- Form a Company Now!+
- Compare Prices+
- Learning Center+
- HBS Blog+
- Make Payments+
Business Week has a great interview with author and marketing guru, Philip Kotler. He has a new book out called Chaotics: The Business of Managing and Marketing in the Age of Turbulance. Below is a portion of the interview.
Philip, in these troubled times, companies are cutting their marketing budgets—in fact, marketing is one of the first departments to be cut. Do you think it is a wise move to cut the marketing budget?
Yes, if the marketers cannot provide performance metrics for their expenditures. Marketers have had it easy in the past, getting lots of money for 30-second commercials without having to produce any evidence of their sales or profit impact. Advertising was a matter of faith, not reason. The plot was to get a large share of voice so that the brand was locked in the customers' memories. Hopefully the message promised something distinctive and the customer who wanted that point of difference would automatically choose that brand.
My guess is that only 1 out of 10, maybe only 1 out 20, advertising campaigns really makes a financial contribution. That means that the average company has only 1 chance in 10 or 20 that its ad campaign will create a memorable and motivating message. I don't like those odds.
Years ago, Will Rogers quipped, "If advertisers spent the same amount of money on improving their products as they do on advertising, they wouldn't have to advertise them." This theme was recently elaborated by Jean Claude Larreche in his new book Momentum. He claimed that heavy advertising spending is often on products that have little distinction. The company would be smarter to save that money and use it to build a better product.
Is cutting out the less-defensible parts of the marketing budget enough to do in difficult times?
No. I can even imagine where the proper step is to increase the overall marketing budget and spend more. A down period introduces as much opportunity as it does chaos. For example, customers are ready to switch to lower-price store brands and away from the more expensive national and international brands. Retailers such as Kroger, Tesco, and others are strengthening their private brands and offering two or three private brands on the model of "good, better, and best." Today, more people are fishing to solve the problem of having a good dinner with little cost. This is good news for companies that make fishing rods, nets, and bait. Some companies see cracks of sunshine in this otherwise gloomy picture.
Are there any marketing maxims that must be preserved even in bad times?
Yes. I would mention three:
1. Understand your target customers and solve their problems in a better way than your competitors.
2. Build your brand promise that is delivered by everyone in your business network (employees, distributors, suppliers).
3. Innovate continuously in your products, services, and supply chain.
See the full article here: http://www.businessweek.com/managing/content/jun2009/ca2009065_435823.htm?campaign_id=rss_daily.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.