Marketing 2.0 – the downturn may be the catalyst for a re-engineering of marketing and sales, but the genesis of change lies in a combination of factors, including some historical marketing malpractice
By Kenneth Wong
Assoc. Professor, Business and Marketing Strategy
Queen’s School of Business
There are three incontrovertible pieces of advice when it comes to marketing and sales during a recession.
The first is “don’t stop spending.” Research over the last five recessions has consistently shown a strong, positive relationship between a business’s share of industry spending (share of voice) and its market share and profitability.
In fact, those who keep spending not only win during the recession, they experience a widening of the performance
gap in the first years of the recovery.
The second is “don’t cut your price.” Regardless of industry, nothing has a greater impact on your profitability than your prices. Yes, you may have to clear out some inventory to maintain liquidity in the early stages of the downturn but, once cleared, prices must be maintained.
Many a firm has learned the hard way that, because price cuts are so easily met, you can never find enough new selective demand to replace the loss of primary demand due to the recession. So don’t just spend to build volume, spend
to defend your prices.
The third advice is usually delivered as a directive: “do more with less.” Regardless of how sound the first two principles
may be, surveys of spending intentions show that 30 to 40 per cent of businesses are planning marketing cutbacks in many cases, cutbacks needed to “finance” price cuts.
How can so many firms be so wrong?
The New Reality
How does one “do more (or even the same) while spending less?” Simple. You can’t.
At least not if you keep doing things the same way you always have. And therein lies the opportunity presented by every recession: the chance to explore new technologies, new ways of managing and new ways of executing marketing and sales programs.
Yes, I said opportunities.
Make no mistake. While the downturn may be the catalyst for a re-engineering of marketing and sales, the genesis
of change lies in a combination of new consumer and customer behaviours, new technologies and, to be honest, some historical marketing malpractice. In short, these changes are long overdue.
This doesn’t mean traditional areas of emphasis like branding, creative execution, relationship management and integrated marketing and media will be any less important. If anything, these marketing outputs will be more important than ever as firms go back to the basics of selling things the way people want to buy them as opposed to what and how we want to sell to them.
And as we go back to basics, the big changes will be in how we manage, how we execute and how we measure performance in those areas. Welcome to the era of lean marketing.
Lean Marketing
The key to marketing has always been differentiation. No one ever paid more for something they could get elsewhere for less. Recessions threaten differentiation when we allow the desire for cost reduction to erode the quality or quantity of our differentiation. Lean marketing is the search for ways to reduce cost while enhancing, not destroying, differentiation.
Differentiation doesn’t necessarily mean “more” of anything, except relevance. If the times demand that you spend less, then look first for those elements that are irrelevant to the customer. Ridding yourself of those expenses will liberate the resources needed to make the investments you must. This is the marketing version of lean manufacturing. The concept is simple – if you aren’t creating value in the customer’s eyes, then all you are creating is cost.
The key to lean marketing is precision. Precision requires segmentation and data in order to do what marketing has always been supposed to do: develop products with just the right attribute set for your target market; use media that minimize the wastage that comes from talking to someone who will never buy your product; concentrate on retail partners most heavily patronized by your clients; set prices that reflect your true value instead of a mindless attempt to win customers who will leave you in a heartbeat; and, perhaps most of all, know which clients matter most given their lifetime value.
It might seem strange to call for innovation and then say the key to success lies in age-old practices like segmentation and target marketing. But the two aren’t mutually exclusive. New technologies enable innovations in data collection/analysis and in targeting the delivery of messages, products and services where and when the customer needs and wants them most.
This is marketing the way it is always supposed to be done. Marketing that takes words like “customer intimacy” and translates them into measurable actions with measurable results. We always dreamed we could do it. Now we can.
