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
Supply Chain's Preciado Honored for Teaching Excellence 29 Jul

Felisa Preciado, clinical associate professor of supply chain management, has been named the 2014 recipient of the Penn State Smeal College of Business Fred Brand Jr. Award for Excellence in Undergraduate Teaching.

Summer Business Program for High Schoolers Facilitates Diverse Penn State Network 28 Jul

The Business Opportunities Summer Session (BOSS) Program, facilitated by the Penn State Smeal College of Business’ Diversity Enhancement Programs, connects underrepresented high school students with current Penn Staters and alumni to provide an inside look at the business majors and beyond. Currently in its eighth year, the program is helping to create a powerful network as it continues to share the value of a Smeal education with a diverse population.

Why Aren't Consumers Buying Remanufactured Products? 28 Jul

Firms looking to increase market share of remanufactured consumer products will have to overcome a big barrier to do so, according to a recent study from the Penn State Smeal College of Business. Findings from faculty members Meg Meloy and V. Daniel R. Guide, Jr., indicate that consumers perceive many categories of remanufactured products as dirty and disgusting.

Penn State President Emeritus Rodney Erickson Joins Smeal Executive MBA Students in Celebration 25 Jul Penn State President Emeritus Rodney Erickson Joins Smeal Executive MBA Students in Celebration

About 30 students celebrated their completion of the Penn State Smeal Executive MBA Program last month in a pre-commencement ceremony held at the Business Building on Penn State’s University Park campus, with former University president Rodney Erickson delivering the commencement speech.

Smeal's Multimedia Team Recognized for Providing Valuable Student Service 24 Jul

A group of Smeal College of Business staff members were recently recognized for their efforts to provide students with professional portraits for their LinkedIn profiles. The Penn State Information Technology Resource Responsibility award was granted to the Resource, Instruction, and Information Technology (RIIT) Group’s Multimedia Team.

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