Monday, April 9, 2012

Efficiency Improvement of Marketing

The focus of industrial engineering is efficiency.

Even marketing activities and processes need efficiency analysis and improvement.

Philip Kotler devoted a section in his chapter Organizing, Implementing, and Controlling Marketing Activities of his ninth edition of Marketing Management.

He recommended the appointment of a marketing controller for look after the efficiency of marketing activities. I would like to recommend to industrial engineers to take up this activity. It is their core focus.

Kotler covered the topic under the following headings

Sales Force Efficiency

Average number of sales calls per sales person per day.
Average sales call time per contact.
Average revenue per sales call
Average cost per sales call
Entertainment cost per sales call
Percentage of orders per 100 sales calls
Number of new customers per period
Sales force cost as a percentage of total sales

Industrial engineers have to identify the issues that fall into their domain and take up them. The issues that fall into the domain of marketing function have to be handed over to marketing specialists.

Advertising Efficiency

Advertising cost per thousand target buyers reached by a media vehicle.
Percentage of audience who noted, saw/associated, and read most of each print ad.
Consumer opinions on the ad's content and effectiveness
Before and after measures of attitude toward the product
Number of inquiries stimulated by the ad
Cost per inquiry

There may issues of efficiency and effectiveness jumbled up in the above list. Industrial engineers have to take up efficiency issues and do value engineering of advertisement designs, media vehicles and other activities.

Sales Promotion Efficiency

Percentage of sales sold on deal.
Display costs per sales dollar
Percentage of coupons redeemed
Number of inquiries resulting from a demonstration

Distribution Efficiency

Several tools are available for improving inventory control, warehouse location and transportation modes.

Efficiency evaluation comes into picture when the function to be served by a marketing activity is determined, the quantitative numbers are laid down for the expected output and then cost reduction ideas related to various inputs or resources are explored. Many times functional executives focus properly on output measures but ignore efficiency issues and specify higher cost inputs. Industrial engineers as resource minimization experts have to help functional experts or collaborate with functional experts to come out cost effective solutions to earn the targeted revenues. That is why Taichi Ohno described industrial engineering as profit engineering. They increase the profit available to the company on the targeted revenue.

Advertising Value Engineering could be an interesting industrial engineering activity.
Original Knol - 2094

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