Why Traditional Measures of Earnings Performance May Lead to Failed Strategic Marketing Decisions: A Focus on Core Operations

As a result of intense competition, many companies have changed their fundamental marketing strategy from one of diversification of products and services to a well‐focussed, concentrated effort on “core” products,services and markets. Examines the reasons why it has become increasingly difficult to identify and evaluate core earnings performance. Also examines the ominous implications of this problem for strategic marketing decisions which require an accurate assessment of core earnings performance. Describes a number of situations in which the use of unchallenged or unadjusted earnings figures could result in flawed or failed marketing strategies. Finally, provides insight regarding a number of issues related to earnings and cash flow to increase marketers′ ability to evaluate core earnings performance and thus avoid the marketing problems described.