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| Author: | Ryals, L. Dias, S. Berger, M. |
| Title: | Optimising marketing spend: return maximisation and risk minimisation in the marketing portfolio |
| Journal: | Journal of Marketing Management
2007 : VOL. 23:9-10, p. 991-1011 |
| Index terms: | marketing marketing management portfolio management marketing profitability |
| Language: | eng |
| Abstract: | When making decisions about marketing portfolio in order to maximize shareholder value, marketing managers rarely consider the risk aspect. In finance, both risk and returns is concerned. This paper presents an application of modern portfolio theory (MPT) suitable for managing marketing portfolios in the industries of food retailing and drinks manufacturing. The model calculates an efficient frontier of marketing portfolios maximizing the overall returns and considers risk constraints. The model is presented for both simple two-segment marketing and for multi-segment portfolio. The necessary difference between marketing portfolios and financial portfolios is that the amount spend affects the returns from marketing portfolio. Consequently, the paper develops an extension of MPT that takes marketing spend allocation decisions into account. |
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