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Is Small Prettier in Financial Planning? (Part 2)

15 February 2008 - Miscellaneous - Editor

Is Small Prettier in Financial Planning? (Part 1)

Links between Marketing Metrics and Stock Value

Naturally, stock investors do not know whether their companies use MBO or another management technique instead. Financial statements and management reviews focus on end results. The company with a top stock price may have started to slide, while another at the bottom of a stock exchange pile may have turned the corner. Customers are generally the first to know when management trends change, so perhaps we should stuff portfolios with stocks of things we buy! Marketing Metrics is one of the most current ways of predicting future stock price trends. How can you use this method for stock investment?

Marketing metrics keeps tabs on new, growing, reducing, lost, and potential customers. Some executives have informal estimates of the figures, but the professional way is to work with representative samples. Marketing Research is worth every cent when it uncovers trends in customer buying decisions. However, your own impressions and experiences can be even more revealing than any Market Research report. Consider queues and delays at airports. Airlines that handle the pressure best will grow, while some famous names will fall because they fail to treat passengers well. It is the same with Coca-Cola: you may have a thing against sodas, but who can deny that the core product values have stayed the same for generations?

Customer Satisfaction as a Stock Value Driver

Price is a part of the satisfaction formula. You may use Windows but wish that you had Linux because it is free. That is different from McDonalds, which tastes the same all over the world, comes with top service, and never taxes your wallet. Google goes a step further and makes advertisers pay for you! Profit is really a reflection of what customers think of products and services. It’s a fluid thing, because we begin to respect brands that we have not known before, and can also be disappointed by some of our earlier favorites. Successful stock investing is all about detecting business trends before others; changes in customer satisfaction levels are the best signs of future changes in stock prices.

Top management types may not even know real customer satisfaction levels at Ground Zero. Subordinates and agents may stage-manage feedback to keep the truth from the suites of policy-makers. Web logs manipulated by company sponsors are examples: pay people to post good things about your brands! Advertising is another potential weapon of deception. Creative people can go so over the top that even employees begin to believe the hype of campaign lines! That is why we have started work on a companion piece entitled “Does Stock Price Depend Excessively on Impression Management?” Please bookmark this web site if you would like to read about the three phases of Marketing, and how they affect stock value. We would also love to hear from you. Please join our forum and share your views on how companies can continue with excellent levels of business when they grow. Do you think that quality suffers after a business grows beyond a certain size? Are you a niche marketer? Is boutique selling your style? Which are your most loved brands, and do you own their stocks? We wait to hear from you!

 


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