At least 50 per cent of marketers do not have proper performance targets and as a result are not accountable for how profitable their companies are, says research by PA Consulting and Cranfield School of Management.
The joint project, which interviewed 150 senior UK marketers, found that 95 per cent were working to targets based on revenue or volume growth, while only half were given targets geared to profitability. As a result, many marketers have no direct incentive to make sure that the additional sales they generate are making the company a big enough margin.
Professor Robert Shaw at Cranfield says the lack of profit targets reflects an organisational problem within many companies.
The research, commissioned for this week's annual UK Marketing Forum conference, found that companies that give their marketers targets based on "economic profit" (defined as post-tax profit less a charge to reflect the capital employed in the business) make significantly better returns than those that do not.
"We believe that closing these gaps to achieve high-performance marketing is typically worth about 25 per cent improvement to the share price," the report says.
Marketers' lack of accountability has not made them popular among company bean-counters. While the survey reveals that finance directors acknowledge the importance of marketing, brands and customer relationships in increasing the market value of a company, they regard marketing as one of the most poorly controlled areas.
And marketers say they are not confident about their own understanding of financial indicators.
But shareholder value seems to be creeping into marketers' vernacular. Prof Shaw says several companies, such as Cadbury Schweppes, Diageo, and Unilever, are focusing on the relationship between their share price and marketing.
emiko.terazono@ft.com
For the full report contact: edoniger@richmondevents.com
Copyright 2002 The Financial Times Limited
This article originally appeared in the Financial Times Creative Business supplement. For more information please visit www.ft.com.
