Do company owners just not listen? Do they not look back on history and see how many companies that have gone from being small and relatively unknown to large corporates through marketing in an economic downturn?
On Monday, at Marketing Eye Melbourne, we had a position vacant for a Marketing Executive to work with small to medium sized businesses on developing strategic marketing programs, public relations, advertising, branding, digital marketing and promotions.
Over 300 people applied from Monday afternoon until Wednesday lunchtime. Of the 300 people, over 80% don't have a marketing job right now.
12 months ago, we received 80 applications for the same position with over 60% of people employed sending in an application.
What are businesses doing? I don't for a second think that all of these people are under-performers. The ones I have interviewed so far sound dynamic, experienced and incredibly excited about the prospect of working with companies to help them grow through marketing.
I still have alot of applications go through, but I am alarmed that companies have 'let them go'.
As a business owner, we have no control over the potential loss of revenue or profits that may occur due to the current state of the economy.
What we do have control of is how well we respond to the economic downturn.
Whilst most companies have been frantically cutting costs and reducing expenditure, it still seems that marketing is on the top of most businesses chopping boards.
Why is marketing so important? Where is the benefit in marketing in an economic downturn?
These questions have been answered over and over again in blogs, in the news and in everything we read, yet marketing still remains seen as a non-business critical expense.
What do you think?
www.marketingeye.com.au
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The company that I work for have cut about 95% of the marketing budget in the last six months, which leaves me gob smacked. In title I am in marketing but in reality I push around paper all day asking the very same questions that are written in this blog. The sad thing is that I should count myself lucky that I am even in a “marketing” role.
Companies are panicking and management are cutting down on an area of business that maybe they don’t truly understand. Many may see it as luxury but for those people in the know, it’s a vital component of business and the way your company is presented to the public and most importantly your customers. It baffles me that when profits are decreasing, companies would want to make things worse by removing the component that gets their brand/service/product out there and into people’s heads. Times like these should see some great innovative marketing thought, but instead we are just seeing an excess of talented marketing gurus out of a job.
Blogging - I must admit I thought I was tech savvy having touched on Myspace, Facebook and slowly being drawn to the world of 'Twitter', blogging was one of those things I had not yet ventured into, so of course I have jumped at the opportunity to get on board the blogging train and express my view on the current economy and the fact that businesses are cutting down their expenditure.
I would know having been on the dark side. I was the enemy, recently working as a sharp and savvy advertising consultant for a leading newspaper. Shop owners would cower behind cash registers, run out to the backroom or 'pretend' to be unavailable when I walked through the door (suffice to say it was because they were in denial!), my task - to get them advertising! I must admit it was a difficult and challenging task and I began my script with a hard but truthful fact - "most small businesses fail within the first 5 years - and in this current environment most likely more. The key to business survival in this tough world is through marketing and advertising". Of course they weren't convinced, but I wasn't going to fail just yet so I continued..."repetition is the key to success, think of a song that gets stuck in your head most likely the verse is repetitive and the beat is catchy, so why not apply that to your advertising? The more frequently you advertise and market your business the more you will get a response and the quicker you will see a return".
There are so many benefits of being 'that organisation' who advertises, this should be a time of innovation, new ideas and the intelligent approach, what are your competitors doing? Either they have taken the smart approach and have utlised different mediums for putting their name out there or they've gone under. Of course strategy is important and no, one ad will not get you 100 phone calls but maybe 10 ads over 10 weeks will.
Business owners will eventually make up their own minds but we as marketing professionals can only guide them in the right direction and draw on our experiences of seeing first hand the positives and benefits of marketing in the current economic environment. By doing this we can confidently look forward to a secure economy and the satisfaction of contributing to a successful business.
Dear Marketing Eye
I have recently applied for the position of Marketing Executive at Marketing Eye and received your email about your blog. I have just graduated from RMIT University with a Bachelor of Business (Marketing) with Distinction and I am desperately looking a fulfilling job and I must admit that job hunting is proving to be quite tedious.
As we are all aware, world economies have already gone and are going into recessionary phases. The effect of the stock market crash has just recently been felt in Australia and we are currently officially in recession. This means that demand is at its lowest as customer confidence is down and consumers are spending less. Companies, both public and private are also cutting down spending.
Given the fall in demand, many companies are cutting costs in order to maintain profits or reduce losses, and one area where cutbacks are occurring is in advertising and marketing.
As I watch television, it can be noticed that advertising has been greatly reduced as compared to previous times. Personally, I do not think it is a good idea. To boost the economy back to where it was (if that is ever possible), consumer spending is fundamental. Companies should be aware that while total spending may be falling, consumers are becoming more discerning in their spending habits, and are looking for both bargains and quality. Customers are increasingly skeptical about spending their money and are now faced with higher opportunity costs.
