Managers often wonder about the effectiveness of their marketing strategies and the potential that they have for success. Without information about the practices of competitors, it is difficult to know just what works and what does not. The profit impact of marketing strategy, or PIMS, is a tool that provides firms with access to this information. It is therefore, important that managers understand PIMS and how it can benefit their organizations.
History
PIMS began in the 1970s as firms began to contemplate why certain strategic business units were more successful than others. The initial PIMS survey included more than 2,000 strategic business units from a variety of companies. The longitudinal survey took place from the early 1970s until the early 1980s, asking a variety of questions about individual marketing strategies. As of 2011, the PIMS surveys continue, and the database is regularly updated to reflect the most current information available.
Questions
According to the Strategic Planning Institute, PIMS data can be used to answer four key questions for businesses. These questions are what profit levels can be expected, what gain or loss in market share can be expected, what should the level of marketing expenses be and how does the business rate for profitable growth opportunities? Answering these questions can be invaluable for businesses, as it can indicate whether a project has a likelihood of being profitable.
Strategic Areas
Information from the PIMS database has identified four key areas of strategic concern in business: "competitive position," "market environment," "stage of life cycle" and "capital and operating structure." "Competitive position" deals with the firms market share and relative factors such as price and quality. "Market environment" is centered on customers and industry information. "Stage of life cycle" focuses on matters such as new product development and market growth. "Capital and operating structure" involves the financial side of the firm including investment, firm value and operating effectiveness.
Tags: business units, expected what, life cycle, market share, marketing strategies, operating structure, strategic business