PRO Article
Six Approaches to Marketing in Tight Economies
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.
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Comments
I think some of this advice is too simplistic not very creative. "cut drastically and wish for the best?" Is that really a strategy? For example, I think a major possibility overlooked here is to re-evaluate historic marketing channels. As a first step toward re-trenching, how many cash-strapped businesses could conserve cash and IMPROVE effectiveness by abandoning traditional advertising channels utilized simply because that's the way they have always done business?
Fair point that "cut drastically and wish for the best" is not a strategy. I used this wording to make a point on the approach that far too many companies will actually take. Significant cuts come through and those companies with little or no measurements will use gut instinct to cut their budget. Without knowledge of what's truly working, they will just "wish for the best".
I absolutely agree that re-evaluating historic marketing is a worthwhile step, which should help you allocate smart (#5) or spend smart (#2). But 1) many companies that are not measuring are not well prepared with the right data to run an historical analysis, 2) without advanced modeling techniques, you will most likely get directional insight at best and 3) the big wins are going to come more from changes in targeting and integrating multiple marketing channels than simply re-allocating by marketing channel.
I've received more feedback from senior executives on this article and more requests for reprints than any of my other 50+ articles. It may not cover every possible scenario but the goal is to take a deeper more thorough look at your options. I was getting far too aggravated with the dozens of expert articles telling everyone that you have to hold or increase your marketing spend during a recession.
Thanks for your comment Mark.