Investing in Marketing Produces Higher Firm Value

The power of marketing cannot be underestimated as it results in substantial firm value. According to an analysis of 612 U.S. firms between 1998 and 2008 those that invested heavily in creating powerful marketing departments created long-term shareholder value beyond short-term return on investment (Hui, Morgan, & Rego, 2015).  

Short-term return on investment is a standard marketing analysis where income streams grow based on specific marketing activities. Companies usually assess their marketing by determining the return on investment on specific marketing channels. 

 

Long-term marketing focuses on creating a stronger brand image. The company itself should stand for certain values and underlining characteristics that create its image beyond specific products. For example, Apple and technology innovation and Cabella's and outdoor enthusiasm seemed to be linked in consumers minds. 

 

Each advertising campaign should not only align with the specific product, but also fit within the larger brand. A consistent approach that will reap the highest ROI has solid alignment between products and brands thereby maximizing the short and long-term reach of their marketing approaches. 

 

 Investing in marketing isn't a bad idea if companies are consistently creating short and long-term value. Throwing more money at a marketing department won't fix it if the money is not used wisely to create immediate returns while not neglecting its alignment with the company's long term brand. Maximizing shareholder value is a result of full integrated marketing process that create lasting impressions in consumer's minds.

  Hui, F. Morgan, N. & Rego, L. (2015). Marketing department power and firm performance. Journal of Marketing, 79 (5).