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Necessity is the mother of invention

There is nothing like necessity to concentrate the mind. Whether or not the economy is still technically in recession is irrelevant to most businessmen and marketers in particular.

Regardless of what either government or economist may say about the state of the economy, the chief marketing officer (CMO) is still responsible for producing the financial income on which the business depends and is faced with the realities of the market in the level of demand, the volume of orders, number of customer creditors, and the rate of cash flow.

Experience shows that the effects of recession are manifested in a slowdown of orders as customers defer their decision-making and an increase in payment times. Fewer orders and slower payments can seriously reduce the level of cash flow, and panic a business into a hasty and ill thought out round of cost cutting. Advertising and promotion costs are easy to cut , but research has shown that companies that continue to advertise during a recession do better than those that don’t. Reducing corporate advertising may have little direct effect on sales, but a reduction in product advertising may be counter productive.

It is a general observation that in a recession, work gets harder and results take longer to achieve. In this situation, what can and should the marketing manager do? Cutting budgets is a crude but effective way of making savings, but it does not increase revenue or cash flow. Alternatively, improved efficiency may produce cost savings, which may in turn improve the return on investment and the overall level of profitable revenue.

If key orders have not arrived as scheduled, the initial action of the CMO should be to refer to the marketing plan and consider the contingency actions that should already have been prepared for just such an event. In the absence of a working contingency marketing plan that would take immediate effect, the CMO will have to prepare a reappraisal of the marketing situation, and a new plan of action, which will take time.

The CMO should first consider at all the elements that form the marketing budget. In many businesses, what is described as the marketing budget in fact only relates to a part of all those elements involved in anticipating and satisfying customer demand. In such circumstances, the CMO may not have complete authority over all those budgetary elements that relate to marketing, but it should not preclude a necessary interest in those budgetary elements outside the CMO’s immediate responsibilities. Each area of the budget needs to be assessed to ascertain where the money goes, to what purpose, and to what result. In every case, CMOs should be asking:

* Are we doing this right?
* Could we do this better?
* If so, - how?
* Has anything changed?
* What has changed?
* How has it changed?

It may be the case that there is little that can be done to hasten customer decision making in the short term. Special offers and credit options may be helpful in converting slow customers, but they should generally be avoided if the results do not contribute to overall profitable income. If the current customers are not producing enough income, then ways to increase the potential customer base may need to be considered, including diversifying into other markets, products and services. Before embarking on new sales activities, it is important to get the opinions of those directly in contact with the customers, in order to understand their problems, and to encourage their ideas to save money, cut waste and increase productivity. Some ideas may be radical, and some may require investment, but if valid ideas and suggestions which emanate from the sales team are implemented, they are more likely to be successful than those imposed by management who are not directly acquainted with the problems.

The operating costs of running a sales force can be some of the most expensive in the marketing budget; therefore efficiency and effectiveness are all important. Sales managers who must organize and motivate their sales teams to maximize sales, while minimizing the costs involved. CMOs should be prepared to reappraise the role and activities of a sales force and should:

* Know which areas produce the most income, and which are the most costly to service.
* Consider whether some of the customer base can be served by other means.
* Look for alternative ways for increasing the number of enquires including seeking new markets.
* Consider whether current methods of selling are still suitable for the current market conditions or could others be considered as an addition or alternative?

Necessity is the mother of invention. A slowdown in demand can bring new opportunities by enforced radical thinking. Being responsible for producing the profitable revenue for the business, CMOs should not be afraid to question what they do and how they do it and look for new ways to improve efficiency in producing their financial contribution.

What does PR do for marketing?

Advertising and public relations are major elements of their marketing mix for many businesses, Provided that advertising agents are properly briefed, it is possible to have advertising plans which are in part at least, measurable in their results. But what about Public Relations? How does Public Relations (PR) fit into the marketing mix? What does PR contribute to the overall output from marketing?

Public Relations is an expensive business and by its nature is not fully controllable. With advertising, money buys media space and broadcast airtime, but with PR, the investment is not so certain in its outcome. Time and money may be spent in producing press releases, but with no guarantee that any of them will find their way onto the printed page, television, radio or any other form of mass media. However, the right story can incite interest and be reported worldwide, but whether it is the right story is decided upon by editors of the media, not by the marketing manager from the originating business. The story that results may be of interest to the media, but may be to the detriment of the business. While perhaps it may be said in celebrity circles that all publicity is good publicity that is certainly not the case in the world of business, where bad publicity can have a seriously damaging effect sales and income.

PR for businesses works on two levels. On one level, the ultimate purpose of PR is to keep the company and the product in the public eye in order to aid sales. PR is used to develop a positive attitude to the product and the company by informing potential and existing customers. On a second level, PR helps to provide a supportive attitude within the local and national community, which may help in the recruiting and retaining of staff and develop a general accord with the company’s objectives.

Publicising support the local football team, may be good in developing a positive attitude amongst the local community towards that company, but is very unlikely to directly influence sales, or open doors for the sales force. Similarly, press releases about new products and services my help to open doors to the sales force, by informing new and potential customers, but may have little or no impact with the attitudes of the local community towards the business. When considering PR opportunities, the marketing manager needs to consider how it will contribute to the overall marketing output. If PR expenditure is to support corporate objectives as opposed to sales support, then it should probably not be part of the marketing budget.

In his world number one bestseller book, “Up the organization” the late Robert Townsend, chairman of Avis Corporation, recommended the sacking of PR departments and outside agencies, and appointing a number of internal executives as official spokesmen for particular aspects of a company’s business. Townsend’s approach to PR is imaginative and cost effective, provided that it is the media that seek information about a company. However, should a company seek to be pro active in issuing information to the media, then using PR professionals may have an advantage.

How should the marketing manager evaluate the contribution of PR to the overall marketing activity? Although the contribution of PR may be subjective rather than quantitative, it has an important role in projecting the image of the business, its products and services,

When considering the potential use of Public Relations it should be remembered that:

* All publicity is not necessarily useful publicity.
* Marketing managers have a responsibility for public relations and its contribution to the marketing function.
* Public relations activities that directly support the maintenance of the sales effort are of value to the marketing function.
* Public Relations activities which do not clearly support the sales effort and the production of income are unlikely to be of value to marketing function. That is not to say that such public relations articles and activities have no value to the business as a whole, but its value might only be regarded as corporate support, and thus not a marketing asset or responsibility.

Marketing managers must therefore ask:

* How PR might contribute to the marketing plan, as a stand-alone activity or in conjunction with supporting Adverting and promotion?
* What aspect of the business will it help – e.g. sales support or corporate image?
* When should PR methods be used – is it timely?
* Where should PR stories and activities be place for best effect?

