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The strategic marketing and finance mix : a quantitative method for evaluating, planning and controlling marketing expenditures based on tangible historic company and market data / by James J. Mehail.

by Mehail, James J.

Marketing -- Decision making -- Mathematical models

Business enterprises -- Finance

iii, 108 leaves : ill. ; 29 cm.

Advisor: Julian Piekarski.

Committee members: Dr. Bruce Thompson, Cecil Head.

Introduction -- Conventional strategic marketing -- Financial evaluation and budgeting methods for marketing -- Methodology and curvilinear analysis -- Conclusions.

Strategic marketing has historically had a problem with inconsistent and subjective financial planning, evaluation and control, which indicates a need of a practical objective quantitative analysis method. It currently is a very elusive, qualitative managerial discipline and is even more elusive when coupled with traditional strategic financial quantitative analysis. Strategic marketing is an aspect of strategic management (planning) which has had much focus, enhanced by total quality studies, but not necessarily in the area of general marketing quantitative financial planning, evaluation and control. The marketing department of a company may use numerous mathematical techniques for specific sales projections resulting from mutually exclusive advertising campaign expenditures. Yet the assignment of a quantitative means to gauge the marketing department’s strategic effectiveness is still vague at best. There is an obvious quantitative need in business for the application of controls and feedback to the marketing department performance measures. This paper meets this need and recommends a curve fitting and equation generating technique applied to marketing expenditures versus sales.

The historic challenge that marketing faces is the annual submission of a budget request based on subjective, experienced-based decision making. While this opaque qualitative amount may serve the marketing department from year to year, it is increasingly viewed with contempt by other functional departments and top-management. A mathematical method of budget request submission would carry more credibility and be well received by the finance sector of a corporation. The purpose of this marketing-budgeting process scrutiny is developed by the objective analysis of the historic, subjective and strategic marketing process. This thesis addresses the problem of strategic marketing department performance analysis, its quantitative planning, evaluation and control. The main purpose of this paper is to demonstrate objective, quantitative graphical and mathematical methods for strategic marketing financial planning, evaluation and control.

This thesis investigates why the subjective situation exists and prescribes a graphical/mathematical method to remedy the situation. There are alternative subjective qualitative techniques which are applied to specific tactical decisions and can also be applied to strategic decisions. However a quantitative method is the focus. This method incorporates an objective means of assessing the effectiveness of the efforts of the marketing department, rather than just specific tactical advertising campaigns. This thesis will not only indicate the historic effectiveness of marketing efforts through a graphical means, but also offers a mathematical method of strategic planning with equations that will be more accurate than the traditional methods such as a linear ratio method. It critically examines the marketing for practical incorporation into this process.

The mathematical method for marketing performance analysis is the fundamental premise of this thesis. It results in the successful establishment of limits as well as measurement and accounting categories. This mathematical method can then be used for strategic managerial marketing financial planning, evaluation and control. It is specifically applicable to new top-level managers who are not seasoned and do not yet have the experience or “feel” for the future of a company both short and long-term. The specifics of this method apply linear mathematics to curvilinear (non-linear) equations describing the horizontal parabolic distribution of sales vs. marketing expenditures. This curvilinear distribution analysis method is more accurate than a simple linear ratio method. It analyzes historic marketing department performance data and predicts future performance results of planned expenditures. With higher accuracy, this mathematical method is also applicable to contemporary problems which include downsizing, global marketing, restructuring, reorganizing and reengineering, each of which can have tremendous impact on a company’s performance. This method affords accurate performance mapping which in turn allows the company to be even more fiscally competitive. Only by continued refinement and attention to detail can a company anticipate remaining competitive in today’s, and the future’s dynamic business environment. This mathematical method will certainly be of use in more than just the marketing area of strategic management. It can also be used for analysis of a product life cycle which possesses a similar curve distribution but different contrasting data.

The current status of industry strategy development is primarily qualitative. A quantitative curvilinear strategic marketing appropriation budget method has not been developed, applied or recorded in most companies. This thesis draws the conclusion that strategic marketing performance is in strong need of a quantitative analysis method which is answered by the graphical and mathematical method as displayed in this paper. This paper’s recommendation is that corporations should apply this procedure as an augmenting tool for strategic management’s evaluation, planning and control associated with a corporation’s marketing department.

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