The man from Del Monte, chief marketing officer Bill Pearce, says to spend on marketing, capital investment and innovation or risk losing your business within the next five years.
Pearce’s stark warning came at the Argyle Executive Forum’s CMO Leadership Forum in San Francisco, where his keynote address offered advice for navigating brands through the worst economic crisis in years.
Here are his top eight tips:
1. Don’t scale back spending
“Now is not the time for across-the-board cuts,” warns Pearce. The old way of dealing with a recession was to slash and burn head count, marketing and capital investment – but companies that do that are likely to be out of business in five years, says Pearce.
Instead, marketers need to evaluate every investment and raise spending on the vehicles that are paying off or look promising while cutting the ones that look dubious or break-even. "Get rid of it. If you think it's break-even, I guarantee you're losing money," he said.
2. Reassess your market
Marketers need to keep a pulse on consumer behavior, which is "changing in ways we can't even begin to forecast," Mr. Pearce said. The recession has changed everything, from baby boomers needing to work beyond their planned retirement years to recoup what has been knocked off their nest eggs to changing behaviour in the young who don’t want to be caught in the kind of financial turmoil that has hit their parents.
"Demographic groups are undergoing life-transforming reversals of fortune," he said. "It's a life-altering, generational, scary change, and it's going to change how they make purchases."
3. Identify your best markets
Marketers are failing to find their most attractive markets, because they have changed over the past 12 months.
4. Do your homework
The three questions CMOs and marketers need to be singularly versed in are: Who are your most profitable customers? What are the emerging consumer trends? What are my most effective marketing and sales vehicles?
"You need to understand where your revenue is, because, I guarantee you, your revenue stream now is not where your revenue stream was 12 months ago," Pearce said.
5. Value messaging isn't always about the lowest price
Tough times call for value messaging, but it not necessarily about being the cheapest. Instead, know what motivates consumers today and what they are looking for from brands. Is it money, peace of mind, or time, for example.
6. Keep management in the loop
The goal is to proactively manage your CEO, whose instinct is to cut budgets. Marketers need to constantly measure everything they do to give CEOs a reason to raise budgets. Marketers also need to constantly demonstrate to their chief financial officers the results and metrics of their investments.
7. Invest in the future
Now's not time to shy away from new ideas, especially if they work. If your message is nine months old, it's stale, Pearce warns. The companies that invest in innovations and roll out new products and services when the economy makes a turn will reap disproportionate benefits, Pearce said, citing media, which is more cost-efficient now than it was 12 months ago.
8. Turn the crisis into opportunity
Del Monte sees the recession as a time to renew its message and strategy to fit with the new ways consumers are shopping, such as buying in bulk and shopping more at value chains, Mr. Pearce said. If other brands are trimming budgets, it's also a good time to make a play for niches.
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