Setting Marketing Priorities Using the AHP Framework

Posted on April 18, 2011

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In earlier posts I had described how Marketing was different from Sales and how Marketers can craft value proposition that resonate with their customers. These are, however, just the beginning of the marketing process. Thankfully, a marketer’s life is little more interesting than crafting a value proposition.

A marketer has many internal customers to satisfy – Sales, Product Management, Finance, Executive Management. These customers expect a marketer to deliver on multiple objectives and often these objectives compete for the marketer’s limited time and resources; for e.g. Sales might want Marketing to focus on generating leads that will close in the short term whereas Product Management might want Marketing to focus on increasing awareness of key product features with an eye to bulding category leadership in the long term.

A marketer must work hard to ensure that all his internal customers are aware and agree on what the business’ marketing priorities are.

I believe that this is the single most important step to ensure that Marketing is closely aligned to the business strategy. This alignment also ensures that the marketer’s limited time and resources are optimally utilised. Let me be clear- I am not saying that Marketing should simply take directions from other functions on what it should do; I am saying that Marketing should own and lead the dialogue process across functions to arrive at an articulated consensus on what the business’ marketing priorities are.

However, setting commonly agreed and understood priorities is easier said than done. In my professional career, I have been exposed to a number of tools and frameworks to help the process of setting priority and the one that I found most useful – Analytical Hierarchical Process (AHP) Framework – is what I want to describe in this post.

The Analytical Hierarchy Process (AHP) framework is a simple, easy to follow framework that can be used to prioritize goals and so assigns priority to them. AHP uses verbal judgement by participants to denote a degree of preference between competing objectives. The reasons I like this framework are:

  1. Allows all stakeholders to effectively exchange and understand opinion.
  2. Does not require any outside expertise (consultant/facilitator) to effectively utilise the framework.
  3. The process is simple and quick and doesn’t need complicated charts and scorecards.
  4. The output is meaningful and easy to understand.

I will describe the detailed steps in using the framework below and in my next post write about a personal experience using the framework.

In the first pass as you read it might sound complicated but I can assure you that if you read carefully and follow the instructions it is really a simple and effective approach to priorit setting.

  • Identify and list all the goals that need to be evaluated and prioritized. Examples of goals are
    • Improve sales leads per dollar spent
    • Increase/Decrease Marketing Spend-to-Sales ratio
    • Increase focus on key/new geographies
  • Choose the criteria by which the goals are to be evaluated. Examples of such criteria:
    • Impact On sales
    • Current contribution to revenue
    • Current market share
    • Expected increase in market share
    • Expected increase in sales
  • Develop the AHP measurement scale. A typical AHP measurement scale is as shown below:
Verbal judgment to denote degree of preference Numerical Rating
Definitely more important 5
Much more important 4
Moderately more important 3
More important 2
Same importance 1
  • Develop a set of pair – wise comparisons to compare each pair of goals. If a goal i has a rating x with respect to goal j then goal j has a rating 1/x with respect to goal i. Use the identified criteria to arrive at the rating. The result of this step will be tabular like the one shown below, where a, b, c, p, q, r, u, v, z are ratings of one goal against another based on the AHP scale defined earlier:
Goal 1 Goal 2 Goal 3 Goal 4 Goal 5
Goal 1 1 a b c d
Goal 2 1/a 1 p q r
Goal 3 1/b 1/p 1 u v
Goal 4 1/c 1/q 1/u 1 z
Goal 5 1/d 1/r 1/v 1/z 1
  • If I ascribe the  values a=2, b=5, c=3, d=1, p=4, q=2, r=5, u=4, v=3 and z=1 then the table above will look like
Goal 1 Goal 2 Goal 3 Goal 4 Goal 5
Goal 1 1 2 5 3 1
Goal 2 1/2 (0.5) 1 4 2 5
Goal 3 1/5 (0.2) 1/4 (0.25) 1 4 3
Goal 4 1/3 (0.33) 1/2 (0.5) 1/4 (0.25) 1 1
Goal 5 1/1 (1) 1/5 (0.2) 1/3 (0.33) 1/1 (1) 1
  • Obtain an adjusted matrix from the matrix obtained in the previous step. This is done by
    • Calculate column totals.
    Goal 1 Goal 2 Goal 3 Goal 4 Goal 5
    Goal 1 1 2 5 3 1
    Goal 2 0.5 1 4 2 5
    Goal 3 0.2 0.25 1 4 3
    Goal 4 0.33 0.5 0.25 1 1
    Goal 5 1 0.2 0.33 1 1
    Total 3.03 3.95 10.58 11 11
    • Divide each element of the column with the column total and replace each element with this new value.
    Goal 1 Goal 2 Goal 3 Goal 4 Goal 5
    Goal 1 0.33 0.51 0.47 0.27 0.09
    Goal 2 0.17 0.25 0.38 0.18 0.45
    Goal 3 0.07 0.06 0.1 0.36 0.27
    Goal 4 0.11 0.13 0.02 0.09 0.09
    Goal 5 0.33 0.05 0.03 0.09 0.09
    • Calculate the row averages.
    Goal 1 0.334
    Goal 2 0.286
    Goal 3 0.172
    Goal 4 0.088
    Goal 5 0.118
  • The calculated row average represents the weight of each goal.

As you will see from the table above Goal 1 is “voted” by the group to be twice as important as Goal 3 which in turn was “voted” as twice as important as Goal 4. Similar analysis allows the group to determine the relative importance and the relative share of investment that each goal would/should get.

Click here for a case study on how the AHP enabled a group that I was part of to arrive at an ordered list of marketing priorities.

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Posted in: On Marketing