Bill Gates famously said that, if he was down to his last dollar, he
would
spend it on marketing. But, with the UK still stuck in a deep economic
crisis, many companies are setting aside strategies for growth
altogether
and are intent solely on survival. Indeed, the Institute of
Practitioners in
Advertising’s (IPA) annual survey from last year found annual
marketing
budgets were being slashed by the greatest extent ever recorded in the
survey’s history, and although this has since started improving, many
companies are still cutting back.
On the surface, who can blame them? The signals are still not that
encouraging. Spending on innovation programmes surely equates to sheer
madness. Not so, according to the Chartered Institute of Marketing
(CIM),
which claims companies are increasingly realising it is the creative
marketer, ripe with innovation, imagination and the right budget, who
grasps
the downturn as |an opportunity.
They would say that, of course. But a wealth of studies backs this up.
Global
consultancy McKinsey & Co found companies that remained or emerged
in the
top quartile of their sample overspent their less successful peers by
almost
10 per cent during recessions, while other studies have found that
companies
that increase their marketing spend in a recession recover three times
faster when economic conditions normalise.
Consider the cereal company Post and its reaction to the Depression in
the
Thirties, says Adrian Lomas, managing director of the creative and
digital
agency Blueleaf. “They were neck-and-neck in terms of market share
with
Kellogg’s, but decided to tighten their belts to survive the economic
environment. Kellogg’s, on the other hand, saw this situation as an
opportunity to increase their market share. They doubled their
advertising
budget and even launched a new product – Rice Krispies. Kellogg’s
profits
increased by almost 30 per cent and became the market leader, while
Post
never regained.”
According to the CIM, there are six key reasons why committing to a
marketing
plan pays off in a downturn. The first is that the obvious alternative
–
heavy discounting – may devalue your brand in the long term. “Look at
PizzaExpress,” says Scott Knox, managing director of the MCCA
(Marketing
Communication Consultants Association). “The majority of their
consumers
will only return when they have a voucher in hand. It will take the
brand
years to recover from this, and as a result they are incapable of
taking
advantage of the improving market.”
Secondly, people don’t stop buying in a downturn – they just buy more
safely.
If you find out how your customers are redefining value and reassure
them
accordingly that they’re making the right decision, they’re likely to
feel
more confident about you both now and when the downturn has long gone.
People don’t even necessarily want cheaper versions of things, points
out
the marketing agency Dragon Rouge – they just want more compelling
reasons
to put their hands in their pockets. “Sony, for instance, have
dramatised
the quality of their products – through colour definition and picture
quality – to amplify the research that’s gone on in its development
and help
position the brand above all others, without succumbing to price wars
and
discounts,” says Joe Hale, client director.
Third, if you don’t communicate with consumers, you risk an “out of
sight, out
of mind” response. Worse still, they’ll smell failure. “Consumers
cannot understand
why, in a recession, companies aren’t desperate for business and will
penalise those with a desultory attitude or who go quiet on them,”
says
Carole Lowe, executive planning director at the advertising agency
Archibald
Ingall Stretton.
Fourth, companies of all sizes need to adapt to survive. Paul Spaven,
strategic growth partner at the building and property consultants
Tuffin
Ferraby Taylor, says: “This was my fourth recession, and I knew that
cutting
marketing costs is a false economy. So we took a careful look at our
business and services, and established which areas we felt would be
the most
sustainable in the highest demand, and then we launched new
innovations for
these services. We then invested in specific marketing campaigns to
support
these, mixing trade advertising, direct mailing and PR support. In
fact, our
total marketing spend increased from 2.4 per cent of turnover last
year to
3.1 per cent this year.”
Sodexo Motivation Solutions agrees, having recently re-evaluated its
messaging
and rebranded its employee benefits division. “The result has seen
double-digit growth rates for our business, increased brand awareness,
more
customers and an internal energy level that makes us well placed to
grow
further out of the recession.”
Fifth, consumers want reassurance you’re “on their side”. Consider the
success
of Sainsbury’s “Feed your family for a fiver” campaign and Waitrose’s
Essential range. Meanwhile, many smaller companies are winning
customers
through voucher, incentive and loyalty schemes. Michael Moszynski,
chief
executive of the global advertising agency London Advertising, has
even
started publishing its production costs online to prove their
commitment to
cost savings.
Finally, the difference between this downturn and the last is the growth
of
the internet as a cost-effective, measurable platform for marketers to
test
messaging and gain consumer insight. “Building an online presence
might seem
like needless expense at a time when brands are looking to cut costs,”
says
David Donnan, director at the digital marketing agency MSG. “But the
average
UK surfer spends 22 hours and 15 minutes on the net each month,
according to
the UK Online Measurement Company, which is testament to its power as a
marketing and business tool.”
Focusing on electronic campaigns is cheaper than direct mail, and
research
shows that marketing which enables customers to respond has better
outcomes.
Many small companies report the most effective and powerful way to
market is
through email marketing. John Peers, managing director of health and
fitness chain
Total Fitness, says digital marketing has been key to growing its
business
throughout the credit crunch. “Membership sales through online routes
have
gone from 3 to 10 per cent, and we expect that proportion to grow
further.
What’s more, digital marketing gives us 100 per cent clarity as to how
interest in our services translates into a sale.”
Promoting on social networking sites, such as Facebook, is also
essential, not
least because it enables you to see a level of detail about what your
customers think of you, never seen before.
Meanwhile, Patrick Peal, managing director of Tribe PR, is a big fan of
online
search advertising. “Pay-per-click does not require significant
origination
or production costs,” he says. “With search marketing, there is no
wastage
either. Because you only pay when a prospect clicks on your message,
your
costs are clearly focused on people interested in your proposition.
Online
is infinitely adaptable too – campaigns can be changed in real time at
a
moment’s notice. Finally, online is accessible to everyone and can be
targeted to an individual.”
Brands need to get out of the mindset that marketing is a luxury, says
Knox.
“It’s not. If SMEs take advantage of the quietness in the rest of the
market
and deliver well thought-out, innovative marketing communications,
they will
achieve greater cut-through at far less spend.”
Source: The Independent
Date: 24/06/2010
Author: Kate Hilpern