Using public relations wisely, can do a lot to influence public attitudes towards both products and businesses. For the marketing manager, PR that supports the selling activity is all important in maintaining the customer’s confidence in the product and the business’s ability to satisfy their requirements. To what extent the public image of a business actually effects the sales of products is debateable and may depend on the image and quality of the product and the size of the business. In the end, the value that PR makes, especially in supporting the sales effort, is a judgement that marketing managers must make and justify.

Forget Crystal balls, senario planning is what you need.

The prospect of the end of the year always brings out the crystal ball for New Year predictions. For all people in business and especially for those in marketing, crystal ball gazing may be fun and an interesting diversion, but it more often seems to relate to wishful thinking rather than be grounded in reality.

Much of what is predicted in January fails to materialize and can often be simply wrong. Changes in market conditions and trends do no suddenly start on the 1st of January. So is there any value in making New Year predictions? The answer is yes, but it depends on what is being predicted, how the prediction was made, what information was used and what assumptions were made.

Most of the market trends that started in 2009 are likely to continue into the New Year. However there are some events which will make a difference to the economy and therefore to market conditions, such as the level of demand, which may affect the lifeblood of business.

While it is expected that the British economy should be out of recession, hopefully in the first quarter of the year, there is no guarantee that it will be. Short of a miracle, it is unlikely that there will be any appreciable increase in demand in the first half of the year in most market sectors. Consumer confidence will take many months to restore to a level where demand can be seen to be growing to any appreciable extent. The coming General Election, which has to be held by the end of May, will help economic confidence by providing a degree of certainty for at least the next few years, in which both business and consumers can operate. However the extent to which the General Election affects the level of confidence and demand, will depend on the political outcome.

What is certain, is that there is little that can be done to affect the level of demand. In a recession, demand does not go away, it is only deferred until the consumer is confident enough to buy, or is forced by necessity to purchase. In the meantime, the marketer must use resources wisely to maintain a level of income, and conserve the marketing assets as far as possible. What should the marketer do in such circumstances? There are a number of things that should be done or actively considered:

* Maintain close links with existing customers, monitoring their needs and changing requirements.
* Use the knowledge of the changing needs of existing customers to target new potential customers.
* Consider the problems and fears of customers and potential customer and adapt the product or service to meet their changing needs.
* Continue advertising and promotion, even on a reduced budget, because the market needs to know that your product and service is available rather than that of the competition.

Probably the most useful action of a marketer during difficult trading times is that of Scenario Planning. Few businesses do scenario planning well, but while it takes time, it can be a very useful insurance policy against the unexpected situation. Not long before the 1974 oil crisis, the Royal Dutch Shell Group had worked through such a process, to identify every situation that they could think of, that the company might encounter as an oil producer. Having identified every possible situation that might occur, Shell then produced action plans to be implemented should any of the identified scenarios actually occur. When the Arab oil embargo took effect after the 1973 Arab Israeli war, most of the world’s oil companies were totally unprepared, except for Shell. Shell had considered such a possibility, (which was considered remote at the time) and had prepared plans accordingly. While other oil companies were struggling to find a way to respond to the embargo, Shell simply applied their pre-prepared plan. As a result, Shell had moved in a short time from a position of 10th largest, to 4th largest oil producing company in the world, a growth largely attributed to the company being fully prepared for any conceivable political or trading situation.

Possible scenarios that the marketer should consider in difficult economic times;

* Prime contracts fail to materialize, or are reduced.
* Key customers seek to price reduction or longer credit.
* Increase in payment defaults.
* Increase in aggressive activity from competitors.
* Forced reduction in the marketing budget and resources.
* Adverse Government legislation.
* Difficulties in maintaining necessary supplies.

While some of these possible scenarios may seem unlikely, in difficult economic times, none are impossible. It is the task of the CMO to produce and maximize the profitable income on which the future of the business depends. Therefore when considering what lies ahead in 2010, marketers should consider scenario planning as an important management tool.

In short, the wise marketer needs to consider all possibilities in 2010, planning for the worst, while still hoping for best.

© N.C.Watkis, Contract Marketing Service 05 Jan 10
Contract Marketing Service, (Marketing Performance Consultants)

value

While chief executives and accountants debate the return on company investment and productivity, the activities which generate business rarely appear to come under such scrutiny. Marketing, which generates profit by anticipating and satisfying customer demand, requires considerable investment in money and resources, and is at the heart of every business.

If all marketing is investment, why would companies not want to assess the returns on their money? Increasingly Chief Executives and Financial Officers are looking to ensure that measurements of the return on investment are used across the whole business area, including marketing.

Cut or not to cut? That is the question.

Many businesses are seeing their income fall during the current recession. Demand is still there, but buying decisions are being deferred so that sales income is currently reduced. At the same time, costs remain and may even go up. The result is that profits are squeezed, and can even turn to loss.

The responsibility of getting and retaining business, to produce the necessary profitable revenue, lies with the chief marketing officer (CMO). Getting and retaining business costs money, but when profits are squeezed, there is always a pressure to cut costs, and the marketing budget is often one of the earliest targets. This is because chief executive officers (CEOs) and chief financial officers (CFOs) often do not have a full understanding of what is involved in marketing and unfortunately, too many marketers still do not provide quantifiable evidence that defines their contribution to revenue generation, so the marketing budget becomes an easy target.

If reduced income is causing cash flow problems, then cutting expenditure in the short term may be necessary if the business is to survive. However, if reducing expenditure is considered necessary, then being selective about what to cut and by how much will be essential for the long term future of the business. If the CMO cannot demonstrably justify the level of expenditure in the marketing budget, then cuts in expenditure may have to be made.

Before making any cuts, the CMO needs to know how much it actually costs to get and retain business. This question is fundamental to understanding the true scale of the marketing budget, and how the various investments and costs contribute to the production of profitable revenue. No business can succeed simply by cutting expenditure. Businesses have to produce income in order to survive, but producing income cannot be done for nothing. At the same time, businesses cannot survive indefinitely if costs continue to exceed income. So if cuts are essential for short-term expediency and business survival, what should be done?

* First, the objectives for making budgetary cuts must be defined in order to achieve the target reductions in marketing costs.

* Secondly, there needs to be a cost/benefit analysis of all the options available for reducing costs, especially regarding potential unforeseen consequences.

* Thirdly, decisions must be made on those actions that will least damage the business’s ability to compete successfully in both the short and long term.

It is important not to cut everything proportionately across the marketing budget, as this tends to magnify hidden weaknesses while diminishing strengths.

If the business is to survive over the long term, then it is important to evaluate the expected return on each area of investment and continue to invest in those offering the most attractive returns, while cutting the rest. Consideration must be given to the relative importance of particular customer segments, product groups, and geographic areas, in producing income. Similarly, not all customers, products or areas are of equal value in their production of income. Each should be evaluated and ranked from highest to lowest, according to their expected return on investment, making cuts in the lowest performing ranks. The principle should be to starve weak projects and to feed strong ones.

