2. The Financial Imperative of Marketing

This chapter describes the reasons for measuring the performance of a firm in financial terms. First, finance is the language of the firm; publicly incorporated firms must report results in financial terms and are evaluated based on financial performance. Second, financial measures are the only way to compare alternative actions across products, markets, and customers. Such decisions can only be made if the costs and benefits are translated into comparable terms, and this usually means financial terms. The only way to answer questions about the optimal marketing mix is to translate marketing activities and outcomes into financial terms. Measuring marketing outcomes in financial terms provides accountability. Finally, measures of financial performance promote organizational learning and cross-functional team work by focusing members of the team on a common set of inputs and outcomes.