By Peter Walshe, Senior Research Director, Millward Brown
Turn on the news and you will almost certainly be assailed by gloom, doom and cutbacks. And the chances are that the marketing budget nearest to you will be in the process of being shredded.
Despite the overwhelming evidence that cuts in marketing spend are counter-productive and only lead to profit falls in the longer term with weakened brands, your favourite Financial Director will still be sharpening his scissors if he has not already pulled them, bleeding profusely, out of your back.
So what are the top ten things you should do to survive?
1. Do not think short term! Brands are here to stay and yours will have been carefully built and nurtured over a considerable time. Any action now will produce a reaction that goes beyond the short term – like throwing a stone in the lake, the ripples spread out and reach the shore for a long time afterwards.
2. Continue to invest in marketing because if you leave a void it will soon be filled by competitors that will only make your return harder, more expensive and more difficult. Analysis of the IPA database indicates that a year’s budget cut will on average leave you with only 41% of where your profit should be even after you have reinstated the budget.
3. Do more for less. Our own research shows that being ‘creative’ is one of the biggest ways to multiply profits. Something that is compelling, interesting and distinctive will make its way into the ‘mental workspace’ of the brain where everything is reacted to. Not getting into that space means you will be ignored – and creative is the best way to unlock the door to gain entry. So the solution is to pre-test. (We see gains on average of nearly 50% in effectiveness with our Link™ pre-test research, which goes a long way to alleviate any budget cut.)
4. Utilise the media mix efficiently. Gains can be achieved by using cheaper media with an equivalent effect. The mix and synergy becomes vital, backed by relevant creative that works for each medium.
5. Keep your spend to market share ratio above 1. Millward Brown data shows that if your share of spend is above that of your share of market (high media pressure) you have a strong likelihood of gaining market share – and vice-versa.
6. Understand your brand. If you do not already have a clear picture of your brand’s strengths, weaknesses and unique qualities, you had better start now. Focussing on your strengths will be essential as competitors gird their loins for the recessionary battle.
7. Look at the competition. It is tempting in times of strife to look inwards, but now is the time to look around to understand more clearly what you are up against, and where you can maintain a lead.
8. Look at your customers. Some will be more important and profitable than others. If you have not carried out a segmentation, do so right away. And consider updating any study that is ageing. Some customers will behave differently during recessionary times as they become more price/value conscious and you may need to adapt to stay relevant. (Perhaps leasing a car becomes a more attractive option in times of limited credit rather than outright purchase.)
9. Guide your employees. Particularly the customer facing and sales people. If they are not fully aligned with your brand and understand exactly what it needs to deliver in order to remain distinctive and valuable, then profits will fall further and fewer jobs will be available. Communicate why it is in their interest. In so doing, reward success and listen to ideas. Focus on low cost improvements that provide high perceived value for customers.
10. Do not be tempted to reduce the quality of your product. The customer experience is what magnifies the promise of the brand. Any disappointment or deterioration will be quickly found out (particularly in these days of on-line communications and the rapid spread by ‘word of mouth’). Selfish short term gain will only cause long term pain.
And use your research budget wisely. Do the appropriate research at the appropriate time and you will find it has a great return on investment that even your Financial Director will appreciate!
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