The impact of cost reduction decisions depends in part on the actions of competitors. Even if competitors cut their expenditures, it may still be possible to achieve as much as previously, but on a lower budget. But supposing the competition cut less, or actually increases spending? Exploring such possibilities, with analysis of the possible cause and effect will help illuminate the level of competitive risk involved in making cuts to the marketing budget.

At the same time as considering where it may be possible to make cuts in marketing expenditure, it is worth considering where it might be advantageous to actually increase spending, in order to compete more effectively. Investing more in customer relations may be necessary to maintain customer retention. More investment may be needed in marketing research in order to fully understand the change requirements of customers who are also affected by the recession. Is the customer being given a relevant message via a media suitable for the recipient? If not, additional investment may be necessary.

In a recession, the first expenditure cuts usually come from the advertising budget. While this may be relatively easy and helpful in the short term if there are problems with the cash flow, it may easily be a false economy, especially when considering the long-term future of the business. Research conducted by McGraw-Hill into the recessions in the U.S. from 1980-1985, showed that out of the 600 business-to-business companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256-percent growth by 1985 over their competitors that eliminated or decreased spending.

Cutting the marketing budget, without a full understanding of the implications is dangerous.
Reducing the financial costs in the immediate short-term, without carefully considering the implications, may dangerously compromise the ability to produce the necessary income for the long-term future of the business.

© N.C.Watkis, Contract Marketing Service 07 Dec 09
Contract Marketing Service, (Marketing Performance Consultants)

Marketing the Roman way.

For over seven hundred years the Roman army, both Republican and Imperial was very successful in the majority of its campaigns. That success was despite the fact that for much of the time the Roman army did not have superiority in numbers or in weapon technology to its adversaries. The great strength of the Roman Army lay in its superior organization, command structure, logistics, training and leadership. It was said of the Roman army that its “drills were bloodless battles; its battles bloody drills.”(Josephus, - “The Jewish War”).

Considering that marketing often absorbs quite a lot of investment in order to produce profitable revenue, its efficient organization ought to be of major importance. But just how well do marketers organize their departments and their activities? If the principle marketing executives happened to fall under a bus, how well would the business function without them? How easy would it be for someone to seamlessly take control over the marketing decision making and management?

Marketers rarely admit to having all the resources that they think they need, but how well do they use the resources and assets that they have? How well organised are marketers’ assets and processes to achieve their marketing objectives? As with any activity, if marketing operations are directed to achieve specific objectives, all the resources will require organizing accordingly.

Marketing involves all those activities which directly or indirectly produce the necessary income on which a business depends. The task of chief marketing officer (CMO) is to maximize the level of profitable income while minimizing costs and the use of assets.

Because marketing involves many diverse activities and disciplines, such as research, sales, advertising, promotion, planning, it is essential that all its resources are managed efficiently and effectively, It is therefore the responsibility of the CMO to direct the effective organization of assets, finance and especially, personnel.

The principles for the organization of the marketing function are no different from
those of other business areas and disciplines. A business organization tends to work best when its structure is:

* formal
* simple
* flexible and capable of adaption to meet changing requirements.

Marketers need to understand that the marketing function does not stand or operate in isolation from the rest to the business, but is an integral part, responsible for producing the income on which the business depends for its existence. It is therefore incumbent upon the CMO is to ensure that all the marketing staff, understand how the rest of the business is organized. They need to know how the various functions and departments are subordinated, what their functions and responsibilities are, and the identities of the principle personnel. Marketers should have a similar understanding of how their own department functions, especially concerning who has what responsibility and authority.

Each member of the marketing staff should have a clear job description. This should not be prescriptive, but should define their subordination, principle tasks, responsibilities and authority. CMOs need to ask:

* Do all marketing staffs have clear objectives, both individual and collective?
* Do they also have clear lines of responsibilities, communication and authority?
* Are all these clearly understood by all the marketing staff?

While businesses put considerable effort into developing an annual marketing planning process, in many businesses, much less effort is put into ensuring that there is an effective organization to carry it out. As with most business functions, marketing staffs tend to work better when there is a clearly under stood routine of activity. However, one of the most important aspects of any business or marketing structure is to be able to cope with changing conditions, and especially unexpected events. Efficient internal communications can ensure that all marketing decision makers are informed of all current and planned activities. This is especially important when marketing staff leave or are absent, so that others are able to take over their workload to maintain the continuity of actions.

Marketing plans are not simply a blue print for using marketing resources and investment to achieve specific marketing objectives. Quite often businesses leave out the most important aspect of business and marketing planning, which is how to deal with the unexpected event. How many businesses actually have a contingency plan for such occasions? What do the marketing team do if the projected sales do not come in as planned? What actions are to be taken if the revenue is below what was planned? Or what should be done if demand is outstripping supply?

The Roman Army was trained and organized to meet every eventuality, both expected and unexpected. Marketers must similarly organize themselves and their resources in order to deal with any change in market conditions or circumstance, and especially any unforeseen event. Being well trained and organized will help to ensure that the level of developed income can be maintained without interruption, despite changing conditions and unexpected events.

© N.C.Watkis, Contract Marketing Service 19 Oct 09
Contract Marketing Service, (Marketing Performance Consultants)

The Only Marketing Question the CEO cares about

Looking at the marketing press, would suggest that the main priorities of marketers are brand, the return on investment for advertising and promotion, and customer relationship management. While these subjects are laudable areas of interest and concern, they are not the true purpose of marketing.

The Chartered Institute of Marketing (CIM) defines marketing as being, “the management function of all those activities which anticipate and satisfy customer demand profitably.” From the CIM’s definition, it is clear that the purpose of marketing is the production of profitable income. Thus the marketing function has the clear responsibility of producing the income for the business. The priority of every marketer must therefore be to maintain and increase the flow of profitable revenue, by anticipating and satisfying customer demand.

The chief marketing officer’s (CMO) task is to maximize sustainable profitable income, while minimizing costs and the use of assets. Managing the marketing function is a complex business. Balancing all the activities related to product, price, promotion and market to produce levels of income both for the present and the future is not an easy task, and it is easy to become side-tracked into detail and lose sight of the objective.

Developing market share and brand image are important, as they help to provide a security of income by a status and position in the market place. However, market share and brand image are only a means to an end, namely to produce sustainable income for the long term future of the business. A business may have a substantial market share and a strong brand image, but unless the marketing function is delivering sufficient profitable income, the business may fail.

Marketers need to be able to control all the assets at their disposal efficiently and effectively in order to produce and maximize sustainable revenue. Being able to micro analyse every aspect of an advertising campaign, market research, or customer relationship management, may be important, but is it relevant? The marketer must be clear to the purpose of the information obtained and be able to determine:

* How much time and money has been spent?
* How does it help with income development?
* Whether the information obtained more or less than is necessary for decision making?

