Does Marketing Context Maximize Shareholder Value?

A critical evaluation of Doyle’s view

“Marketing is the management process that seeks to maximise returns to

shareholders by developing relationships with valued customers and creating
a competitive advantage” (Doyle, 2000)
Different ways to Maximize Shareholder Value

Recent research has strengthened the idea that customer satisfaction boosts
Shareholder Value (SV) by increasing cash flow growth and reducing its
volatility (Anderson et al., 2004; Gruca and Rego, 2005).
Akroush’s (2012) comprehensive study concluded that marketing orientation
can substantially improve both customer satisfaction and financial
performance with a significant impact on SV.

Ryals and Knox’s (2005) findings revealed that a customer portfolio

review led to improvements in both relationship marketing
strategies and SV.

These studies confirm Doyle’s view:

Marketing can play an important role in
maximizing business growth and SV.

Adapted from: Cute Pictures, 2015

 The Relationship between Marketing and
Shareholder Value

P Marketing Strategies must be

evaluated based on how much value
they contribute to the effectiveness
P SV P of business process, financial
outcomes and SV (Srivestava et al.,
1999; Akroush, 2012).
P
SV in the core objective of marketing
strategies (Akroush, 2012)

Marketers need to understand “how to evaluate the risks

associated with marketing expenditure and linking this
assessment directly with SV” (McDonald, 2006, p.102).
Shareholder Value Analysis Model based on Cash

Level of Future Time of Risk Attached Business

Cash-flow Cash-flow to the Business Continue Value

Shareholder Value Created

Marketing Assets Opportunity

•Marketing Knowledge Competitive to Create
•Brands
•Customer Loyalty Advantage CASH
•Strategic Relationships
Adapted from: Doyle (2000) and Akroush (2012)
 References

Akroush, M. (2012) An empirical model of marketing strategy and shareholder value - A value-based marketing perspective. Competitiveness
Review: An International Business Journal. Vol.22(1), pp.48-89.
Anderson, E.; Fornell, C. ; Mazvancheryl, S. (2004) Customer Satisfaction and Shareholder Value. Journal of Marketing. Vol.68(4), pp.172-
185.
Doyle, P. (2000) Value-based marketing. Journal of Strategic Marketing. Vol.8, pp.299-311.
Gruca, T.; Rego, L. (2005) Customer Satisfaction, Cash Flow, and Shareholder Value. Journal of Marketing. Vol.69(3), pp.115-130.
Hooley, G. J.; Piercy, N.; Nicoulaud, B. (2008) Marketing strategy and competitive positioning. 4th ed. Harlow : Financial Times Prentice
Hall.

Mcdonald, M. (2006) Do your marketing strategies create or destroy shareholder value?. The Journal of Database Marketing & Customer
Strategy Management. Vol.13(2), pp.102-107(6).
Rappaport, A. (1988) Cash flow analysis of corporate performance. (Finance: A Guide to Creating Shareholder Value). Small Business
Reports, Vol.13(9), p.80-87.

Ryals, L.; Knox, S. (2005) Measuring risk-adjusted customer lifetime value and its impact on relationship marketing strategies and
shareholder value. European Journal of Marketing. Vol.39(5-6), pp.456-472.

Srivastava, R. K. ; Shervani, T. A. ; Fahey, L. (1999) Marketing, business processes, and shareholder value: An organizationally embedded
view of marketing activities and the discipline of marketing. Journal of Marketing. Vol.63, pp.168-179.
 by Salomé Correia
August 19th, 2015

Extract of an assignment on Strategic Marketing - MBA program

University of Northampton (UK)