Article Summary: “The Bottom Line: Marketing & Firm Performance”
Leslie M. Fine, author of “The Bottom Line: Marketing & Firm Performance,” analyzes how marketing relates to how well the firm does overall. A majority of the article is focused on how customer relations’ impact firm performance and can affect shareholder wealth. Firms improving customer equity and reducing the firm’s cash needs, will influence the net present value of the firm. Within recent years, there has been an increase in the awareness that firms should be able to demonstrate that marketing actions affect financial outcomes. Along with this awareness, marketers have realized that the investor is also the customer, especially at the initial IPO, and leading companies to report customer equity statements and customer equity flow statements.
The article notes various studies that have been conducted analyzing the impact of customer satisfaction in relation to areas such as the “stock value gap,” performance of portfolios and the impact of marketing, research and development and operations on firm performance. The studies concluded that “doing what’s right for the customer is doing what’s right for the firm and shareholder value.” Customer satisfaction has a significant impact on the “stock value gap” when compare to the top competitor, meaning the lesser the gap the higher the customer satisfaction ratings of the firm. In relation to portfolio performance, the study indicated that portfolios with firms that had high satisfaction scores produced positive trend portfolios. Over a 10-year period those positive trend portfolios yield better than others and more impressively better than the S&P 500.
Through reading this article I began to see clearly the importance and relevance of marketing to the success of the firm. As shown by the research indicated in this article, firms should begin to place an additional emphasis of the marketing function throughout the firm. I was particularly...
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