If the information collected from analysis does not demonstrably assist in producing income, it is a wasteful distraction. Marketers need to consider and judge every marketing activity in relation to how they contribute to producing income.

The chief executive officer’s (CEO) main interest is the amount of profitable income generated collectively by all the marketing activities, and how the net profit of the business as a whole may be maximized and continued into the future. At the same time, the main interest of the chief financial officer (CFO) is to ensure that the budgets have been adhered to, and that the costs and use of assets have been kept to a minimum.

The chief marketing officer (CMO) should always be able to demonstrate effective process and accountability for all marketing activities, costs, investments and decision making.
As the late Deng Xiaoping of China is reported to have said, “It doesn’t matter if a cat
is black or tabby; if it catches mice, it is a good cat.” Provided the marketing function has met the financial and marketing objectives of the business and marketing plans, kept to the budget, the company policy and the law, why should it matter in the detail of how this is achieved? Marketers need to accept that while it is desirable that all activities should be measureable, in practice, many marketing activities cannot be measured accurately and that a level of inaccuracy or uncertainty has to be accepted. Marketers have to decide whether investing more time and money into assessing the return on investment on aspects of advertising CRM programs and consumer research really assists in maximizing profitable revenue.

The only marketing activity that actually produces income, is that of “Sales”. All the other marketing activities of advertising, promotion, research, customer relationship management (CRM) etc, are there to support “sales”. Because they are supportive to sales, and have no direct out comes, measuring their contribution and return on investment will always be difficult and of limited accuracy. Therefore assessing the correct level of investment and return must always be subject to a level of judgement. Provided that each marketing activity is maintained within its defined budget and those parameters which can be accurately measured, further analysis is likely to by unproductive and futile.

Everything comes at a cost. Income is not freely given by the consumer to the supplier. The supplier has to work for the income by finding suitable customers, understanding what the customers need and providing what they want in a form for which the customer is willing to pay. Marketing performance should be measured by results. The only results that actually matter to the CEO and CFO are the amount of income produced by the marketing function, and the amount of money and assets used in getting it.

When it comes down to it, the only marketing questions that have any real importance to the CEO and CFO are: how much profitable revenue has been achieved? How much does it cost to find and obtain the income? How can the income be sustained for the long term?

© N.C.Watkis, Contract Marketing Service 07 Aug 09
Contract Marketing Service, (Marketing Performance Consultants)

When did you last see your marketing plan

For many businesses both large and small, the marketing plan is just one element of the annual round of the planning process. Depending on the culture of the business, that planning process precedes or follows the annual budget.

In some organizations, it is not unusual for the budget to be set first, followed by the planning process. When this happens, the budget may be set by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) in an apparently arbitrary way, which is often based on an extrapolated increase or decrease in income, costs and investment. The new budget is then announced and managers are expected to plan accordingly. Surprisingly, there are a number of successful companies that perform in this way. However, making a budget without a proper appreciation of the current and prevailing marketing situation, means that at best, the budget will probably be set too low. This could mean that while the business achieves its targets, it may well be performing at less than capacity. At worst, when set in this way without relation to the marketing resources or prevailing market conditions, the financial objectives may be beyond the capability of the business to achieve them.

The Chief Marketing Officer (CMO) is responsible for producing the income of the business through the anticipation and satisfaction of customers’ demand for its products or services. How much income the marketing function produces, depends in part on the state of the market, in terms of the level of demand, as well as the customers’ ability and desire to purchase. In addition, the suitability of the product or service to meet the requirements of customers, the strength and activity of competitors, as well as the ability of the marketing organization to find potential customers, and complete profitable sales, are all fundamental in achieving the financial and marketing objectives.

It is unfortunate that for many executives, business and marketing plans tend to be seen as annual rituals, rather than working documents. For the marketer, the marketing plan sets out the financial objectives in terms of the expected level of revenue, and the return on investment. The plan should also outline the marketing strategy to be employed, the sales actions and sales support that are required, and the financial resources available for costs and investment. If marketing plans are set out properly, they will have clear achievement requirements at regular points throughout the year, so that progress may be assessed and verified. However, the current state of world markets may be described as volatile, so that as the Chinese say, we live in “interesting times”. While the marketer must continually measure performance against the marketing plan, it is also important to consider the plan in relation to developments in the market. It is especially important to understand how market conditions and financial constraint affect customers and their ability and willingness to continue to buy. In these circumstances, what should the marketer do?

The first thing that the marketer should do is to look at the planned marketing objectives and assess whether they are still valid in the present situation, and if not, how they may have changed. The business is dependent on marketing achieving the desired level of profitable income, but with changed market and economic circumstances is this still possible with the existing plan? Are sales targets likely to be achieved from the principle customers, or have their requirements been deferred or no longer needed?

“No battle plan survives contact with the enemy” and the same may be said for business and marketing plans. As soon as marketing plan is put into action, it requires change and development to meet changing market conditions. In the current business climate, marketers must expect business conditions to be changing, perhaps quite rapidly, and therefore they need to be continually revising their action plans or if necessary enacting pre prepared contingency actions. While constantly re-appraising the marketing plan, marketers need to be able to answer the following questions:

* Is the money coming in as planned? If not, - why?
* Are the principle orders likely to be confirmed as planned?
* Are customers intentions still valid, - how do we know?
* Will the contingency plan need to be enacted or is it already in operation?

Both the business and marketing plans should not be just annual rituals, but working documents in constant use, defining the route to take a business from where it is to where it has to be. For the marketing plan, the only elements that should be fixed are those of the marketer’s financial objectives, and possibly the business and marketing strategies to be employed it their achievement. But to be useful, the plan must be constantly updated, in the light of market conditions and business success. The actions, by which the marketer produces sustainable business income, may be subject to frequent change. Ignoring the marketing plan, especially in times of market volatility, means that resources are unlikely to be used efficiently, and objectives, especially in terms of financial revenue are less likely to be achieved.

