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Handbook of Marketing Decision Models pp 501–523Cite as

Models for the Financial-Performance Effects of Marketing

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Part of the book series: International Series in Operations Research & Management Science ((ISOR,volume 121))

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Notes

  1. 1.

    By accounting definition, “free” or “net” cash flow is operating profit minus investment. Investment is the net change in the firm’s capital. However, “marketing induced capital” such as brand equity or customer equity is currently not recognized on the firm’s balance sheet. For example, a $20 million investment in a plant or equipment is recognized as an asset, whereas a $20 million advertising campaign for a brand is not.

  2. 2.

    We refer to Hanssens, Parsons & Schultz (2001) for a review of other functional specifications that have been used in the literature.

  3. 3.

    Cross-sectional comparisons of brand equity cannot monitor the formation of brand strength, only the equilibrium result of the branding process. By contrast, longitudinal data, possibly across several brands or markets, allow us to infer how marketing spending builds brands over time.

  4. 4.

    An excellent review on the link between perceptual marketing metrics and financial performance is given in Gupta and Zeithaml (2006; see e.g. their Table 1).

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Author information

Authors and Affiliations

  1. University of California, Los Angeles, USA

    Dominique M. Hanssens

Authors
  1. Dominique M. Hanssens
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  2. Marnik G. Dekimpe
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Correspondence to Dominique M. Hanssens .

Editor information

Editors and Affiliations

  1. Erasmus University, Rotterdam, The Netherlands

    Berend Wierenga (Prof) (Prof)

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Hanssens, D.M., Dekimpe, M.G. (2008). Models for the Financial-Performance Effects of Marketing. In: Wierenga, B. (eds) Handbook of Marketing Decision Models. International Series in Operations Research & Management Science, vol 121. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-78213-3_15

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