Paul W. Farris - Marketing metrics: 50+ metrics every executive should master

Measurement is critical to the health of any business, and Marketing Metrics highlights key tools and techniques across many measurement landscapesfrom the consumer, to the sales force, to the ever-changing media environment. Its a must-read for any business leader who wants to optimize the way they measure business activities and results in order to grow their business.

Kimberley B. Dedeker, Vice President, Global Consumer & Market Knowledge, Procter & Gamble

Why read Marketing Metrics? Because better metrics lead to better decisions, which lead to better outcomes. This book does a superb job of helping marketers, and all executives, understand which metrics to use and how to use them.

Erv Shames, former CEO, Kraft Foods

Why was this book not written earlier? Marketing Metrics presents an excellent compendium of the metrics you really need to know, along with a structural framework that ties them together and helps you steer your business successfully.

Dr. Hans-Willi Schroiff, Vice President, Market Research/Business Intelligence, Henkel

Marketing is being challenged, as never before, to be accountable. This book, by describing metric options and their risks, will help address this challenge.

David Aaker, author of Brand Portfolio Strategy

Measurement is central to our business discipline. What gets measured matters, and having the right measures is key. Marketing Metrics provides an insightful compilation of what to measure and how to measure it for todays marketing-savvy executives.

Glenn Renwick, CEO of the Progressive Corporation (Progressive DirectSM and Drive Insurance from Progressive)

Marketing, as a function, is under increasing pressure to develop business-oriented metrics to justify marketing mix investments. Marketing Metrics offers clear advice on how to develop common marketing metrics that are relevant and accessible to both marketing and non-marketing decision makers.

Anil Menon, Vice President, Marketing, Systems & Technology Group, IBM

50+ Metrics Every Executive Should Master

Paul W. Farris
Neil T. Bendle
Phillip E. Pfeifer
David J. Reibstein

Vice President, Editor-in-Chief: Tim Moore
Associate Publisher and Director of Marketing: Amy Neidlinger
Editor: Yoram (Jerry) Wind
Acquisitions Editor: Paula Sinnott
Editorial Assistant: Susie Abraham
Cover Designers: Chuti Prasertsith and Sandra Schroeder
Managing Editor: Gina Kanouse
Project Editor: Kayla Dugger
Copy Editor: Ben Lawson Publishing, LLC
Indexer: Lisa Stumpf
Compositor: Interactive Composition Corporation
Proofreader: Jessica McCarty
Manufacturing Buyer: Dan Uhrig

2006 by Pearson Education, Inc.

Publishing as Prentice Hall

Upper Saddle River, New Jersey 07458

Prentice Hall offers excellent discounts on this book when ordered in quantity for bulk purchases or special sales. For more information, please contact U.S. Corporate and Government Sales, 1-800-382-3419, .

Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners.

All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher.

Printed in the United States of America

Tenth Printing, July 2008

ISBN-10: 0-13-187370-9
ISBN-13: 978-0-13-187370-4

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Library of Congress Cataloging-in-Publication Data

Marketing metrics : 50+ metrics every executive should master / Paul Farris... [et al.].
p.cm.
Includes bibliographical references and index.
ISBN 0-13-187370-9
(hardback : alk. paper)1. Marketing research. 2. MarketingMathematical models. I. Farris, Paul.
HF5415.2.M35543 2006
658.8'3dc22
2005031114

We dedicate this book to our students, colleagues, and consulting clients who convinced us that a book like this would fill a real need.

We hope this book will be a step, however modest, toward clarifying the language, construction, and meaning of many of our important marketing metrics. If we have succeeded in making such a step, we owe thanks to a number of people.

Jerry Wind reviewed our initial concept and encouraged us to set our sights higher. Rob Northrop, Simon Bendle, and Vince Choe read early drafts and gave valuable feedback on the most important chapters. Eric Larson, Jordan Mitchell, Tom Disantis, and Francisco Simon helped develop material for important sections and provided their research skills. Gerry Allan and Alan Rimm-Kauffman allowed us to cite liberally from their materials on customers and Internet marketing.

Marc Goldstein combined business savvy with deft editing touches that improved the readability of almost every chapter. Paula Sinnott, Tim Moore, Kayla Dugger, and their colleagues also made significant improvements in moving from a raw manuscript to the book in your hands.

Erv Shames, Erjen van Nierop, Peter Hedlund, Fred Telegdy, Judy Jordan, Lee Pielemier, and Richard Johnson have collaborated on our Allocator management simulation and Management by the Numbers online tutorials. That work helped us set the stage for this volume. Finally, we thank Kate, Emily, Donna, and Karen, who graciously tolerated the time sacrificed from home and social lives for the writing of this book.

Paul W. Farris is Landmark Communications Professor and Professor of Marketing at The Darden Graduate Business School, University of Virginia, where he has taught since 1980. Professor Farriss research has produced award-winning articles on retail power and the measurement of advertising effects. He has published more than 50 articles in journals such as the Harvard Business Review,Journal of Marketing,Journal of Advertising Research, and Marketing Science. He is currently developing improved techniques for integrating marketing and financial metrics and is co-author of several books, including The Profit Impact of Marketing Strategy Project: Retrospect and Prospects. Farriss consulting clients range from Procter & Gamble to Apple and IBM. He has served on boards of manufacturers, retailers, and e-Business companies. Currently, he is a director of Sto, Inc., and GSI Group.

Neil T. Bendle is a Ph.D. student in marketing at the Carlson School of Management, University of Minnesota. He holds an MBA from Darden, and has nearly a decades experience in marketing management, consulting, business systems improvement, and financial management. He was responsible for measuring the success of marketing campaigns for the UKs Labour Party.

Phillip E. Pfeifer, Alumni Research Professor of Business Administration at The Darden Graduate Business School, currently specializes in interactive marketing. He has published a popular MBA textbook and over 25 refereed articles in journals such as the Journal of Interactive Marketing, Journal of Database Marketing, Decision Sciences, and the Journal of Forecasting. Pfeifer was recognized in 2004 as the Darden Schools faculty leader in external case sales. His teaching has won student awards and has been recognized in Business Weeks