© N.C.Watkis, Contract Marketing Service 14 Jul 09
Contract Marketing Service, (Marketing Performance Consultants)

PARLIAMENT’S LESSONS FOR MARKETERS

For several weeks, the newspapers have been full of revelations about members of Parliament their allowances and expenses. As a result of these revelations, several MPs are having to resign, some will be deselected by their constituencies, and some may even be subject to criminal investigation. The standing of MPs in the eyes of the British public has never been particularly high, but their image has now sunk to rock bottom so that many are regarded with contempt. It is a serious matter, because while the public believe in Parliament, they have lost faith in the integrity and judgement of MPs, to legislate on their behalf. It is quite obvious that some MPs were more interested in what they could get out of the system, than what they could contribute. The comparison of the high claims of MPs, with their voting attendance, makes interesting reading.
What has gone wrong? The underlying causes seem to be that MPs both individually and collectively, appear to have:
* Lost sight of their purpose and developed self interest
* Concentrated on short term objectives
* Failed to see consequences of their actions
* An inability to see how their actions are perceived, regardless of legality or intentions
* Failed to understand the perceptions of the electorate
But what has this got to do with marketing and marketing management in particular? In fact, there are quite a lot of lessons to be learned from this sorry saga, which apply to marketing management and business in general, especially during a recession. At such times, there is a danger that with falling demand and revenues, marketers and other executives are inclined to develop short-term thinking, which manifests itself in:
* Losing sight of purpose of the business
* The development of self interest for self preservation
* Concentration on short term objectives
* Failure to see long term consequences of actions
* Inability to see how actions are perceived regardless of legality or intentions
* Failure to understand the demands of the customer.
The objective of the Chief Marketing Officer (CMO) is to produce and maximize the profitable monetary income for the business. All marketers involved in the marketing organization are responsible for their contribution to maximize the level of profitable income. However, maximizing profitable income is not for the short term, but must be sustainable for the long-term. At the same time, the emphasis is on maximizing profitable income, so there is also the objective of minimizing costs, investment and the use of assets.
For most markets, demand usually slows during a recession. What this means, is that customers defer buying decisions until a later date, which slows the flow of revenue to the business. The reason customers buy products is not really for the benefit that they receive from the product or service, but for the fear of a problem unresolved, the work involved or the potential danger they face, if they do not have the benefit of the product or service. However, it should be remembered that demand has not gone away, but it has been deferred. The danger for a business is that if circumstances change, then the customer may cease to have a need and thus the potential sale is lost.
With the possibility of slowing sales and thus falling demand, what actions should the marketer take? Initially, the marketer needs to understand the current market environment, especially how customers are reacting and the problems that the customer is facing, only then can effective actions be taken for the immediate and long term benefit of the business. The immediate questions that need to be answered are:
* How are customers affected by the recession?
* Is their demand deferred – if so for how long?
* Have their priorities changed?
* What are their current problems?
* What are their fears?
* What assistance do they require?
The best way to illicit this information is by direct face to face contact with a customer or potential customer. In this case, the business with a direct sales force has a distinct advantage in customer relations, over the company that relies on web-sales or non- traditional selling methods. Answers to these questions may require a revision of sales expectations and cash-flow projections. In addition, the answers may suggest that when demand slows, for whatever reason, the sales and marketing communications message may need to be refined.
* Is the current marketing communications message suitable for current market situation?
* How can the sales message counter the deferment of buying decision making?
* What are the customer’s fears that influence the purchase?
* Without playing on customers fears, which would be counter-productive, what benefits can be stressed, which the customer might fear to lose by delayed decision making?
If marketers are to have credibility, they must develop and retain long term thinking while enacting effective short-term actions for the long term benefit and future of the business. Customers need to trust and rely on their suppliers, and suppliers need to understand and trust their customers. Developing and maintaining good customer relationships is essential for the continuity of every competitive business, and especially so during a recession. The example shown by Parliament of its relations with the electorate, is the antithesis of good customer relations.

© N.C.Watkis, Contract Marketing Service 15 Jun 09
Contract Marketing Service, (Marketing Performance Consultants)

How Much Marketing do we need?

How much marketing do we need? This is the sort of question that can be asked by the chief executive officer (CEO) or chief financial officer (CFO) if the role of marketing in their business is undefined or misunderstood. Despite all the evangelising by the Chartered Institute of Marketing (CIM), on the role and contribution of marketing to business development and profit, it is still the case that for a large part of the business community, sales and marketing are considered as two different business areas, with marketing as another name for advertising and promotion. Unfortunately, many marketers have acquiesced with this misunderstanding, by cultivating the idea of creative mystery and eschewing performance measurement and accountability.

In the course of every recession, businesses always look to become slimmer and fitter. During the years of growth, businesses tend to expand their organizations to a greater or lesser degree. However, smaller businesses tend to retain their lean organization owing to more limited resources. In many smaller companies, the marketing staffs comprises the sales organization with perhaps one other person responsible for providing marketing expertise in the form of essential sales support.

For larger businesses, where the marketing function has expanded into various specialists sections or departments, such as customer relationship management, advertising, public relations, research and planning, the current economic situation may provoke a reappraisal of the marketing requirement. Just how big should the marketing organization be? How much does it all cost? What does it contribute to the business? Is it all necessary?

Every chief marketing officer (CMO) worth their salt should know what every part of their marketing organization costs, how much investment it absorbs, and most importantly what it contributes to the business. If CMOs have such information, they should be able to demonstrate how marketing resources and investment are used and what collectively they return, in terms of profitable revenue. At the very least, they should be able to show the cause and effect of general cost cutting and its potential effect on the level of revenue,

Whether one likes it or not, cost cutting and reorganization, may be the order of the day dictated by the CEO, and the CMO will have to find ways to implement it. But before embarking on a cost cutting exercise, it is important for the CMO to remember that the purpose of the marketing function is to maximize sustainable profitable revenue, and to achieve this with the minimum of cost and investment. All the activities of the marketing function should be examined on the basis of cause and effect, considering what would be the overall effect on the marketing effort and the business as a whole, if a particular activity were to be reduced.

Trying to ascertain the result of say, a five or ten per cent cut in investment in any particular marketing activity, may be difficult. However, if the internal costs of providing a particular marketing activity or service are known, it may be worthwhile to establish the costs and potential savings to be made by sub-contracting or out sourcing that activity. However, it should be remembered that although out-sourcing may have short-term financial benefits it may also lead to a loss of knowledge and expertise that may create problems in the future.

For the marketer, the most difficult areas of marketing to evaluate are those where there is no direct measurable outcome, which tend to be those areas of sales support. The input and output of the sales organization, including direct as well as web based sales are relatively easy to establish, but what about the advertising department and the public relations function? Effective advertising can be essential to maintaining sales or making opportunities for the direct sales force. At the same time, advertising can be expensive and wasteful. If advertising is handled internally, perhaps it would be more cost effective and productive to use an external agency with a clear objective and budget? Public relations can be the most cost effective way of informing the market and potential customers, but it can equally be expensive and time consuming with no guarantee of successful results.

The job of the chief marketing executive is the efficient management of marketing resources and investment, in order to maximize the amount of sustainable profitable revenue for the lowest level of cost and investment. It follows that marketing departments should be as small and flexible as possible, with marketing specialists only employed as necessary to manage outside specialist agencies.

Before the revolution in office Information Technology (IT), marketing departments required more people, as all sales records, analysis, market research and financial analysis had to be done largely by hand or with the aid of an electric calculator. The IT revolution now enables marketing activities, such as developing spreadsheets and market projections, that used to take weeks to prepare to be done several times in an hour. The result is that while direct sales teams still have to be of sufficient size to meet with the size of the customer base, the rest of the marketing organization can be quite small.

