Marketing managers, who are under a tight supervision of top management and shareholders, feel the need to assess and estimate the possible effects of their marketing actions on shareholder returns. Now the main question is : “ How can they improve the outlook of future cash flows?”
According to the paper written by Shuba Srinivasan, Koen Pauwels, Jorge Silva-Risso and Dominique M. Hanssens, it is the object of the marketing managers to translate marketing resource allocations and their performance consequences into financial and firm value effects as efficient as possible.
To reach this objective, they note that product innovation, and more specific pioneering innovation might be the solution. However pioneering innovation contains high risks and costs. For example, the product failure rate ranges from 33% to over 60% and Boeing invested $4 billion to compete with the airbus. Studies (Chaney,Devinney and Winer 1991) conclude that pioneering innovations compared to minor updates obtain a seven times higher impact on stock returns.
Dieter Slowack, groep 7
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