The fact still remains that consumer spending is unavoidable even if customers will spend less. However, they will choose more carefully before doing so. So 'now', more so than before, is the time for ‘smart’ companies to allocate a reasonable component of their budget to Marketing. Now is the time to try and convince customers to buy their products and services and try to differentiate their brand through advertising, public relations, relationship building with their existing customers etc. Therefore if a firm is able to maintain it's marketing budget, or increase it, it may be able to increase market share at the expense of those rivals that have reduced their marketing expenditures. This is particularly so if marketing can emphasize the bargain or quality nature of the firm's products or services. Thus, the tough economic climate is actually providing opportunities for "smart" marketing and advertising to be even more effective.
The debate surrounding the importance of the marketing function within a business is one that I have battled throughout my career. With a history of working for global corporations, I have many a times had to justify the value of my initiatives as a revenue generator.
This issue is not directly related to the economic climate as such, but is being heavily impacted by it. Companies are presently looking at ways to cut their budgets and assessing functions on the ‘money in’ and ‘money out’ basis. Unfortunately, the marketing department is historically seen as the heavy spenders of the business with the inability to adequately measure the effectiveness of their campaigns without substantial investment.
As a result, the effectiveness of our role is not well understood. The fact that the marketing function assists to bring in new sales leads through often unquantifiable objectives (e.g. increasing brand awareness) does not help our case.
So, where do businesses go from here? Instead of reducing the marketing budget during an economic crisis, businesses should be embracing this function. With competition withdrawing, now is the time to utlise the marketing team and risk the extra expenditure to solidify their position for the future. Cost-effective marketing strategies are possible and can often be more effective. They now have valuable time to strategically revamp their marketing efforts, formulate clearer strategies and forge economical partnerships.
Being innovative during the downturn will ensure that they come out on top!
It is unfortunate that many companies consider marketing as one of the less essential roles and often cut down on marketing first in times of economic downturn.
Marketing is such a critical element to a company's success, both in positive economic conditions and when the economy is not going so well.
When consumers are spending less, they tend to be more selective about what they do purchase and marketing is crucial to gain market share.
Smart companies will use time of economic downturn as an opportunity to get their brand out there while their competitors are cutting back their marketing efforts.
I currently work at a Marketing Consultantcy called TNS (Taylor Nelson Sofres) where there has been a global freeze on recruitment and promotion due to the economic situation. Larger clients projects expiried have not been renewed and therefore there is less work. At recent job interviews many recruitment interviews have asked me how I can provide value in this time of recession (whether we are in one or not) and why I should be chosen over other candidates. Well here is why, I am a consistant and hardworking employee combined with an independant thinker.
Everyone here seems to be from a marketing background and hence defending the discipline. Lucy: "Companies are panicking and management are cutting down on an area of business that maybe they don’t truly understand." Luisa "this should be a time of innovation, new ideas and the intelligent approach, what are your competitors doing" Tushiti "is the time for ‘smart’ companies to allocate a reasonable component of their budget to Marketing."
While on the whole I agree with the importance of marketing everyone here seems to have avoided its shortcummings and it is time for a bit of counter argument.
1. Marketing is still lacking in quantifiability. For example if your comapny is on the virge of potensial bankruptsy and you are confronted by liquidating a factory resulting in near set loss of sales and revenue from the sale is is much more appealing then a new marketing campiegn thats expected payoff cannot be expressed or expressed very poorly in a dollar value.
2. Marketings short term value: some may say but we can quantify marketing value, $x into the distribution chain will decrease unit cost by $u and increase sales Z times resulting in a payoff of $p YAY! well that is all well and good assuming you have accurate idea of the trend of the economic situation which almost nobody has except by luck. However, lets say you do, where is that extra spending money comming from? are you taking it from HR who are facing legal battles of your staff termination. Is it comming from accounting who are performing valuation of your assets?
3. Marketings long term value: many people talk that brand equity or product perception will be harmed in the long run if marketing is neglected. THIS IS TRUE. However it is no good having untarnished brand perception if you are out of business!
As for the role of marketing in the economic crisis. One of the key reasons of the economic crisis is the over valuing of goods. Hmm would marketing be the disipline most responcible for convincing consumers goods are valued higher then consumers or even businesses do when they try them?
Now In favour of marketing:
At university a very smart lecturer/marketing proffesional of mine said "when it gets dark, you don't turn out the lights" this is very true. Successful marketing is not a cost, and provided it is quantifiable and accountable can be shown to be the most preferable place to select funds. Lets say your a a fairly sucessful company that the reccesion has not hit extremely hard yet, although things are uncertain you still have funds but you think you should become more efficient by cutting costs such as marketing. Have you forgotten about risk of entering markets or staying in markets, or leaving markets that are lucative without knowing it? how are you going to determin this without marketing? what about your customers and compeditors, your offering is going to become uncompeditive overnight without them keeping you in the loop. What about the efficiencies of your distrubution, which channels are you going to promote through how are you going to know?
