- 1.1 What Is a Metric?
- 1.2 Why Do You Need Metrics?
- 1.3 Marketing Metrics: Opportunities, Performance, and Accountability
- 1.4 Choosing the Right Numbers
- 1.5 What Are We Measuring?
- 1.6 Value of Information
- 1.7 Mastering Metrics
- 1.8 Where Are the "Top Ten" Metrics?
- 1.9 What Is New in the Fourth Edition?
- 1.10 New Developments in the World of Marketing Metrics
This chapter is from the book
This chapter is from the book
This chapter is from the book
1.5 What Are We Measuring?
Measuring marketing is highly challenging. For example, marketers generally agree that a firm’s brand is a key marketing asset, but different marketers all have subtly different views of what is meant by a brand. It is hard to measure something when you don’t know what exactly you are trying to measure. We, therefore, suggest that the first thing marketers need to establish is a clear definition of what they are trying to measure.
Watt and van den Berg distinguish theoretical and operational definitions in a way that we find useful:
“Concepts represent the ‘real world’ phenomena being explained by the theory. The scientific method requires that the nature of these concepts be unambiguously communicated to others. This requirement mandates the creation of theoretical definitions.…Concepts must also be objectively observed. This requires that we create operational definitions, which translate the verbal concepts into corresponding variables which can be measured.”9
The same authors differentiate constructs from concepts, arguing that the former are even more abstract than concepts and cannot be directly observed. They use “source credibility” as an example of a construct that comprises concepts such as expertise, status, and objectivity. Of course, constructs can also be operationalized in a number of ways.
To see what this means, note that marketing has a number of basic ideas that capture real-world phenomena; let us call these concepts. These basic ideas are very important to marketers and can be explained—and even formally defined—verbally. These concepts are, however, not the same as metrics. For example, loyalty is a critical concept for many marketers, but my idea of loyalty may differ from yours. Is loyalty demonstrated when I visit a grocery store every week? What if that grocery store is the only one I can easily get to? In that case, I might not feel loyal to the store, but I still visit it every week. Someone else might feel highly loyal to the same store but live much further away and only be able to visit irregularly. Which, if any, of these consumers are loyal?
We must make concrete our abstract concept of loyalty by providing an operational definition, a precise specification in numeric terms of what exactly we mean. This allows us to create metrics to keep track of how a firm is performing against the operational definitions specified. This book aims to improve measurement validity—how well you translate your ideas into numbers; we do not seek to provide new ways of looking at marketing or argue which concepts are more important than any others.
Some common ways of translating concepts into metrics are shown in Table 1.1.
Table 1.1 Common Metrics Used to Track Important Concepts
Concept |
Metric(s) |
|
Loyalty Distribution Market concentration |
Share of Requirements (SOR) All Commodity Volume (ACV), Total ACV Three-Firm Concentration Ratio, Herfindahl Index |
Keeping a clear distinction between concepts, operational definitions, and metrics is surprisingly hard. In any given marketing team or organization, one can expect to see a certain level of confusion. We hope our book helps reduce this confusion and promote a common language, but we are realists. Indeed, we are happy to acknowledge that we also make mistakes and inadvertently refer to metrics by the name of the concept. We are trying to be clear but please contact Neil Bendle if you see areas where we can improve (just in case there is a fifth edition).
There will continue to be healthy (or at least vigorous) debates in marketing on what should be meant by various theoretical concepts and constructs. However, at the level of measurement and reporting, we believe that the field should be striving for consistency, accuracy, and reliability that allow us to at least understand what other people mean, even if we disagree with what they are suggesting. No shared understanding can happen without clear operational definitions. Providing these definitions is the primary focus of the Common Language Marketing Dictionary. The aim of this project is to improve the measurement of marketing, specifically making measurement in the discipline more consistent. It has been undertaken by MASB (Marketing Accountability Standards Board, www.themasb.org), along with MSI (Marketing Science Institute, www.msi.org), ANA (Association of National Advertisers, www.ana.net), and AMA (American Marketing Association, www.ama.org). We encourage readers to learn more about, and support, the initiative, which can be accessed at marketing-dictionary.org. We add a special plea to any professors reading the book to encourage your students to use the Common Language Marketing Dictionary (for example, by adding a link in any syllabi).