System Dynamics and Marketing Productivity

The marketing function in many companies has come to consume what many believe to be a disproportionately high share of corporate resources, inviting intense scrutiny from corporate cost-cutters. Further, there appears, at a macro level, to be a low correlation between the level of spending on marketing and measures of overall financial performance or competitive position; many firms are getting low, even negative returns on incremental marketing spending. Finally, more than ever, marketing as a corporate function and societal institution is regarded more as a “necessary evil” than a value-creating activity. All of these factors and more have focused renewed attention on the critical issue of marketing productivity. In this paper, we propose that the use of systems modeling could help alleviate the productivity crisis in marketing.