Cutting marketing investments can often turn a short-term problem into a long-term issue
Over the last few years, there have been growing concerns about marketing’s inability to communicate its impact on performance. Marketers have been accused of overspending without evaluating and communicating the consequences of such expenditures. Worryingly, marketing budgets are often the first to be cut in times of crisis, because it’s a quick and sure way to save money without experiencing any immediate negative effects on sales or having to let people go. The current economic downturn has exacerbated the tribulations of marketers, who now face even further threats to their budgets.
However, senior managers considering slashing their marketing spending must consider carefully the implications of such cuts. In most cases, unmitigated cuts and short-term orientations can have dangerous outcomes. There are at least five considerations and opportunities that management should keep in mind in a recession:
Marketing investment can be used as an offensive strategy. Maintaining marketing spending at current levels, or even increasing it, can represent an opportunity to steal market share from more cautious competitors. After all, business performance is affected by factors that are internal and external to the organisation.
Understand how your customers’ needs are changing. Customers’ needs and priorities may change in recessionary times. Some customers may continue to buy their preferred brands at premium prices, but others may seek low cost alternatives or postpone certain purchases indefinitely. The key question is: to which category do your customers belong? Recessionary times call for even more market research, to ascertain if, and how, your key target market is responding to the recession and to adapt your strategies accordingly.
Over the last few years, there have been growing concerns about marketing’s inability to communicate its impact on performance. Marketers have been accused of overspending without evaluating and communicating the consequences of such expenditures. Worryingly, marketing budgets are often the first to be cut in times of crisis, because it’s a quick and sure way to save money without experiencing any immediate negative effects on sales or having to let people go. The current economic downturn has exacerbated the tribulations of marketers, who now face even further threats to their budgets.
However, senior managers considering slashing their marketing spending must consider carefully the implications of such cuts. In most cases, unmitigated cuts and short-term orientations can have dangerous outcomes. There are at least five considerations and opportunities that management should keep in mind in a recession:
Marketing investment can be used as an offensive strategy. Maintaining marketing spending at current levels, or even increasing it, can represent an opportunity to steal market share from more cautious competitors. After all, business performance is affected by factors that are internal and external to the organisation.
Understand how your customers’ needs are changing. Customers’ needs and priorities may change in recessionary times. Some customers may continue to buy their preferred brands at premium prices, but others may seek low cost alternatives or postpone certain purchases indefinitely. The key question is: to which category do your customers belong? Recessionary times call for even more market research, to ascertain if, and how, your key target market is responding to the recession and to adapt your strategies accordingly.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Ranked 6th Overall
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IIPM Global Exposure
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IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)
