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Accountants or Marketers in the Boardroom?

For far too long has our community depended excessively upon accountants’ short term rounds of exotic debt instruments, excessive leverage, cost cutting and focus on cash. This is a fact which has exacerbated because marketers have self-destructively focused on the measurement of tactical promotional expenditure in an attempt to prove that they are indeed not wasteful, self-indulgent and innumerate.

The journal explores.

Research shows that successful marketers make a major contribution to corporate wealth by understanding markets, doing proper needs-based segmentation, developing quantified value propositions, competitive analysis, portfolio analysis and managing market place risk.

So, the time has come to measure the real contribution that world-class marketers make to the creation of shareholder value. This will not come from econometric models -  although these are important -  nor from simple measures of marketing effectiveness. Top executives still don’t know how to convert, for example, brand equity to “real” equity, whilst single numbers such as the net promoter score* just do not convince anyone. Hence the “show-us-the-money” school at the top of most companies.

So, a totally new approach is necessary. The most common objective of modern commercial organisations is the sustainable creation of shareholder value. This can be achieved only by providing shareholders with a total return from capital growth and dividend yield that exceeds their risk-adjusted required rate of return for this particular investment.

In today’s highly competitive environment, the major sources of shareholder value creation are the intangible marketing assets of the business, such as brands, customer relationships and channels of distribution; the 80 per cent of the company’s value that does not appear on the traditional balance sheet. Consequently, the critical future marketing strategies of a company, which indicate how these assets are to be developed, maintained and exploited, should be subjected to a rigorous review process. Unfortunately, not only is such focused forward-looking information still normally absent from the externally available data produced by companies, but also, even more worryingly, there is often not even a rigorous internal evaluation of the shareholder value impact of such proposed marketing strategies. Whilst most companies would undoubtedly have formally constituted, board-level audit committees that are responsible for reviewing all the major business risks that they face, and for conducting comprehensive financial due-diligence processes on any major acquisitions or strategic investments, most have nothing for evaluating the risks associated with the use of their intangible assets to establish whether their marketing strategies create or destroy shareholder value.

Books on 1001 metrics will not change the underlying problem of accountability nor help us to “ talk the language of the board “. Fabulous work is being carried out in our community, but we need to spend more of our energy on proving the real value that professional marketing contributes to corporate wealth.


Net Promoter Score (NPS) measures the loyalty between a Provider and his consumer, via the asking of the one question: How likely are you to recommend our company/product/service to your friends and colleagues? The scoring for this answer typically uses a 0 to 10 scale.

Last modified onFriday, 27 December 2013 08:14
Malcolm McDonald

Professor Malcolm McDonald MA(Oxon) MSc PhD DLitt DSc Emeritus Professor,
Cranfield University School of Management, was recently cited as one of the top marketing gurus in the world, along with Philip Kotler and Michael Porter and, has been named as one of the top ten consultants in the UK. He is now Emeritus Professor at Cranfield University School of Management where, until recently, he was Professor of Marketing and Deputy Director. Formerly Marketing Director of Canada Dry, he is Chairman of six companies and works with many of the operating boards of the world’s biggest multinationals on every continent. He is the author of over 40 books, many of which have been translated into several foreign languages and has published hundreds of articles and papers. Malcolm continues to research and teach at Cranfield and other universities around the world, in addition to speaking engagements, visiting lectures, and consultancy work. The Chartered Institute of Marketing’s Malta branch (CIM Malta), who has bridged the illustrious professor with the journal, has hosted Malcolm McDonald for a second time in Malta earlier in the year with two successful events. Malcolm may be contacted through CIM Malta at

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