The Effect of Marketing Efficiency, Brand Equity and Customer Satisfaction on Firm Performance an Econometric Model and Data Envelopment Aproach

Topics: Marketing, Advertising, Strategic management Pages: 42 (7347 words) Published: December 15, 2012
THE EFFECT OF MARKETING EFFICIENCY, BRAND EQUITY AND
CUSTOMER SATISFACTION ON FIRM PERFORMANCE

AN ECONOMETRIC MODEL AND DATA ENVELOPMENT APROACH

Luis Fernando Angulo
Autonomous University of Barcelona, Business Economics Department 08193 Bellaterra (Cerdanyola del Vallès), Barcelona, Spain
Tel. +34 93 581 1209, Fax +34 93 581 2555
Email: LuisFernando.Angulo@uab.es

ABSTRACT

This research focuses its attention to support empirically and not separately the impact of marketing activities, brand equity and customer satisfaction on firm performance. In addition, this study intends to fill the gap of marketing efficiency effect on long-term profits. Through methodology of three stages, two by econometric models and one using data envelopment analysis, the authors provide empirical evidence for the marketing link to firm value. Firstly, the results in the first stage confirm the impact of marketing assets on short-term performance. Secondly, the marketing efficiency shows that there are firms that have better abilities to maximize results in terms of marketing activities. Finally, some future research lines were considered.

Keywords: Advertising, Brand Equity, Customer Satisfaction, Data Envelopment Analysis, Marketing Efficiency, Marketing Impact, Firm Value.

1

PROBLEM STATEMENT AND PURPOSE
Nowadays, Marketing has to face some situations that the new business environment brings with it. One of them is related to the evolution of business atmosphere from Marshall Economy labelled as bulk-processing (Arthur 1996) to the Positive Feedback Economy known as the increasing returns (Arthur 1989, 1990, 1999) as well as the knowledge-processing. In addition, the second situation is linked to the operational and business unit level that Marketing take up in the organization (Ambler 2000). The last situation is connected not only with the increasing expectative of the board to get shortterm profits but also with the rising relevance of the financial perspective on the top management (Webster et al. 2003).

In the called bulk-processing perspective, firms wondered how much money is spent (Ambler 2000), focused in the denominator of the business ratio (Hamel and Prahalad 1994), and oriented to reduce inputs. In the new environment, firms have to wonder how much money is generated (Ambler 2000) expand the outputs (Hamel and Prahalad 1994) and look for the generators of cash flow (Srivastava et al. 1998). Through Marketing firms can answer. The response has been the market, the customer. This may seem nothing new but the great majority of firms do not follow the logic through (Ambler 2000).

To make worse the board only focuses 10% of its time on figuring out about the originators of money (Ambler 2000). As Marketing is the link between firms and markets, its organizational process, position and path give the firms the possibility to be aware of where the profits come by. Nevertheless, Marketing has been considered at business unit level (Ambler 2000). In addition during 90s and 2000s the financial function in the firms grew in importance (Webster et al. 2003) giving relevance to short-term results.

Consequently, as the short time dedicated to discuss marketing metrics as well as the interest of corporate board in short-term returns, marketing managers have to develop tools to quantify its contribution to firm growth and profitability in terms that are meaningful to CEOs, CFOs, and investors (Webster et al. 2003). Focusing on Marketing, Customer Satisfaction and Brand Equity are relevant aspects to the firm’s profitability. Theoretical aspects have been considered in the research of 2

customer satisfaction construct (e.g. Anderson and Sullivan 1993; Anderson et al. 1994, Fornell et al. 1996) as well as in the research of brand equity (e.g. Aaker 1991; Keller 1993, 1999). Some empirical aspects of the link of marketing positions on firm performance have been developed (e.g. Anderson et al. 2004, Gruca and Rego...

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