Background: It is proven difficult to provide evidence for the financial benefit of marketing operations within firms and marketing is the last organizational function to achieve an adopted quantitative method to track and measure its effectiveness. As a result, demands for marketing to provide accountability for its inputs toward firm performance have increased over the past decade and there are an increasing amount of methods looking to measure its contributions.

Problem: Small businesses need to invest financial resources in marketing in order to increase their market share and sales. However, marketing’s value to the firm as an organizational function often goes undervalued. Additionally, small businesses commonly lack the marketing experience and knowledge required in order to make more profitable marketing investment decisions.

Purpose: The purpose of the thesis is to research how much marketing investment influences the profit/sales effectiveness of small business within the clothing sector in Sweden.

Method: The study was conducted using a quantitative research method, through the analysis of 23 small businesses in clothes retailing industry located in Sweden. The data was collected through the firms’ annual reports and telephone surveys with firm managers. This information was processed using a relevant marketing effectiveness model in combination with regression and correlation analyses. Empirical findings were analyzed using theories relevant to pursuing the purpose.

Conclusion: Based on the findings the study concludes that there is evidence for a positive relationship between a firm's marketing investments and sales, as well as between the effectiveness of its marketing activities and it’s incremental revenue. This provides evidence for marketing investments contributing to the economic effectiveness of the firm and that the firms marketing effectiveness contributes to overall financial growth