Any business without significant resources invested in thier product development, distribution channel, promotion, market and compeditor analysis (ie marketing) is going to fail. However any organisation that allows marketing to operate freely without quantifiability and accountability is going to overspend and become uncompeditive in other areas and go bankrupt, esspeically in theses uncertain economic times. Therefore it is up to marketers to find the information to make assist fund managent to make the best decision of when and where AND WHEN AND WHERE NOT to invest in advertising. These will be the firms that survive
On a global level decreased expenditure on advertising may or may not result in an increased global economy, perhaps further advertising would make consumers even more skeptical and trigger further crisis, or perhaps marketing will evolve to a form more believable to consumers and assist in regrowth. Either way is immiterial for the sake of individual firm strategy. Sucessful firms will have invested appropriately in marketing based on solid information, uncompeditive and bankrupt firms will have neglected or 'overfead' thier marketing functions.
Matthew Albert
0417098717
In the 1980’s so many companies slashed their marketing budgets, refusing to believe it would help them through such harsh times. At the end of the recession those same companies took a long time to find their feet and most importantly, find growing profit margins. The small percentage of companies who did the right thing, such as Apple, Kellogg’s and Nike, came out stronger than they were at the start of the recession. Why? They saw an opportunity and took it. Rather than hiding away, waiting for the rainy days to disappear, they saw an empty market where no one was making noise…and made some! They may not have achieved direct responses in their sales at the end of each campaign, but the most important thing they did achieve was strong brand awareness and recognition. When people finally had more money to start spending again, they went straight for the brands that sang clearly in their minds.
This same situation reminds me of times I was working at a marketing agency in the UK, where we had a constant battle with the clients about brand consistency. Our main job was trying to convince the Sales Managers that just because one press ad in the local paper didn’t turn into a ton of sales, is no reason to scratch the ad and start again. We have to give campaigns the appropriate amount of time to make their impact. There are so many techniques that can be used in an effective manner and when they’re all put together in an integrated, consistent campaign, the results can be outstanding. Eventually we convinced the clients of this and their brand grew strong and subsequently, sales hit an unexpected high. Companies need to remember that marketing throughout the recession is not necessarily going to achieve direct responses, but it will be the essential tool for keeping the company on its feet and a clear winner in the end.
Businesses also need to realise that marketing doesn’t always mean thousands of dollars spent on TVCs. Nowadays there are endless options that offer more cost effective solutions than just traditional ATL methods. The 80’s recession saw a rapid growth in direct mail, because this was a more cost effective solution of reaching the target market. Maybe new media will be our answer to marketing uncertainties throughout this current crisis. Search engine PPC, SEO, e-marketing and advertising on social networking sites are just some of the many options available online, and they don’t have to cost the earth.
So my message to Financial Directors and CEOs is this: Put down your red pen and treat the marketing dollar like it’s milk to a baby. You won’t only save your company, but you may even help save our slowing economy. Go on, make some marketing noise!
Do we crawl into the bunker and wait for the storm to pass, or do we take advantage of the current economic environment?
Companies, clients and consumers are looking for more ‘bang for their buck’ during these tough times. Now is the time to shine.
Marketing professionals are under the pump to curb budgets or be ‘let go’.
As a marketing professional we need to make smarter choices, negotiate better deals and push our brands.
With less branding in the current market, smart business’ can build stronger brand awareness and promote quality (cost effectiveness) of their product. (With other companies reducing their marketing budgets and hoping for the best.)
An economic down turn allows smart marketing professionals to build their brands, so when the ‘storm’ is over and their products can blossom.
Business owners need to ask themselves one simple question before they ‘let go’ of their marketing professional. ‘Will I be noticed if I only wink to that attractive person across the dark bar, will they see me?’
Don’t let your business be unnoticed during these dark economic times. Make smart, cost effective marketing choices (online is great at the moment) and build your brand.
Remember… after a dark (economic) storm, there is always a beautiful new day. (A bit poetic but hey, let’s have some fun with this blog!)
Interesting news article for all of the budding marketing professionals:
http://tinyurl.com/nelson-marketing-eye
Cutting down marketing expenditure during the economic crisis is an understandable approach. Surely, it would be better than laying-off more people. By keeping the money in the company, businesses are certain that it will help them go through the tough times. But in doing so, it will only be a temporary relief and might not benefit the company in the long run.
As consumers are gaining more and more bargaining power, they are wiser and more careful in their spending. But this doesn’t mean a lack of demand. Therefore, it is more important than ever to strengthen the company’s image and build brand awareness during this tough time. With proper marketing strategies, companies will be able to convince consumers that they are well established and this gives them a sense of confidence that no matter how tough the market is, the company will be able to sustain.
For example, if I were to buy a car, I would buy from a company that still invests in marketing since it gives me a sense of security that this company is still going strong despite the economic crisis. Would consumers want to buy from a company and find out that the company is gone six months later? Would consumers want to buy from a company that they have not heard of? While this marketing approaches will help in generating new sales, it will also help to retain existing customers. The value of customer retention is not something to be underestimated. It is five time more profitable to retain customers than to acquire new ones.
Gaining as much market share as possible during this time is very important for a company to sustain in many more years to come. Marketing during this time will create such a big impact and will eventually help companies to gain market place. Many large corporations today start out small during an on going economic crisis and being able to survive through it has proved their abilities.