Financial restriction may also provide an opportunity to reorganize the marketing function, rationalizing the functions of sales, sales support and customer support, into an integrated and effective marketing organization. Reorganization and rationalization does not necessarily produce cost savings, but it does encourage the efficient use of resources and investment to produce the sustainable profitable revenue required by the business.

© N.C.Watkis, Contract Marketing Service 08 May 09
Contract Marketing Service, (Marketing Performance Consultants)

What do we do now?

In a recession, demand slows, and the first action of most businesses is a round of “belt tightening” involving cost cutting. This is understandable, because the priorities of the chief executive (CEO) and financial officer (CFO), are to secure the financial assets of the business and reduce the outgoings. While this may be regarded as prudent initial first aid in helping to protect the business, it does nothing to maintain it. Reducing the outflow of cash is important, but more important is to maximize the sustainable income, without which the business will die. Too often, in their concern to cut costs CEOs and CFOs effectively strangle the resources which are there to generate the necessary income on which the business is to survive. Why is this? Marketing is responsible for producing sustainable revenue necessary to maintain and develop the business. It is therefore the responsibility of marketers to demonstrate their contribution to the business and show how investment should be used to produce the required income.
The first requirement of the chief marketing officer (CMO) is to reappraise the current marketing and business situation. What is the financial state of the company? What is the cash flow position? What is the ratio of current assets to liabilities? By doing this the marketer will know what financial resources will be available for future business development. All this information should be readily available but it could also provide an opportunity to demonstrate an interest and understanding of the necessary financial affairs of the business.
As in previous recessions, marketers are required to do more with less and in the past, most managed to muddle through. However, the changes that the economic environment has undergone since the last recession and the nature of the present one, suggest that relying on past survival actions may not be enough. In previous recessions, marketers often concentrated on customers and markets that had been historically profitable. However, now that the world’s economic situation is often affecting customers and markets in unexpected and different ways, this approach may prove unreliable.
Marketing has evolved rapidly over the past decade, with traditional media declining in importance as the Internet and social networking have increased in size. CMOs, trying to rationalize their media spending, need to consider this new balance when redrawing their media plans, rather than just relying on the more traditional press and television.
A common approach in the past has been for marketers to cut costs by cutting the office sales support overhead, while maintaining the outside sales staff. However, an increasing number of companies are now relying on more integrated sales operations, including internet sales, direct mail, and other methods, as well as a direct sales team. Simply cutting the staff overhead may damage customer relationships and ultimately the revenue stream.
If marketers are to survive this or any recession, they will need to clearly identify the profitable customers and markets before prioritizing the most effective marketing methods for reaching them. In the current situation of the global economy, demands are changing with unprecedented speed, for example in many parts of the world the demand for new cars has collapsed in a matter of months. Such uncertainties require the constant attention of the marketer, with strategies that anticipate and respond to changing market conditions. It may no longer be sufficient to concentrate only on those customer groups and market areas that were previously profitable. Multinational companies will need to reassess their business, country by country, as almost every country is affected to a greater or lesser extent by the world economic situation, and any forecast made, even in the last six months, is likely to need revision.
For many national and international consumer companies, the profitability of different regions has changed rapidly, forcing many of them to reallocate marketing resources, accordingly. CMOs of business-to-business (B2B) companies will also need to re-examine the opportunities and risks of every one of their customers, especially regarding their long term cash reserves and liquidity.
Marketers should be aware of how the economic climate affects all aspects of their business, whatever its size. In the current business climate, marketers must ask themselves a number of questions:

* Which market segments provide most of the business?
* Are the main customers of the past likely to remain as important in the future?
* Have the demands of the market changed or are they likely to do so in the foreseeable future?
* Where are the best customers likely to be?
* How are prime customers to be qualified?
* Is the product or service suitable to the current customers?
* Does the product or service meet the economic requirements of the current market?
* How do we know?
* What is the media mix for advertising and promotion?
* How has it changed?
* Is the traditional mix still suitable for the present situation?
* The current pricing policy suitable for current market conditions?
* Would cutting price stimulate demand?
* Are the credit and payment terms suitable for the present time?

As professional marketers we are again in what the Chinese call “interesting times”. By staying alert and responding accordingly to the rapidly changing opportunities and threats posed by a volatile economic situation, marketers will provide the key to business survival and future growth.

© N.C.Watkis, Contract Marketing Service 21Apr 09
Contract Marketing Service, (Marketing Performance Consultants)

When the Going Gets Tough

Business life is getting tough. The days of credit, sales growth and benign economic environment are over, at least for the time being. Now, survival of the fittest is the order of the day.
Business will have to adapt to survive or as in nature, be replaced by new businesses. People forget and some have yet to learn, that a recession is not a new phenomenon; - we have been here before. Recession is a normal part of the business and economic cycle. Some cycles are long and others short, but they all end in some type of recession as the market corrects itself.
For marketers, a recession is a particularly difficult time. Demand can be seriously reduced, to the point of appearing to have dried up altogether. But while demand may have appeared to have evaporated, in most cases, demand has merely been deferred. Customers, be they private consumers or business organizations still require the goods and services on which they depend. Uncertainties may make consumers slower to make decisions and buy, but it is only a matter of when they buy, not if. It is therefore down to the marketer to prepare for that deferred purchase.
Companies need to understand that getting and maintaining business costs money. However, the first inclination of Chief Executive Officer (CMO) and Chief Financial Officer (CFO) in a recession is to cut costs, and one of the first targets is usually the marketing budget. This is because marketing is often confused with advertising, and is often only partially accountable for its costs and investments, a position that too many Chief Marketing Officers (CMOs) still find difficult to defend satisfactorily. However, it is the responsibility of the CMO to generate sustainable profitable revenue for the business. Thus the CMO must be able to clearly explain what it is they do, and the contribution that marketing makes to the business, especially in quantifiable terms. Marketers need to remember that in a business organization, finance is king, and that numbers speak louder than words. Talking about brand and image is of no real interest to the CEO, but the financial contribution that the marketing function makes to the business most certainly is.
Marketers need to decide which is more important, the marketing department or marketing? This may seem a pointless question, but when revenue is down, cost management becomes increasingly important. Marketers must look at every aspect of the marketing budget and consider how it contributes to the overall generation of revenue. In good times, marketing organizations tend to grow, often developing into small empires that their leaders want to defend.
If costs have to be rationalized, then salami slicing across the marketing function is generally a bad policy. Much better to rationalize those processes and activities which are insufficiently productive, and use their resources to bolster successful investment elsewhere, based on a full understanding of the contribution of each separate marketing activity.
While advertising is often an easy target for cost cutting, it is still an essential aid to opening doors to the client and preparing the way for a successful sale. Hence the need for advertising to be at least in part measureable in its contribution sales development. Is the advertising program achieving its objective? If not, then how should it be changed? Is every marketing activity still relevant to the current business situation? What does it achieve? How do we know? Are there more cost effective ways of achieving the same end?
In a recession, it is essential that marketers are pro-active, and not just reactive to questions from the CEO or CFO. Marketers must prepare themselves, ensuring that they are familiar with the company business plans, objectives and strategy. They need also to have a full understanding of the business’s financial position and any financial actions that the business is required to take. Any change in the marketing objectives, resources and investment must be clearly understood. It is in the marketers own interest not to save sacred cows, but to be ruthless and decisive in removing unproductive areas of marketing activity, if they cannot be shown to make demonstrably adequate contribution to the generation of profitable revenue.
Experience shows that it generally takes more effort to produce sales and revenue during a recession, and therefore not only is a simple cut in the marketing budget counterproductive, but there may even be a necessity for the budget to be increased.
Market research may be needed to examine changing customer requirements to meet current market conditions. Product and services might require development to meet changed customer requirement. Advertising and promotion could also be changed to maintain or increase effectiveness, but certainly not stopped. The distribution systems must be cost effective, while meeting the customer needs. Pricing structures, together with credit and payment terms should be re-assessed in the light of current trading conditions and the changing requirements of both the business and the customers.
In a recession the role of the marketer is fundamental to business success and survival. Marketers must recognize that getting revenue will cost more and take longer than in better times, but while it is the CFOs responsibility to manage the necessary financial resources, it is the CMO’s responsibility to use those resources efficiently and effectively to generate sustainable revenue and to do so demonstrably.

