By Mark Stuart, Head of Research, The Chartered Institute of Marketing
Many marketers will be concerned for their employment security at the moment – companies of all sizes are looking to make cuts, and the marketing budget can often be the first place companies start looking. Yet by being robust and staying confident, the marketer who is willing to see the opportunities rather than the problems inherent in a downturn can still enjoy healthy career prospects.
Firstly, whilst some companies will look to cut marketing, the leading companies know that maintaining marketing spend in a recession is the key to weathering the storm. Both Unilever and Procter & Gamble have recently announced that they will not be reducing their marketing expenditure in 2008; although they will be changing how some of the budget is allocated. For example, they’re planning to invest more in point of sale marketing, as they believe customers are leaving their purchase decisions until that point.
Moderating your approach in this way, rather than slashing budgets, can be key to success in the changed environment. As another example, consider last year’s Christmas campaigns, the most successful of which were those that emphasised ‘family values’ and caring for those you love, rather than acquisitive, materialistic campaigns that we’ve become familiar with in the past. Rather than committing to less marketing, commit to different marketing.
The importance of communication
A recent report from YouGov indicated that up to 40% of small companies plan to cut their advertising budgets this year. And Deloitte estimates that 24% of companies across the board are likely to cut marketing and advertising spending this year. Yet, customers do not stop buying in a recession – they just buy differently. That makes it more important than ever that you encourage customers to buy from you, instead of someone else. With this in mind, how can you let those potential customers know what you can offer them compared with the competition, if you don’t communicate with them? Cutting your marketing budget is therefore a guaranteed way to make the feared negative outcomes happen. If your company is planning to make cuts in its advertising or marketing budget, this could be a credible argument that they might want to reconsider.
When the airline industry suffered a downturn after the 2001 attacks, most airlines pulled up the drawbridge and reduced their marketing, accepting they were going to take a hit on profits. Ryanair bucked this trend by robustly increasing their marketing, and experienced significant growth as a result. Sometimes, acting counter-intuitively like this can lead to unexpected successes. That’s partly because customer psychology doesn’t always work as you might expect. There’s evidence that in difficult times, sales of luxury items can actually go up, instead of down. Perhaps this is because people want to treat themselves more to cheer themselves up; certainly, the marketer who wants to benefit from this effect can tailor marketing communications to fit it. Look at how the sales of ‘comfort’ or nostalgic, retro brands can increase in a downturn too – people want to spend money on things that make them feel safe and reassured.
All this evidence points to the fact that marketers are now needed more than ever as the differentiator in business. Yet if they are concerned about their future career prospects, and/or job security in their current role, there are several things that the individual can to do to maximise their chances of success. The first is to consider your own personal development, building new skills, attending training to expand your portfolio of capabilities, and keeping up to date with latest developments in marketing and business.
Interested marketers can also look at growth areas like social marketing or health services marketing. Social marketing, broadly defined as the application of commercial marketing techniques for social good, is being widely invested in by the Government, the NHS and other public sector organisations, not-for-profit bodies and charities. Smoking cessation campaigns, anti-crime initiatives and projects to encourage healthier living and more responsible drinking are all areas that have achieved great success recently – and the effectiveness of social marketing as a way of tackling social and environmental issues is being increasingly recognised. For the marketer who wants to move into a sphere that gives them career satisfaction and a sense of helping society as well as shareholders, social marketing is now a very real option in many different areas. The Chartered Institute of Marketing’s next agenda paper is on social marketing, and will be freely available from www.cim.co.uk when published later this year.
Two thirds of Financial Directors believe that the worse of the downturn is yet to come, and that we are a long way from turning the tide. Yet for the marketer who understands the importance of maintaining budgets and acting robustly, there are plenty of opportunities in the changing climate – it’s just a case of researching the market to understand what those opportunities are, adjusting the marketing plan to suit, and communicating your offering to the customer.
Key tips to marketing in a downturn
Maintain budgets, but re-allocate them where appropriate. Identify how your customers spending habits are changing, and modify your marketing and communications to fit the changed environment
Customer psychology often doesn’t follow the patterns you might expect; luxury purchases can go up in a downturn. Bear this in mind when planning marketing communications
Customers don’t stop spending in a recession – they just spend differently. Differentiate yourself from your competitors and communicate this differentiation to customers, so that they buy from you instead of someone else
Target appropriately. If there is a smaller potential customer base, you need to reach the customers who are willing to spend.
Don’t get tempted into a pricing war, because that benefits no one. If you communicate panic to customers, they’re likely to panic too and stop spending.
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