Since many businesses claim that they are cutting down marketing expenditure in order to save for the rainy days, I would really like them to rethink their strategy and see that investing more in marketing during these rainy days is like the sunshine in the rain. It creates rainbows. Every cloud has a silver lining and after the crisis ends, companies that undertake smart marketing approaches will find themselves smiling at pots of gold at the end of the rainbows they created.
With the recession deepening, marketers are caught in a tricky position. On one hand, we face reduced demands as consumers moderate their spending and yet on the other hand, companies are trimming the marketing budget which is the very budget needed to stimulate demand. The challenge in view of declining demand for companies therefore is how to use marketing dollars more effectively instead of trimming budgets. As I quote from my previous manager,
“Cautious buying behavior often results in brand switching. Companies have to learn to manage consumers especially in times of uncertainty where buyers are value-conscious”.
Whilst it is tempting to cut marketing costs in a recession, it would do well for businesses to keep in perspective that marketing should not always be seen as a cost or an expense. It is, in fact, a form of investment both for the short term and the long term.
As such I wish everyone here good luck and best wishes in their hunt for the next career move.
Like many other companies out there during these tough financial times, my marketing budget has essentially been slashed to zero within the last three months, the reasoning, because not enough sales are going through. Why? Because of what I believe mass media is telling them.
Essentially right now, if you have a somewhat stable job, it is the perfect time for these individuals to reap the benefits, interest rates are down, sales are flagged on every corner, so why wouldn't you want to spend?
I believe that with these "tough" times, companies who are deciding to cut down on their marketing and advertising are essentially adding themselves to the ever growing amount of companies going bankrupt, why? Because they haven't kept themselves in touch with consumers to let them know about the organizations dealings. Its an on going battle at the moment with my Director who is incredibly stubborn and essentially old-school, which is why I'm applying for this position. To help businesses flourish when everyone else is being so grim.
Can I just say BRAVO to Marketing Eye! You managed to turn a simple job advertisement into a pretty clever marketing initiative for the company. Every applicant would've trawled your website before coming to this page to blog. If the number of applicants was as high as you quote then that is over 300 potential clients (with networks to match), who have had exposure to your firm. Very Nice!
Not surprisingly as a marketer, I tend to agree with the general consensus of the blog, that companies should be increasing/maintaining marketing expenditure during the economic downturn. The economy works in cycles, so if we dispose of our marketing functions during a downturn to save money, what happens when the boom comes around again? There will be a shortage of skilled Marketing professionals resulting in the inability of companies to take full advantage of an economy/ population with the confidence and capacity to spend again! Thus translating into lower profits in the long term.
Just to illustrate the point above, businesses thinking about disposing of marketing professionals and the marketing function should think back to Jeff Kennett closing down all the technical schools in the 1990's. 10 years later we had huge skilled labour shortages...the moral here is that we should learn the lessons from the past.
On the other hand, if firms maintain confidence in their marketing teams and sustain marketing initiatives during slow economic periods we can avoid these knee jerk reactions. In much the same way the RBA dictates interest rates to avoid dramatic price fluctuations; firms can gain steady profit growth, in economic peak and trough, through consistent marketing.
Just to play devil's advocate, I would also like to say that the idea of firms cutting back on marketing and advertising during this economic turmoil may also be a little overstated. I recently read that during the month of January this year, job advertisements for Marketing and advertising professionals were the only sector to have increased. However I also understand people can make statistics read however they please and the article did not state the amount of possible applicants there were for each of these jobs.
It's natural for companies to adopt a siege mentality during downturns.
They bunker down, focus on their existing customer base, and if new business comes to them - great - but they won't commit resources in capturing it as actively as during times of economic prosperity. 'Non-essential activities' are also pulled back, like marketing.
Marketing, as we know, can never be considered non-essential. Arguably more than products or services themselves, it connects a company with its consumers.
As with any crisis, people by nature are going to find comfort in the familiar and known, and I would argue that extends to the brands they love. If a brand stops marketing, it stops reassuring consumers that it is experiencing the hard times with them.
And to one extent or another, everyone has abandonment issues.
If a brand is seen to empathise with consumers, simply through its communications or by offering them better value through promotions or sales, it can maintain or increase confidence among consumers, while the brands that do stop marketing, stop talking to their consumers, will lose voice in, and the confidence of, the marketplace.
As marketers we shouldn't pretend that this crisis isn't happening when addressing our target audiences, but we should understand the key role relevant, relationship building marketing will play in restoring consumer confidence.
It seems it is a bit difficult to gather the points hidden behind all the marketing jargons thrown around freely here in the bid to prove marketing prowess. Seems too convoluted.
It is very simple, really.
Over dinner today, I mentioned this “assignment” to my cousin brother who is currently undertaking an MBA course at the Swinburne University. He said, “But it can’t be avoided, can it? When companies turn in less profit, they have to cut down on the marketing, the promotions or advertising, right?”
