Recession – Making Marketing Count

There is now a general recognition that a recession has arrived in the wake of the credit crisis, which will manifest itself in both a slowdown in demand and business in general.
The usual reaction of companies to this situation is to batten down the hatches and to look for cost cuts and budget reduction.
Those in charge of the marketing budget are often seen as the first in line when it comes to cost cutting, but should this really be the case? How should marketers respond when asked to make cuts in expenditure?
Marketing is defined as “all those activities which anticipate and satisfy customer demand profitably”. Thus the marketing function of any business has the responsibility of producing all the profitable revenue for the business, using all its activities to anticipate and satisfy customer demand. In those businesses where the sales function is managed separately from the rest of “marketing” there is still usually an executive with overall charge of “sales and marketing”.
For the Chief Marketing Officer (CMO), the executive in charge of all marketing activities including sales, the objective is to maximize sustainable profitable revenue while minimizing costs and the use of marketing assets. Thus the marketing function is the driving force for any business in producing and maintaining the levels of profitable revenue.
At a time when demand is reduced, everyone has to work harder and maximize efficiency to ensure the continuing production of the necessary revenue. It follows that arbitrarily cutting expenditure on all those activities involved in getting and maintaining business may damage the ability to produce revenue, especially at a time when competition is likely to strengthen when demand is weakening.
The successful marketer or CMO needs to be both creative and effective in managing resources. This is particularly important in times of economic and market astringency. The CMO needs to be able to analyse all marketing activities with quantified performance measurements. As an effective manager, the CMO should be able to justify all elements of the marketing budget with quantified evidence of its contribution to revenue production. Marketers must be able to identify those activities which are the most cost effective in marketing contributions and which are not. If necessary, resources should be redistributed to concentrate effort on those areas which provide the best return on marketing investment. Always must be asked the questions; is this an investment or cost? What does it contribute? How do we know? If this action was cut or reduced what would be the consequences? How do we know?
A full understanding of the cost, benefit and contribution of all marketing activities to the generation of sustainable profitable revenue gives the CMO a strong position when defending against arbitrary budget cuts. Such knowledge ensures that if such cost cuts are unavoidable, that they can be confined to activities which will do the least damage to the production of sustainable revenue.
While a recession is generally a period of reduced demand, revenue and profit, it can also be a time of opportunity and creativity. For the CMO, recession requires a constant monitoring of marketing productivity to maximize the efficient use of assets. At the same time, austerity can be the mother of invention. Do market conditions dictate a change in how the market is accessed and satisfied? Would a review of marketing processes reveal alternative methods that could prove more efficient and cost effective? Is there a change in customer demand that requires a new product?
The CMO’s job is to manage assets and investment efficiently to maximize sustainable profitable revenue. While successful CMOs need not themselves be creative, they need to foster and maintain a creative atmosphere within their marketing specialists especially during time of austerity and recession.
Successful management of marketing requires good leadership, especially in difficult trading conditions. Even successful marketing teams can become demoralized and less effective if their morale and motivation is not maintained. In the worst case good and experience marketers may leave. The CMO can only be successful in the mission of delivering sustainable profitable revenue with the aid of a successful marketing team. CMOs must rely and encourage the creativity of other professional marketers, because they are the prime asset of the marketing function. If, because of the size of the business or the size of the marketing team or the particular challenge of the market, that pool of creativity is deemed to be insufficient, then the CMO should seek additional creative input via consultants, specialist outsourced agencies, or qualified interim staff.
When it comes to difficult economic times, the CMO’s prime responsibility is to maintain the levels of profitable revenue. To do this, the CMO must maintain the assets of the marketing team in order to be able to take advantage of new opportunities as they arise and to justify the necessary expenditure and reinvestment required with quantified data of marketing performance.

© N. C. Watkis, Contract Marketing Service 28 Oct 08
Contract Marketing Service, (Marketing Performance Measurement Consultants)

October 28, 2008   Posted in: marketing management

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