You are here: Home / News Release Archives / 2012 / December / Using Marketing Analytics to Increase Return on Assets

Using Marketing Analytics to Increase Return on Assets

According to research by professors at the Penn State Smeal College of Business, Fortune 1000 companies that increase their use of marketing analytics improve their return on assets (ROA) an average of 8% and as much as 21%, with returns ranging from $70 million to $180 million in net income. Despite the proven value of using marketing analytics, the relative number of companies actually employing them is still low.
December 13, 2012

Marketing analytics, which is a technology-enabled and model-supported approach to use customer and market data to shape marketing decision-making, has proven to increase return on assets (ROA) among Fortune 1000 companies. Recent research conducted by professors at the Penn State Smeal College of Business finds that despite the proven value of using marketing analytics, the relative number of companies actually employing them is still low.

Gary Lilien, Smeal distinguished research professor of management science and research director of the Institute for the Study of Business Markets (ISBM); Arvind Rangaswamy, senior associate dean for research and faculty at Smeal; and Frank Germann of the University of Notre Dame found that Fortune 1000 companies that increase their use of marketing analytics improve their ROA on average 8% and as much as 21%, with returns ranging from $70 million to $180 million in net income.

The researchers surveyed 212 senior executives from 500 firms. Their analysis shows favorable performance outcomes from greater use of marketing analytics, suggesting that the impact of marketing analytics deployment on firm performance increases in more intense industries with rapidly changing customer preferences.

Examining one group of firms with an average (50th percentile) deployment of marketing analytics and operating within an industry with average competition and average shifts in customer preferences, the researchers found that increasing the use of analytics by one unit translates to an 8% increase in ROA. Examining a second group of firms, those with the same deployment of marketing analytics, but within in a highly competitive industry with frequently changing customer demands, the researchers found that a one-unit increase shows a 21% average increase in ROA.

The study emphasizes the role of management in the successful implementation of marketing analytics. To ensure effectiveness of using marketing analytics, a company’s top management team must seek to hire people with the skills required to do data analysis, implement a sophisticated information technology infrastructure, and maintain a culture that supports marketing analytics, so that the insights gained can be used within the firm.

“Our study provides a strong rebuttal to executives who believe that information gathering and analysis result in excessive delays and ‘analysis paralysis,’” says Lilien. “On the contrary: when analytics is deployed with strong support from key executives, organizations thrive in competitive industries and react well to today’s customers, who frequently change their product preferences.”

The study, “Performance Implications of Deploying Marketing Analytics,” is forthcoming in the International Journal of Research in Marketing.

Filed under: ,
At a Glance

Gary Lilien and coauthors find that Fortune 1000 companies using marketing analytics had favorable performance outcomes and increased their return on assets (ROA), particularly those in highly competitive industries with rapidly changing customer preferences. Key findings include:

  • Increasing the use of analytics by one unit translates to an 8% increase in ROA for firms with an average (50th percentile) deployment of marketing analytics, operating within an industry with average competition and average shifts in customer preferences.
  • A second group of firms, those with the same deployment of marketing analytics, but within in a highly competitive industry with frequently changing customer demands, a one-unit increase shows a 21% average increase in ROA.
  • To ensure effectiveness of using marketing analytics, a company’s top management team must seek to hire people with the skills required to do data analysis, implement a sophisticated information technology infrastructure, and maintain a culture that supports marketing analytics, so that the insights gained can be used within the firm.
Recent News
Resource-rich Community Helps Ph.D. Students Dive Into Research 18 Apr

Ashley Stadler Blank has focused on sports business and marketing since her undergraduate years at Xavier University where she earned a B.S. in sport management. When it came time for her to choose a Ph.D. program, the broad expertise of the Marketing faculty at the Smeal College of Business and the Center for Sports Business and Research made Penn State a perfect fit.

DelGrosso Foods' Vice President of Global Sales, Marketing Brings Real-Life Case Study to Marketing Class 16 Apr

Michael DelGrosso, vice president of global sales and marketing at DelGrosso Foods, provided several Penn State Smeal College of Business Marketing 422 Advertising and Promotions Management classes with a unique view of a new product launch last month.

Smeal College Celebrates Philanthropy 15 Apr

Alumni and friends of the Penn State Smeal College of Business gathered at the Business Building on April 11 to celebrate the impact of philanthropy on students and faculty. The college’s annual Leaders Celebration acknowledges the outstanding generosity of donors who provide student scholarships, enhance physical resources and technology, support faculty research, and more.

Smeal Undergraduate Net Impact Chapter and Honors Society Beta Alpha Psi Partner with KPMG to Fight Illiteracy 14 Apr

Earlier this semester, the Penn State Smeal College of Business Net Impact Undergraduate Chapter partnered with KPMG, Accounting and Finance honors society Beta Alpha Psi, and First Book for a corporate social responsibility event providing 200 children at Penns Valley Elementary School in Spring Mills, Pa., with books and a day of literacy activities.

Smeal College of Business Mourns Alumnus, Philanthropist John Garber 11 Apr

John D. Garber ’40 passed away last month in Palm Desert, Calif. He and his wife, Bette, were significant contributors to the Penn State Smeal College of Business, establishing the John and Bette Garber Venture Capital Center for Penn State Smeal MBA students in 1999.

More Recent News... More Recent News...