Sadly so, that is the usual perception of most company directors, MBA holders or not. “Marketing” has probably been the most abused and overused term, coming to mean just those few things – advertising, promotional offers, sales, events, etc. That category, psychologically, is the “expenditure” category to them. An ancient (and dangerous) business thinking that should be buried with the dinosaurs, really. When the economic conditions aren’t quite rosy, being brilliant MBA managers, they cut marketing spending.
Even the dullest marketing student who studied Phillip Kotler’s very basic but useful Principles of Marketing would have come to understand that marketing encompasses the whole business, beyond just advertising and sales. The whole marketing mix, and how much of a degree a company integrates it into their business practices makes the difference between life and death of the business.
Marketing, in essence, FORCES a company to review itself.
It makes the company re-evaluate what it wants to achieve (company mission, marketing objectives), the things it is doing to achieve it (integrating the marketing mix plus target marketing and positioning), and how to continue achieving it (through analysis, research).
By “pruning” out the bad business practices (inefficiency, cost, and risk), a company can improve. “Not a fat company”, like how Melissah termed it in one of her articles.
In other words, marketing makes a company become faster, better, stronger. FITTER.
Now, that brings me to my next point; a company that is fundamentally strong will be able to better weather through the economic downturn.
The economic downturn, to me, is also a “pruning” process. It shakes companies to its cores, and the strong ones will be left standing.
Why do economic recessions occur every 10 years? Companies, much like products, go through a cycle. Perhaps 10 years is just about enough time to let a company forget the last recession, and grow complacent; They start letting loose on the spending, take more risks, etc. The US subprime crisis is a great example of bad business practices whereby banks start taking too much risks in lending. Of course, there can be a blame on the lax US Government’s Banking regulations that allowed it to happen (Australia’s housing industry isn’t affected badly because of strong banking practices, Australian banks are one of the best around the world).
Proven bad business practices, like once-great Chrysler, which received huge US government bailouts DESERVE to fail. Like the Darwinian Evolution Theory, the fittest (and best) will survive.
And at the receiving end of this is the consumer who will be getting greater value, with even more high-quality products to choose from.
Marketing operations will help make companies and the people working in them even savvier marketers if they scrape through this economic recession.
For that reason alone, the companies which are facing the glum of the recession shouldn’t be firing their marketing executives who can help them be better equipped to weather through the economic situation.
On another note, the huge government bailouts and stimulus packages are something out of the usual by NOT allowing companies which are inefficient to be “pruned”. What will happen in the next few years will be very interesting to watch. Will the companies which have received bailouts buckle up their operations? Or will the fall prove even worse as they keep pouring in money as a quick fix?
I received your e-mail regarding the selection process for the position of Marketing Executive at Marketing Eye and this is my response.
In today's weak economy, many companies are experiencing lower sales and at the
same time being squeezed by higher fuel prices, increased postage costs, and a variety
of other financial pressures. So, how do these companies plan to meet the economic
challenge? They may have to cut staff and expenses. Which is understandable from "cost point of view"
But I personally think that a slowing economy or a
recession is usually not the time to cut marketing.
In fact, a number of studies found that a recession should
actually prompt an aggressive increase in marketing spending. These studies found that
businesses entering a recession with a pre-established strategic emphasis on marketing;
an entrepreneurial culture; and a sufficient reserve of under-utilized workers, cash, and
spare production capacity were best positioned to approach recessions as opportunities
to strengthen their competitive advantage.
Companies that increase marketing during hard times -- when competitors are cutting
back -- can generally boost both market share and return on investment. Aggressive
marketing can stimulate demand from new and existing customers. But this doesn't
mean simply throwing cash at marketing campaigns. They need to come up with
smarter, more targeted marketing strategies.
Few companies can afford to stop or cut back drastically on marketing -- no matter
what the economic conditions. New products can be revenue generators if marketed
properly. They need to determine what sets the business and its products or services apart from the
competition and proactively market their unique selling proposition.
One suggestion would be to do more online and e-mail marketing. The high cost of postage, paper and printing
is one reason to turn to the Internet as a selling partner, rather than the post office. But
there are other good reasons: The affordable cost of online marketing, the ability to
communicate with customers on a one-to-one basis, faster results and better tracking
capabilities. E-marketing is also more environmentally-friendly.
Under the current economic crisis, companies have been panicking and confidence has dropped significantly compared to 12 months ago. Back then, companies were planning for expansion of their current businesses and how to grow a bigger profit. However, today is a completely different story; we are now surrounded by news such as “higher unemployment rate”, “jobs shifting to overseas,” “negative economics growth.” Etc, and the most terrifying thing is that the market seems to expected these kind of negativity, which is the main reason behind companies cutting marketing budget.
However, as a marketing graduate, I believe that marketing is a vital component to the prosperity of a business. Given the right marketing strategy, companies can obtain new clients, branding and influencing behaviour which results an increase in sales and profit.
As some have suggested, consumers are now spending less, so they are more selective about what they purchase. This is exactly the cause of our slowing economy. But, how can we solve this problem?
