Introduction

Abstract

As shareholders and financial analysts increase their pressure on firms to increase shareholder value, top management demands the marketing and sales functions to show their specific value contributions (Ambler 2003). The sales function's impact on the company's top and bottom line is relatively straightforward and its role as a cash flow generator is well accepted in many companies. In contrast, marketing's return on investment is much harder to quantify (Dekimpe and Hanssens 1995; 1999; O'Sullivan and Abela 2007; Rust et al. 2004; Trull 1965; Vakratsas and Ambler 1999). The impact of many marketing activities is complex in nature as marketing activities interfere on the one hand with other non-marketing activities of the firm (e.g., supply chain or R&D activities). On the other hand the impact of marketing activities depends on general market conditions (e.g., competitive intensity, trends, or customer demand levels). In addition, many marketing activities have considerable long-term effects (e.g., spill-over effects of an image campaign) which are hard to measure. As a consequence of marketing's difficulties in quantifying its value for the company, marketing's contribution is questioned and its influence in the board room is diminishing: In many companies, it is the marketing budget that is cut first, when the company struggles to meet the capital market expectations, e.g., with regard to quarterly results (Ambler 2003; Lukas, Whitwell, and Doyle 2005; Verhoef and Leeflang 2008).