Valuing Market Strategies

The search for shareholder value is changing the way marketing decisions are made. No longer will traditional payback or short-run ROI criteria be sufficient to evaluate investment proposals. Value-based planning methods incorporate the factors used by shareholders, including the cash flow and risk consequences of decisions. This broader perspective also shifts the focus from selecting discrete projects to funding strategies. If marketers are to influence the strategy dialogue persuasively within these new groundrules, they first must understand how and why this new yardstick is being used. They must also be sensitive to the susceptibility of these methods to distorted inputs and the dangers in applying them to new ventures. The risk of misleading signals is high. There is still no substitute for insightful thinking about the fundamentals of competitive advantage, which is where economic value is created.