Marketing can promote consumers’ spending on particular products. It helps us to identify the buyer behaviour, hence, design goods and services that can satisfy the needs and wants of consumers. Since consumers became more selective, better understanding of their desire is a way of providing offers that satisfy them and get them spending again. This can only be done through market research and market strategy.
Furthermore, losing confidence is another major factor which leads to the cutting of marketing expense. However, what most companies don’t understand is that consumers’ confidence will also be affected. Companies cutting down marketing expense are basically sending a message to consumers that they have lost confidence. If that’s the case, why would consumer purchase their product or service?
Marketing is like the “doorbell” to a company. Companies might not aware of its usefulness everyday; however, it is the first interaction between customers and producers. Under the current economic downturn, companies will need to treat marketing as a long term asset. We may not see its value in the short term, but once the economy grows, people will see marketing as the springboard of the company. If marketing expenses are cut down now, consumers may not be able to find the “doorbell” to interact with the company and the company might not be able to bounce back once the economy is back on track.
Franki Sang
During an economic downturn there will always be a reaction by companies whether it’s downsizing or reducing costs in sectors. Of course many companies believe that marketing can be expendable though they may be inclined to think differently that they knew marketing is not just involved in selling the product.
Marketing encompasses many aspects of the business, of course most already know about the aspect of marketing communications that are involved, though things such product development, pricing and the ability to position the product is needed for any organisation. By getting rid or cutting the cost of marketing they are essentially reducing their resources in this regard and potentially crippling their organisation.
There are always positives within these economic downturns especially for companies to buck the trend and try to establish themselves in this market. As you have said in the blog there are many talented marketeers available or looking for worked, which means a great opportunity for companies to reassure their marketing department and have an established front when the economy gets back in the positive.
With marketing budgets decreasing this would be the best opportunity to display other forms of marketing, especially since the internet has been the new frontier. Social networking sites such as Facebook and Twitter has been used by companies and individuals in promoting their products, while advertising using YouTube has also appeared using the videos to engage people. With the internet these options may be more affordable and appropriate to their target market especially the generation Y and Z.
With all this said the most important thing for the organisation involved would be the customers that are purchasing the products and services. So why would you reduce the marketing department when they would be applied to deal with what the customers wants and needs. For the business to thieve they need the support of the customers they are targeted, by directing the resources well and getting the customers to spend their money wisely.
So in the end the need for marketing will always be there with some companies opting to cut while the others will embrace it. In my opinion this is a great chance for up and coming companies (or established ones as well) to put their head above the sea of doubt and challenge the norm by embracing the advantages of marketing can offer during this period.
Dear Marketing Eye,
First of all, I would like to applaud you for the article. I feel that the point you have put across proves very worthy and it is something a lot of CEO’s should be thinking about.
Being a victim of the economic downturn myself, I can say that I have seen how companies are reacting during this unstable period – it has had a large effect on thousands of people including myself who have been laid off. Not to mention the media sending shockwaves that even the big players regardless of industry, such as Ford and ANZ are hit by this global crisis. I feel that upper management and CEO’s need to think of a long term strategy and have a clearer understanding of how marketing activities can benefit them.
There are many reasons why companies should not be cutting marketing budgets and expenditure. However, there are three main points that I want to put across.
As marketers we need to convince companies that there is a direct link between marketing expenditure and bottom line success in terms of sales and profits. The marketing function is not something we can leave and come back to when it is more convenient; it has led many companies to huge success in terms of brand recognition and success with Coca Cola and McDonalds coming to mind. If it weren’t for marketing activities we would not know these brands so well.
Some companies may argue that marketing can be paused during this period and that it can be caught up on later when the environment is more stable. However, I feel that this is not a wise decision. At a time of change and uncertainty, companies should be embracing the trend and work with it in order to try and figure out how to use the situation to their advantage. In a marketing sense I feel that this would be the best time to utilise their marketing resources and get ahead of its competitors. In a rough period like this, competition slows down however an innovative company would utilise this trend to stand out and deliver gaining as much market share as possible.
Finally it is true that consumers are not spending as much as they used to but that does not mean that their needs and wants have diminished. Watching my peers I can see that there is still room for expenditure; we just need to dig deeper for the underlying motivation behind it. As Kevin Rudd points out we all need to start spending to boost the economy, hence the reason these big pay cheques will be coming to us shortly.
To conclude the topic even though it is an unstable and challenging environment companies should embrace the situation and understand that marketing plays a vital role in reviving their performance and the economy overall.
Perhaps not the right thing to put in when applying for a marketing role and responding to the prospective employer. However, here is what I really wonder.
What do these figures of more unemployed candidates seeking employment in marketing mean? Do they mean anything in the global scenario?
Are we looking at absolute number of people who have lost thier marketing jobs are or are we really looking at this in perspective of the total number of jobs lost across industries? If the latter then how do these job losses in marketing compare with the massive job losses in the automative (General Motors) and consumer goods ( Pacific Brands) sectors, amongst others.
Is marketing really sitting atop business chopping boards?
