The effect of marketing expenses on car sales – an empirical analysis

Abstract

In the context of globalization and increased competitive pressure, the client becomes the most valuable asset for the company and so it needs to valorize the competitive advantage in order to ensure not only maximizing client satisfaction but also profit growth. Consequently, the consumer centered approach needs to be conceived and implemented to guarantee increased company performance and profitability.Rethinking and implementing the marketing strategy in accordance with specific client profiling requires continuous investments and while the marketing costs have a high degree of certainty, the extensive studies conducted on the impact of the marketing efforts on performance metrics such as revenue, sales, profits or firm value reveal a high degree on uncertainty. The marketing costs volume, dynamic and structure are directly linked to the activities aimed at increasing costumer satisfaction, loyalty and retention. The main benefits of marketing efforts can be evaluated on two levels: 1) direct financial benefits, generated by increased revenue and consequently higher ROI (Return on investment); 2) indirect benefits resulting from costumer portfolio that can be exploited in the future.The marketing costs versus benefits management has particularities according to the main objective of the company: increasing the customer portfolio, and preserving (loyalty and retention) of existing customers.According to S. Pete and I. R. Cardos [5], the first objective entails higher investments, as the cost for acquiring new costumers is significantly higher than the one for retaining existing ones, thus, the second objective is often considered more competitive, financial wise.The fact that marketing is an important activity for enterprises has caused an increase in marketing related expenditure. L. Kosan [6] considers that a higher level of investment in marketing activities in terms of budgeted The effect of marketing expenses on car sales -an empirical analysisMihaela Brîndușa Tudose 1* , Lidia Alexa 2 1 "Gheorghe Asachi" Technical University, Iasi, brindusa.tudose@tuiasi.ro, Romania 2 "Gheorghe Asachi" Technical University, Iasi, lidia.alexa@tuiasi.ro, RomaniaAbstract. The paper assesses empirically the relationship between marketing expenditures and sales in a highly competitive industry, namely automotive, by analyzing the marketing expending of Automobile Dacia S.A. The first part of the paper presents the state-of-the-art and discusses the studies previously conducted which focus on the structure, dynamic and the impact of marketing expenses, while the second part consists in an empirical analysis conducted on Automobile Dacia S.A. marketing spending. The results of the study show that the company managed to increase its' market share by adopting differentiated marketing for each geographical area. Although the research revealed that the allocation percentage from sales for marketing spending is relatively low (5-6%), the analysis conducted on the cost per unit sold reveals a share of 3% on marketing spending.

Mediating Effect of Corporate Social Responsibility in the Relationship between Innovation and Firm Value

“…Marketing managers try to implement strategies to enhance the efficiency of marketing efforts, in turn which increases firm profitability. Marketing expenditures are directly linked to the activities aimed at increasing consumer satisfaction, loyalty and retention (Tudose and Alexa, 2017). In this point, CSR practices also increase consumer satisfaction, and firm profitability via consumer awareness provided by marketing efforts.…”

The Effect of Marketing Investment on Firm Value and Systematic Risk

“…In the same manner, marketing efforts reflect a long-term investment for a company that may directly bring financial benefits (such as returns and profitability) and indirectly bring marketing benefits (such as customer satisfaction). In turn, such benefits implicitly help to explain market value [7]. As a result of the growing importance of marketing in organizations, many scholars have endeavored to explain the financial impact of marketing strategies through the relationship between marketing efforts and company performance in the capital market [8,9].…”