Quelch and Kenny advise allocating “resources to winners”—in other words, using zero-based budgeting to allocate advertising and promotion dollars, sales-force time, and retail space. Determining the long-term and short-term profit impact of advertising and promotion requires much testing, experimentation, and analysis. Designing such programs and analyzing their results is a sophisticated, difficult activity that demands expertise.
Without a doubt, excellent market research and analysis have great influence on corporate profitability. Yet most corporations do not give these functions the recognition, visibility, or compensation they deserve. Companies need to reward their analysts based on their long-and short-term profit returns in relation to their costs. A successful product-line extension depends on investing in the appropriate cost-accounting systems and the appropriate market-research systems.