Or is it just a perception?
Given that our premise is correct, and it is true that there is a greater percentage of jobs which have ben lost in marketing as compared to other sectors then is there a justification for companies to ignore history and cut down on marketing - essential for its sales and ultimately its bottom line.
I do agree a company which will change its organisational structure when required to reduce costs by cutting off layers and stripping to the bare. But what determines bare essentials?
What are the bare essentials for having a black line at the time of year end reporting? Sales and profitability perhaps? Companies have been allocating large budgets and larger targets for marketing and sales over the last few years and they have witnessed the growth and profit from this function. Why are they suddenly stopping it?
The question really is - are they stopping it? Or are they merely making it leaner? Are companies cutting down on marketing strategies targetted at growth or are they stream-lining their marketing strategies to use the resoures more effeciently and have a leaner structure which ensures good financial health in the event of an ongoing downturn??
Even throughout this economic crisis it is still beneficial for firms to continue to implement and develop strategic marketing programs.
Implementing an appropriate strategy that informs your clients and stakeholders of your company’s position, their mission statement and knowledge of the situation can encourage both financial and company growth even in these troubled times.
Despite our lapse into a recession, many markets do still exist. Although marketing strategies that were used 12 months ago may not be appropriate for use now, it is still fundamental for companies to utilise communication strategies.
If a company handles their media and marketing strategies appropriately throughout this economic crisis it can increase its reputation amongst its clients and its competitors. Although companies do have to be mindful of their costs and budgets, it is still important for companies to promote their business.
For example in times of financial uncertainty many buyers are looking for value for money and suggestions on how to fight back. Here many companies can promote/implement this aspect in their service/product.
Listening to your clients/stakeholders is important to ensure that your market is receiving your intended message. By implementing what your client wants, you are a step closer to winning the market share, maintaining your important two-way relationships with your stakeholders and potentially gaining a strong base cliental.
In a time of great uncertainty, there is however one known certainty. The market will once again increase and this is when companies can flourish because of the smart marketing choices made during this “down period”. To ensure that companies and their clients will be looked after, it is important to act now and keep the market competitive.
Let’s get back to basic. In simple definition, marketing means an activity where a seller is creating space to fulfill the needs or wants of a buyer in a market. It is all about attracting and fulfilling the needs or wants of a buyer. Therefore, it is a very common sense why marketing is fundamental to keep the company going. With marketing, it is absolutely way to generate sales. Marketing is so broad that we can use the right strategy to attract market share. With the ability of selling by executing strategic marketing, a company will be able to generate revenue and profit and grow! The bottom line is a company will be able to survive with the right marketing tools. Without marketing, no matter what products or services you sell or no matter how good your products or services are, you will not be able to attract the market, therefore you do not generate enough revenue to grow your business. I believe many businesses experience loss in this economic downturn or financial crisis. So it is time for marketing people to show their worth and not become the target of business chopping board. I learn, in Chinese character, the word ‘crisis’ has 2 meanings, opportunity and risk. Therefore, the opportunity is there but we also need to know how to manage risk with the right strategy.
When I and my team worked with ‘Deloitte’ Business Innovation team, we spent a lot of time on brainstorming and market research to test an ‘innovative’ yet ‘unproven’ product to the market. To make long story short, the lesson I have got, it turns out no matter how expensive the finance will be or how many barriers to commercialise the product, if the commercialization/ marketing plan is feasible, Deloitte is going to launch the product anyway because we know we meet the demand in the market. We create a new market just by being innovative! It just shows how essential marketing is as part of company’s component. Administration department, finance department, human resource department do not know how to generates revenue for business but marketing department. However, I do not mean marketing department is the most essential one. There must be perfect coordination or correlation between the components to keep the company going. Ever since I finish the project with Deloitte, my passion to marketing is growing than ever because I learned so much in it. I have so much passion in helping businesses to grow. I even think of building my own consulting business!
The fact is that most (marketing) jobs are cut within big firms.
Marketing eye is consulting small to medium businesses. A recent Sensis-survey points out that SMEs are actually investing in their marketing to attract clients at the moment.
From previous comments there is no doubt that most of us, in fact everyone is aware of the current economic scenario and understands how very crucial marketing is in times like these.
Almost every comment touched on the 5 BIG questions (What, Where, When, Who and How) and outlined very detailed explanation to their argument based on the fundamentals of marketing and economics. Good job guys! That goes to show that the money spent on tertiary education and years of marketing experience has been put to good use.
However discussing and informing each other about something we already (must) know will not help ease the situation, will it?
In my opinion, as marketers we should be thinking more proactively and innovatively to overcome this problem asap – less talk, more action!
For example, inviting CEOs of large and medium sized corporations which managed to survive in tough times like these through effective marketing strategies to tell of their company’s success stories in hopes to inspire other SMEs whose marketing department is on the verge of being pushed off the cliff (so to speak). This can also be seen as a business opportunity for marketing consultancies such as Marketing Eye.
