Wednesday, February 12, 2014

Can Better Marketing Data Lead to Stronger Performance?

Data can lead to confusion or clarity. As the market becomes more versatile companies will need betters ways of measuring.  Research by Homburg et. al. (2012) delves into what makes successful marketing data management and what doesn’t. They use a more complex contingency-based model that studies the association between market performance and data through the concepts of breadth, strategy fit, and cause & affect. 

There are many examples of data systems that include dashboards and balanced score cards. The right kind of data can lead to conclusions about cause and effect and this can have great benefits for organizations seeking a path to navigate. Data management is a method of drawing key measurements from the environment and aligning organizational activities for greater market performance. 

The greatest benefits of data appear to be from those who seek to create a differentiation strategy. This means that the firm is selling products that compete within certain demographics. They are showing themselves to be different than others because of X or Y. Market differentiation is a common strategy among companies that desire to set themselves apart in competitive markets.

Data management works well when market complexity and dynamism are higher. It helps to create more clarity that encourages alignment with new market trends. When markets are constantly changing data provides a target that may not be available to other firms. Proper systems help to clarify, develop strategies, and focus energy toward specific targets. 

They found through 201 marketing responses empirical support for performance outcomes depending on the strategy, complexity and dynamisms of the market. Faster changing environments need better information that can guide decision-makers into making stronger strategic choices. The biggest pay offs are for those firms that differentiate themselves from others. When markets are larger and across different continents breadth helps to ensure you are capturing the right data. Secondly, the data must fit within the strategy of the organization and help them focus on what is important. Third, cause and effect information helps firms adjust their processes to create greater impact in the market. 

Comment:  Data for data sake is not beneficial. The type of data collected should be based upon the strategic needs of the organization. This data is then organized in a way that encourages useful conclusions. Since data organized improperly can mislead decisions it is important to regularly revisit the type of data being collected and how it is being organized. 

Homburg, et. al. (2012). Marketing performance measurement systems: Does comprehensiveness really improve performance? Journal of Marketing, 76.

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