As many global economies become tighter and revenue streams shrink, marketing executives must strategically assess their opportunities to profitably win their share of that smaller revenue pie.
Marketing pundits have advocated throughout this year that tough economic times are the right time to build brands and grow share of voice. But this will not work for every company. If you can't make a smart strategic case for how your spending is going to add value to the company, you won't convince CEOs and CFOs to fund marketing budgets when revenues are down.
I'm going to outline the six approaches available and review the key criteria around financial dynamics, competitive environment, and customer behavior patterns that can help you determine whether spending more or less is right for your business.
These approaches are based on the fact that you need to have some expectation for how and when your marketing will generate a positive return on investment (ROI) for the company.
While measuring and managing ROI is always a good discipline for marketing organizations, there has never been a more critical time than during a threat of significantly contracting markets. Executives are not going to buy into a theoretical discussion on brand-building as easily as a quantified projection using your best assumptions. A good ROI analysis takes into account long-term brand building and purchasing behaviors. It's a critical planning exercise to not only show that you can generate more profits than you spend, but also guide the strategies to make it happen.
Presented below are the six strategic approaches that a company can pursue in tough times to generate the best long-term financial outcome. To help you identify which approaches you should consider, I have also included a series of assessment questions following the descriptions of each approach.
1. Win Share and Grow
The approach is to invest in building market share and acquiring new customers now, take a loss on short-term ROI, and earn higher long-term ROI as you retain customers and market share when purchasing levels resume.