Secondly, implementing a synergistic marketing and advertising approach for companies of similar business and marketing mix. This would not only be gentle on the company’s finance department but also a great idea in fostering a good relationship with competitors. Like the saying goes “Keep your friends close, but keep your enemies closer”!
These are just a couple of marketing ideas which I find may be of use during an economic downpour we are facing at the moment, sort of like the cloudy and gloomy Melbourne weather we are experiencing today.
Melissa Tan
A good comment from Melissa. The idea to give the two suggestions is laudable. However, I question the clarity in who those suggestions are for.
As I see it, there’re three different parties for which your suggestions are targeted towards.
1) The company CEOs/owners.
As I’ve already pointed out in my previous comment, the issue of companies reducing their marketing expenditure is perhaps because of a lack of knowledge of the roles marketing departments should play. Heck, even the people in these marketing departments may not realize the role they should play!
The issue at the heart of it, if one is sharp enough to see, is awareness. How do we address that? Melissa, you’re right in suggesting education - having CEOs give talks to SME owners.
That is a good start, although I question, who are the ones asking them to give talks? Let’s be practical here. The great CEOs won’t suddenly think of giving a talk unless someone asks them, and pays them a sum of money. The next question - will these SME owners be concerned enough to come together to suddenly ask a CEO to give a talk? I doubt it.
If there is anyone who whould be concerned, it should be the Union, or the Australian Marketing Institute. Now, that is where the solution lies. The AMI, in the bid to convince company directors of the role of marketing will need to take this initiative. They are the ones who will decide on the topics of these forums, invite the CEOs to talk, and market the talks to not just SMEs, but any businesses.
2) The marketing professionals who are facing loss of jobs and cutting of marketing expenditure.
If the problem is awareness of marketing roles of the company directors, then the people who are working under them has to educate their bosses. It is not impossible, but upwards education might just fall on deaf ears. Worth a try if they want to keep their jobs though.
However, if the marketing professionals in the companies have done great jobs all these while, the company should find them un-disposable.
It will make sense for the marketing professionals to push the AMI to hold these talks.
3) Marketing Eye.
By lumping together “freelancer” marketing consultancy firms like Marketing Eye is where the suggestions went wrong. If companies were to cut marketing expenditure and marketing jobs, marketing consultancies are the ones who benefit. So why should Marketing Eye suggest giving these talks? Logically, they shouldn’t.
However, there can be another perspective to this. Marketing Eye can hold these talks so that at the end of the day, they get more publicity as a highly respectable consultancy, and shows that the consultancy is not just always about profits, but is also concerned about the marketing industry (sort of social marketing, like The Body Shop standing up for the environment, Mkting Eye stands up for marketing). Perhaps.
So. If Marketing Eye were to take advantage of this situation, they will have to illustrate to these companies why they should outsource their marketing functions. Saving cost is one reason. Another is specialty/expert advice. I believe Melissah already knows these. Because that’s where the strength of the business lies.
Next; your suggestion of synergizing marketing efforts of competing companies.
It is optimistic. I admire your boldness in suggesting that. But I really can’t see a way it can work. At times like these, companies should be striving harder than ever to gain leverage over their competitors in order to survive. You need to be better in EVERYTHING you do. So why share marketing brilliant ideas with your competitors who is fighting for that piece of pie you’re eating?
Marketing departments in companies should now be really bucking up, be more educated in what they’re doing, and keep up-to-date on marketing practices around the world in the bid to improve themselves. Only by showing how important their roles are will they be kept.
Jeremy Chen
Jeremy, your comments are fine for the larger organisations who may have a full blown marketing department already. However Marketing Eye caters to the small and medium sized businesses who generally may not have such departments. Therefore our job is to demonstrate to these smaller businesses why continuing to outsource marketing even in difficult economic times is what will set these businesses apart from their competitors in the long term.
You preach a nice line but have dropped the ball in this area yourself.
Your website is advertising Marketing positions and your staff have confirmed these are current (despite the date 2007 appearing on the page)- yet you have failed to reply to my 2 applications.
This may not seem like much to you as underemployed Marketing people are a dime-a-dozen at the moment, but multiply my experience with your brand by the number of other applicants you have ignored and that equals considerable ill-feeling... and it could have been such an easy conversion! A simple 'Sorry, you missed out' email would do.
Ill-feeling, I might add, in a group who will not be underemployed forever and who will never trust your brand or use your consultants when in a position to make that choice.
Regards,
David
I totally agree with David.
This blog started like months ago. It was actually done under the umbrella of an advertised marketing position. I still remember an e-mail that was sent to me by one of the rep. saying that a few people with the best comments will be considered.
I posted my comments along with a few other people, but until now I have not received any single acknowledgment of whether I've made it through or not. A single-short e-mail saying that "sorry, you do not get through" might be nice.
What's the aim of doing this whole thing and advertising it together under a job application? Is it just to get us to fill in your comments? And giving us such false promises, in fact using us, applicants just to fill in your blog.
It might not be true, but as I said before, a single e-mail will do.
Nice way of marketing your agency btw !!! Very very good trick....
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