© N.C.Watkis, Contract Marketing Service 02 Mar 09
Contract Marketing Service, (Marketing Performance Consultants)

Warning Indicators for Marketers

Do marketers really understand the business that they are in? The question is not about marketing, but about understanding the business organization of which they are an integral part.
For marketers to do their job effectively, that is, to maximize sustainable profitable revenue, they need to be aware of the market and economic environment in which they operate. Understanding the state of the market and economic environment in which their business operates is fundamental for the marketer. But marketers must also be aware of the economic health of the business in which they work. What about the economic state of the business? How well is the business performing, and how do we know? How much is being invested in getting and retaining business and what return is being made on that investment?
Marketers must ask questions about the condition of the business and its ability to weather any economic or market storm. Forget about brand, image and market share, for the time being, for while they remain important, the marketer must look for those indicators that show of the health of the business and where problems may be arising.
What indicators should the marketer look for? The first indicators are for the financial strength of the business. An examination of the balance sheet will show how the assets and liabilities are balanced, from which the ability to pay creditors may be derived. This is done by calculating, what is known as the Current Ratio for Liquidity.

The Current Ratio for Liquidity, defined as the current assets divided by current liabilities. “General opinion” considers that ideally, the Current Ratio should be 1:1, so that assets should equal liabilities. When assets are larger than liabilities, it is generally considered that the assets are underused. However, when its assets are less than its liabilities, a business is generally considered insolvent. The immediate liquidity of the business, which is the assessment of its ability to pay its immediate creditors, is measured by the Quick Ratio or “Acid Test.” The Quick Ratio is defined as the current assets less stock, divided by the current liabilities.

While these two ratios are good initial indicators to the financial health of the business, they are relevant only at a particular time. Neither the Current Ratio nor Quick Ratio relate to a business’s trading state, marketing position, management resource, workforce or intellectual property. However, while the Current and Quick Ratios provide initial warning signs concerning the overall health of the business, it is important that marketers should know what other indicators they should be looking for, regarding the marketing or trading strength of the business.

If marketing managers are managing their resources responsibly, they should be continually looking at a variety of marketing performance indicators, which will quantify performance in a number of specific and significant areas. In reality, many businesses fail to do this. Therefore the marketer needs to know which key indicators may act as warning signs of inefficiency and under achievement.

The prime task of the Chief Marketing Officer (CMO) is the generation of sustainable profitable revenue, thus the most obvious initial performance indicator, is the current revenue trend. The comparison of revenue levels at different times soon shows the general trend of income, as do the complementary data for units of sales over the same period.

The balance between production and sales is indicated by movements in stock turn. If stock turn is slowing, it indicates that production is starting to outstrip demand, which may store up problems for the future, particularly with cash flow. If the conversion rate from enquiry to order starts to reduce, then it is important to examine the trend in the levels of enquiry, as well as the time taken between an enquiries and orders.

The trend in calling rates for sales staff can be an important indicator especially when related to trends in the conversion rates of enquiries to orders, and order to sales.
Regular checks of the customer base and order frequency will indicate movements in customer attrition and the maintenance of the customer order base. Any shrinking order base requires the definite attention of marketer.

Since marketers are responsible for the production of revenue, they need also to be aware of the level and trends of bad debt and late payment. These two indicators show whether the money promised by the level of invoice sales, actually turns into the necessary cash revenue, and may highlight a need for changes in credit and payment terms

The indicators listed here is not exhaustive, as there are many others, which may be significant to particular businesses and industries. Used regularly, the right indicators can provide timely warning of emerging problems. It is then down to the marketer to devise actions to counter negative activity, or engage alternative actions to meet the objectives of the marketing plan.

© N.C.Watkis, Contract Marketing Service 27 Jan 09
Contract Marketing Service, (Specialists in Measuring Marketing Performance)

Where is the Contingency Plan?- A Marketing responsibility

The findings of the survey of the 2008 Global Strategic Reward survey by management consultancy Watson Wyatt, makes interesting and alarming reading. The consultancy spoke with 1,389 organizations in 37 countries about what, if any, contingency plans they had in place in the summer of 2008, to cope with the possibility of an economic downturn.
Despite the facts indicting that the current credit crisis has been developing for at least a year it is surprising that 32% of US businesses did not have any contingency plans to deal with an economic slowdown. One in five UK companies (21%) had made no contingency plans ahead of the current financial crisis for managing their workforce during an economic downturn. The percentage of European companies without a contingency plan was similar.
While the figures vary across Europe, the survey showed that of all the firms surveyed ,13% of German, 15% of Irish, 18% of Italian, 25% of Dutch , 26% of Swedish and 43% of Spanish firms had not made any contingency plans. By contrast all the French firms surveyed, had prepared contingency plans for an economic slowdown.
The whole purpose of business and marketing plans is to prepare for the expected and intended, but equally for the unexpected event or conditions whether good or bad. The question must be why, when the economic indicators have been there for all to see, have so many companies not prepared themselves and planned for the possibility of a rapid change in the economic climate?

