Wednesday, February 18, 2009

Marketing through a Recession

Generally speaking most firms view Marketing as an expense instead of an investment such as R&D. Having the helm of 'cost center' put upon your brow... the need for ROMI (Return on Marketing Investment) justification may be the only way to get funding. For this exercise I am using the PULL analogy of marketing vs the PUSH analogy of Advertising/Sales. The PULL concept being "identifying customer segment, channel, need, and price" which results in customers realizing that your product offering fits well into their value chain. Take the Boeing 787's efficient air transport fitting well with the operational/logistical needs of major airlines. My definition of Advertising as having a product that is already instantiated and then PUSHING it to people. During recessions many companies cut their marketing budget first. This makes sense for a majority of companies, but for some, it may be an opportunity to lever up. If you believe that marketing drives demand and also identifies customer needs... then cutting marketing may seem circular. HBS professor John Quelch has some interesting things to say in this article I found on Harvard Business Week Marketing Your Way Through a Recession

From the Article
"Instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the recession. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less. Must-have features of yesterday are today's can-live-withouts. Trusted brands are especially valued and they can still launch new products successfully, but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent."

Marketing/Advertising is still black magic to me though... it is best stated in the words of Lord Leverhulme of Unilever....
"Half the money I spend on advertising is wasted, and the problem is I do not know which half"

1851-1925, British founder of Unilever and philanthropist

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