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Marketing and Finance: Creating Shareholder Value by Keith Ward, Brian Smith, Malcolm McDonald

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2

A process of Marketing Due Diligence

Fast track

Despite what many non-marketers think, marketing is much more than just promotion. It is much more, even, than designing and delivering the ‘marketing mix’ of promotion, product, pricing, place (distribution), process, people and physical evidence. As discussed at the end of Chapter 1, methods for measuring the effectiveness of these more obvious marketing activities have been in place for years. Whilst these tactical measures have their place, they tell us little about the effectiveness of the marketing strategy, that part of the marketing process that concerns itself with understanding the market and deciding what parts of it to focus upon and with what value propositions. It is with this aspect of marketing that the Marketing Due Diligence process concerns itself.

Marketing, in this broad strategic sense, is closely correlated to shareholder value. It is the choice of which customer segments to focus upon and what to offer them that lies at the root of sustainable competitive advantage. Good choices create customer preference which, in turn, creates better return on investment. Looked at through the lens of business risk, as investors do, strong strategy reduces the risk associated with a promised return. To investors, it is the risk-adjusted rate of return that matters, and managing risk is as important as managing returns, sometimes more so.

The Marketing Due Diligence process involves both diagnostic and therapeutic stages. ...

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