For many business planners and marketers, the preparation of business and marketing plans is such a protracted affair, that the idea of preparing contingency plans hardly comes into it. Yet the “what if “question, is vital if plans are not to be thrown into disarray when events turn out differently from that which was expected. Marketers have the responsibility to deliver sustainable profitable revenue to their business. It is therefore incumbent upon them to identify potential problems in the market and the economy and to prepare accordingly. How should they do this? The various quality economic surveys are a prime source of information, as are Government reports, the Bank of England, and economic forecasts from the principle financial institutions and banks. Collectively these can provide good indicators of the economic climate and its future. In addition, statistical information regarding trends and activity in the relevant market sectors is important, as this sets out the forecast of the prevailing trading conditions in the immediate future.
If the preparation of a business or marketing plan is completed properly, the process will require an analysis of the strengths, weaknesses opportunities and threats( SWOT) that effect the business. Strengths and weaknesses are confined to that of the organization in relation to its overall performance in the market and against the competition. Opportunities and threats cover those external factors which affect the business e.g., Health and Safety, economics, legal aspects, as well as those that are seen directly effecting marketing such as competitor activity and market trends. Additionally, opportunities and threats relate to Political, Economic, Social and Technological factors that can effect the business Assessing the nature of these factors is generally carried out through a PEST Analysis. PEST (Political, Economic, Social and Technological) is used to describe the framework of analysis of the external macro-environment in which the firm operates and assess the potential risks to the business or marketing plans. Marketers should then have an understanding of the external risks to their plan, and consider the “What ifs”. What if the principle contract of this year’s revenue does not come in on time, or what if you fail to win the contract? What if the economic slow down reduces demand? How will the hole in the revenue plan be filled? What actions will have to be taken and by whom? When do you have to confirm contract success or failure in order to make good the revenue plan?
Business and marketing plans are essential working tools for effective management, to ensure that assets and resources are used effectively to achieve the objective and should not be seen as a tedious annual event. Used properly, the business and marketing plans should be in continuous use as a working management tool, being regularly reviewed and revised to meet changing conditions, so that resources can be moved effectively when the unexpected happens.
If all companies had drawn up their business and marketing plans properly earlier this year or even last year, then the possibility of the credit squeeze and recession should have been recognized, as all the signs were there, even if they were thought remote. Based on those possibilities marketers should have prepared contingency plans to deal with the situation. Over the next few months it will soon become apparent which marketers prepared and implemented effective contingency plans and which did not. If businesses have failed to make effective contingency plans to deal with the current economic and market situation, then marketers must take a major part of the responsibility, as theirs is the task of maximizing sustainable profitable revenue.

(844)© N.C.Watkis, Contract Marketing Service 15 Dec 08
Contract Marketing Service, (Marketing Performance Consultants)

MARKETING in 2008 - a personal view

When asked to write about the marketing concerns during the past year, I considered that a review of the various topics in the “marketing press” would give a good indication of the main interests of Marketers in 2008.
If the “marketing press” is a true reflection, it is apparent that for the majority of marketers the subject of brand is and has been all important, particularly relating to market share, brand image, and the “added value” of the brand. Now while brands have an importance, for most people involved in marketing this is not the case. Roughly eighty per cent of business is run by small companies, where market share and image in relation to “Brand” have limited importance, but where the image and reputation of the company are vital. For these businesses, success is measured in revenue, not in brand image or market share. Someone said that “Brands are for cattle”, and while brands have an importance in product recognition and reputation, brands do not of themselves generate revenue. The importance of brand image is probably more limited than many marketers would like to admit, as the continuing rise in the success of own label products, indicates that concentrating on the “image of the brand” is not enough when it comes to producing actual sustainable and profitable sales revenue.
Customer Relationship Management (CRM) and all its attendant software continued to remain a prime interest for marketers during the past year. Concerns still remain on whether investment in CRM is cost effective, with some businesses claiming disappointing results while others indicate its growing importance and usefulness in their respective businesses. What is apparent, is that the CRM market is awash with competing products with little obvious differentiation. This makes it difficult for the marketer to make informed decisions about selecting a suitable product in which to make potentially large investments in time and money. Disappointments in CRM program performance, often stems from an initial requirement which was unsuitable or ill thought out , expectations that were unreasonable, and the selection of unsuitable CRM products. Marketers still need to quantify and evaluate their CRM requirement if they are to select the right product and get the best out of a CRM package which may be particularly useful in specific consumer related industries.
Websites are of growing importance to business in general, as is shown by the increase of 16% in online sales in Britain over the past year, together with a corresponding rise of the online advertising market. Online advertising now has a larger percentage share of the media advertising market than national press advertising. Marketers will need to fully understand the dynamics of online advertising and business if they are to maximize its contribution to developing future sales revenue.
The importance of marketing has again appeared in the press as an area of concern and interest to marketers. At the beginning of the year, the CIM continued on its quest to define or redefine marketing. While this subject may or may not be of particular importance to professional marketers, not least members of the CIM, it is generally obvious that in non marketing quarters the subject is of little relevance. However, the image that marketers and members of the CIM give of themselves about trying to redefine what they actually do, by seeking to redefine the CIM’s generally accepted definition of marketing, suggests that if marketers cannot define what they do, they can hardly be expected to be taken either seriously or to express the importance that marketing has for every business. If marketers cannot be clear about what they do and quantify their contribution to the business, they will be regarded as an irrelevance by the commercial world. Navel gazing by marketers about marketing is bad for the profession and its image in general.
Continual Professional Development (CPD) is an area that has been highlighted several times during the year, to show its growing importance. In reality, there is nothing new in marketing. Old knowledge gets forgotten as new markets and trends arrive, but it is then re-discovered in a new guise. Marketers need to reappraise old knowledge, which may be new to them, but which is suitable for different times and conditions. However, the one area where there is always new knowledge is that of legislation. Marketers, especially those involved with consumers must ensure that they are up to date with all the legislation which impinges on their work or their markets. Ignorance of the law is no excuse, but while the law may constrict marketer’s activities, it can also provide new opportunities and new markets.
Despite all the warning signs which have been around for those who wanted to see them for at least twelve months, the words credit squeeze and recession do not seem to have featured much in the marketing press, and therefore perhaps not in the minds of many marketers. The sudden down turn in business has taken many companies by surprise. How many marketers have prepared a “plan B” in their marketing plans for just such a change of conditions? No doubt many will be looking to get more out of their marketing budgets with reduced resources, while many others may be looking for new jobs.
The end of 2008 and the beginning of 2009 will mark “interesting times” for all marketers. Marketers are responsible for finding, securing and maintaining the income on which their businesses depend. If those businesses are to survive the recession, marketers will have to concentrate more on achieving in revenue targets, than on debating the merits of brand image or professional status. By achieving the revenue to sustain their businesses, marketers will demonstrate their importance to business success and increase the status of their profession.

© N.C.Watkis, Contract Marketing Service 11 Nov 08
Contract Marketing Service, (Marketing Performance Measurement Consultants)

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)