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Analyzing Marketing Productivity in Consumer Durables Industries: A Firm-Level Study

Explore the nature and measurement of marketing productivity in consumer durables industries through a firm-level analysis. Delve into the model development, variables influencing marketing productivity, model evaluation, and critique of the research article by Hawkins, Best, and Lillis (1987). Discover the marketing productivity formula, measurement tools, sources of data, and discuss future directions in the field.

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Analyzing Marketing Productivity in Consumer Durables Industries: A Firm-Level Study

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  1. The Nature and Measurement of Marketing Productivity in Consumer Durables Industries: A Firm Level Analysis Hawkins, Dell I, Roger J. Best and Charles M. Lillis (1987), “The Nature and Measurement of Marketing Productivity in Consumer Durables Industries: A Firm Level Analysis,” Journal of the Academy of Marketing Science, 15 (4), 1-8.

  2. Authors • Del I. Hawkins • Professor of Marketing • Various marketing Journals and Textbooks • Roger J. Best • Associate Professor of Marketing • Journals and Textbooks • Charles M. Lillis • Vice President of Strategic Marketing for US WEST Inc. • Various Journals • Marketing executive

  3. Purpose of the Article • Develop a managerially relevant concept of marketing productivity • Construct an operational measurement of marketing productivity-a validity issue • Establish environment specific benchmarks with which to compare the marketing productivity of various businesses

  4. Model Development • How the authors develop the model step by step is a good learning exercise (this is one of the reason I have included this article in the reading list) • Define the variables first • Explain conceptualization and limitation of variables • Identify their relevance in the area • Operationalize the variables-validity • Testing the model with credible data • Explain limitations • Model has no meaning in isolation, relative to what is the question

  5. The Nature of Marketing Productivity • Concept of Productivity: Output/Input • Marketing productivity = marketing output divided by marketing input • Marketing Output = (Relative market share) x (Relative Price) • Marketing input= (Marketing Expenditures) /(Sales) • Percentage or ratio measures, not in absolute dollars

  6. Marketing Productivity • Marketing Productivity Formula: Relative Market Share x Relative Price Marketing Expenditures/Sales • Marketing Productivity Score (MPS) – In isolation it has no meaning ! • Marketing Productivity Index (MPI)

  7. PIMS Database(now Marketing Science Institute) • Sources of data: firms pay a fee to join PIMS • Self reported data, multiplied by an unknown constant when supplied to PIMS • Questionnaire is provided by PIMS • Operational Definitions of Variables (ses Table 1)

  8. Variables Influencing Marketing Productivity

  9. Construction of the Model

  10. Correlation Analysis

  11. Model Evaluation • R² is significant • Model is reasonably stable • Durables, nondurables, split-half…..all supports the model • Supports the overall structure of the model developed for the durables industries • Variables that were collinear were removed before implementing the model

  12. Critique of the Article • Positive Contribution: • First of its kind • Reasonable model • Credible database • Coming from industry • Questionable Issues • Limitation in variable definition • Variability in the dataset • Collinearity • Future direction

  13. Discussion Questions • What is marketing productivity? What problems do we face in measuring productivity? How can we overcome them? • What are the drawbacks/limitations of the Hawkins et al.’s (1987) marketing productivity score/index? Can we apply the index to measure productivity in other industries? How? • Write a critique of the article.

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