-known brands and more.

Financial managers understand the impact of Profitability and Market Share. But concepts such as Customer Satisfaction and Customer Retention are softer items and tend to be treated as lesser by those managers. Yet, the long term success and growth of a brand is highly dependent on them.

Customer Satisfaction doesn’t appear on a balance sheet. It can’t be measured in dollars and cents. It’s measured by the customer’s feelings


about a brand. Does the brand deliver its promise? Is it a good value? Does it bring status to the owner? Is the customer generally happy with the product? Customer Satisfaction begets repeat purchases, loyalty, word-of-mouth advertising and, of course, long-term profitability via Customer Retention.

Customer Retention, the final measure of marketing success, is closely tied to Customer Satisfaction, Profitability and Market Share.

A satisfied customer is likely to remain loyal to a brand, thus enhancing market share over the long-term, as new customers are acquired. Retained customers increase the profitability of a brand. In the course of acquiring new customers, retained customers’ purchases can be counted on for continued profit performance.

It’s widely known that it’s five times more expensive to acquire a new customer than it is to keep an old one. Makes you wonder why marketers don’t generally invest more in Customer Retention, doesn’t it?

Few business organizations focus on all four elements of marketing success, probably because they’re difficult to balance and manage as separate items, yet they’re strongly interdependent.

The four elements of marketing success are reasons enough for financial managers and marketing managers to gain a better understanding of one another’s’ disciplines and work toward the common good of their companies.

About the Author

Mark Levit it managing partners of Partners & Levit Advertising, New York and a professor of marketing at New York University. For more information about Partners & Levit visit www.partnerslevit.com or call 212-696-1200

 

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See all blog posts tagged with marketing on Technorati.
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Marketing Profs - Marketing Concepts and Strategies: Expert ...
Marketing knowhow from professionals. Newsletter, articles and how-to's.
www.marketingprofs.com
 
Guerrilla Marketing Online - The Official Site
Guerrilla Marketing Online is anonline magazine for small business, entrepreneurs, sales people and marketers of all kinds.
www.gmarketing.com
 
Business Marketing - Small Business Marketing
Business marketing - Read everything your need to know about small business marketing.
www.entrepreneur.com
 
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Pages tagged with "marketing" on del.icio.us
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