Chapter Sixteen

Market-Based Management and

Financial Performance

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Market-Based Management and Financial Performance

• How to overwhelm customers and shareholders

• Customer satisfaction and shareholder value

• Marketing strategies and profitability

• Marketing strategies and assets

• Return measures of profitability

• Measures of shareholder value

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How to Overwhelm Customers and Shareholders

Figure 16-3 How to Overwhelm Customers and Shareholders

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Customer Satisfaction and Shareholder Value

Figure 16-4 Customer Satisfaction

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Customer Retention

Figure 16-7 How Customer Retention Impacts Net Profit and Earnings Per Share

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Marketing Strategies and Profitability

How are market-

based net profits

derived?

Figure 16-8 Market-Based Management Model of Profit Before Taxes

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Marketing Strategies and Assets

• How do Marketing Strategies affect assets?

– Accounts receivable

– Investment in inventory

– Investment in fixed assets

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Return Measures of Profitability

• How does Net Marketing Contribution affect Net Profits?– Return on Sales (ROS)

• Net Profit/Sales

– Return on Assets (ROA)• Net Profit/Assets

– Return on Equity (ROE)• Net Profit/Equity

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Measures of Shareholder Value

• How does Market-Based Management affect Shareholder Value?

– Earnings Per Share (EPS)

– Price Earnings Ratio (PE)

– Economic Profit (EP)

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Measures of Shareholder Value

Figure 16-12 How Marketing Profits Contribute to Earnings Per Share

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Measures of Shareholder Value

Figure 16-13 Market-Based Management and Shareholder Value

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Review

• How to overwhelm customers and shareholders

• Customer satisfaction and shareholder value

• Marketing strategies and profitability

• Marketing strategies and assets

• Return measures of profitability

• Measures of shareholder value

16-13Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

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Copyright © 2009 Pearson Education, Inc.  Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice HallPublishing as Prentice Hall