The Application of Shareholder Value Analysis to the Marketing Strategy Case

Abstract

Marketing strategy is largely concerned with the development and implementation of means by which firms can achieve superior long-run financial performance.

Rao & Steckel (1998, 269)

A team of students once performed a break-even analysis for a new car to be introduced by a major automobile manufacturer. The analysis was superbly done, and it revealed that the car should be made and sold without hesitation. It projected that the break-even point would be reached almost immediately and that profits would be forthcoming thereafter. Indeed, reality did match the projection; meanwhile, the corporation that undertook this profitable project watched its share price drop and then drop some more. This profitable business was unappealing to the shareholders and an albatross for the corporation.