Magazine article Marketing

Bite-Sized Business School: The Marketing Module

Magazine article Marketing

Bite-Sized Business School: The Marketing Module

Article excerpt

Vincent-Wayne Mitchell, professor of consumer marketing at Cass Business School, reveals how marketers can save their budgets.

Marketers need to defend against threatened or actual cuts in budgets and better explain the case for expenditure in austere times. Here's how to strengthen your negotiation hand.

Most studies confirm that promotion expenditures in recessions produce ROI, contributing most to earnings in the year of expenditure, but also up to three years following it. Returns are most pronounced if the brand enjoys money-saving points of superiority; has a balance-sheet advantage over rivals, which means the competition is less able to respond to aggressive marketing increases; can demonstrate the value of quality; and has a big market share.

These returns are achieved because firms can win a greater share of voice as most companies cut back marketing spend during a recession Advertising increases both the salience of the product to consumers and the perceived brand quality; counter-cyclical promotion boosts consumer confidence, helps overcome inertia and sends reassuring signals to concerned consumers to justify premium prices. It attracts greater numbers of 'brand switchers' who are less loyal and more opportunistic in a recession; and more promotional spend is put into call-to-actionand point-of-sale-oriented activities. Market share is therefore easier to get as competitors are too hard-pressed to defend their positions vigorously.

Unfortunately, chief financial officers do not always listen to these reasons and have their own arguments for reducing marketing spend, including:

- 'Consumers have less disposable income and will not be spending anyway. …

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