Should You Cut Marketing Expenses During the Recession?

If you read marketing journals and blogs these days, you likely have come across the advice that you should spend more on marketing in a recession. The typical logic is that your competitors are spending less and so it's a good time to pick up market share. Note that most of these recommendations come from people who have a vested interest in you spending more on marketing (e.g., advertising agencies).

I dislike basing marketing expenditures on what competitors are spending. It's not relevant for budget decisions during "normal" economic conditions and it shouldn't matter in a recession. You should increase or decrease your marketing budget solely on the basis of what maximizes operating income - based on your own measurement systems.

Certainly, if your competitors are dramatically reducing spending and therefore giving up sales opportunities that you can exploit, then you should go after those sales, provided you maintain your required level of profitability. However, it is more likely the case that your competitors are cutting back on their marketing right now because there is less total demand in the marketplace - not only for them but also for you.

The purpose of marketing is to maximize the long-term profitability of the enterprise. If you are managing marketing effectively, you have measurement systems in place both to determine the return of past marketing programs as well as to help you predict the return of future programs. Economic trends are inputs into your models and will help you determine how much to invest in marketing. Most of the time, an economy that is slowing rapidly will result in your analytical models advising you to spend less on demand generation. Besides, how much do you know about your competitors' spending on marketing?

While some types of expenditures like advertising are highly visible, you have no way of knowing what competitors are spending on most types of communications, like database marketing, SEO, direct sales, etc. You could waste a lot of resources trying to figure out what your competitors are spending and still be way off.

To make your marketing efforts profitable, you need sophisticated analytical systems, and a comprehensive understanding of integrated marketing communications. You don't need to know what your competitors are spending, regardless of the state of the economy. So don't listen to the advice of experts who tell you when you should increase or decrease your marketing expenditures. Constantly improve your modeling capabilities, find the best data you can and spend marketing dollars in ways that maximize your bottom line. Any other approach is likely to waste your money - and will waste your time for sure.

Author: Ian Heller
Source: Link

The 5 Scopes of Agile Planning

The 5 Scopes of Agile Planning The concept of planning within the agile methodology has often been misunderstood. Due to the commonly known statement "We value responding to change over following a plan" most of teams starting agile think that they will no longer need to plan for the future. Contrary to this popular opinion, planning plays just as big of a part in agile as it does in any other project management approach it is simply a little different. In its essence agile is built to cater the environments with constantly changing requirements and goals. Which means that the traditional planning model, of just setting something in motion at the beginning of the project, is no longer viable. Instead, the planning needs to cater to the changing circumstances and help the team navigate them in the best possible way. To achieve this, the agile planning is organized in different scopes, where each of them are equally important and carry value towards the end goal. Fir...

The Eagle's Dynamic Strategy

The Eagle's Dynamic Strategy Business strategy is important as it can give you a competitive edge in securing clients over other companies who are pursuing the same business model. In order to develop that edge, you need to identify a competitive advantage and develop your business strategy around it. Once you have done that, you need to sustain that advantage. Simply put: Business strategy is the process that allows you to leverage, develop and sustain a competitive advantage over other companies targeting a similar market. The problem is sustaining that competitive advantage over time. Can you sustain your advantage? The problem is that we no longer do business in a bubble. Therefore, your competitive advantage can be enjoyed only for a short period of time. Modern business strategy must be a continuous process evolving with new competitive advantages. One must build their business on the basis of moving from one competitive advantage to another as smoothly as possib...

When the Business Negotiations is Over. What to Do?

When the Business Negotiations is Over. What to Do? The negotiation is over and done with (or at least this meeting that is a part of the negotiations is done with) and the negotiation styles and negotiating techniques have all been put away. Now you can go home, put your feet up, and relax until the next meeting. Hold on - it turns out that things really don't work that way. Reaching the end in a negotiation is when the work really starts. Do you know what you need to be doing now? What Was Achieved? The most important thing to realize is that you need to get together with your negotiating team as quickly as possible after the negotiation is over. Our memory of what happened starts to slip very quickly so speed is of the essence. One of the most important things to discuss is a review of whether or not you got what you wanted. If you had taken the time to define your objectives before the negotiations started, then you'll be well positioned to evaluate the outcome. ...

Job Interview Preparation Hub

Search This Blog