According to the 2009 Spencer Stuart survey of more than 300 senior-level marketers, 55% said emphasis on a short-term response to the economic downturn has led them to neglect long-term strategy.
Marketers have to "fight fires by cutting head count, reducing ad budgets, reallocating the spending they do have.... Given the priorities of what they have to do right now, long-term strategy is probably not one of them," reports Tom Selcow, leader of Spencer Stuart's marketing-officer practice.
As the ice blanketing the economic landscape starts to melt, however, marketers are sure to shift at least some of their mental energies away from what to cut out of their budgets to what to do to drive growth and improve return on investment (ROI).
Interestingly, more than 80% of senior marketers also said they believe they're in "good" or "excellent" shape to drive growth once the downturn subsides. Whether or not as many marketers are as prepared as they say they are, one thing's for sure: It won't be business as usual.
Indeed, marketers are unlikely to have the leeway they had pre-recession to spend their way out of flagging brand performance. If you want to drive more sales, the thinking once went, you've got to spend more—25% more, 50% more, double your budget!
In reality, Plan A, pouring dollars into advertising, rarely increases profitability. Sometimes it doesn't even boost sales, and it certainly doesn't guarantee improvements in marketing effectiveness or ROI.
In the current economic climate, it's an irrelevant discussion anyway, because the vast majority of companies don't have the option to spend more.
Enter Plan B: taking a closer look at the basic marketing strategy fundamentals that drive tactical decisions.
Though there are many tributaries leading to the ultimate performance of a campaign or program, marketing strategist Phil Kotler said it best: "Everything flows from targeting. If you nail targeting, everything else will fall into place."
To get your marketing strategy centered to take advantage of the (albeit gradually) improving economy, you need to answer seven key questions about the buyers in your category or industry to find a high-value target market.
1. Where's the money?
Do not pass Go or collect $200 until you figure out which buyers and which segments of buyers will be the most profitable to pursue.
If your current segmentation does not offer clear direction on which group or groups offer the highest return on marketing investment, you need to address the situation head-on. A good place to start is with financial measures.
Gather information in a strategy study about things such as current spending, lifetime value, number and types of products or services purchased, and brand-switching history/potential. It's very important to collect that data for each respondent.
2. Is the door open?
Financial information is one thing, but there are other characteristics that make some buyers more valuable because they are easier to get and keep as customers.
There are folks, for instance, who are open to considering and trying your brand if they're not already using it. They know your brand and have positive feelings about it. They are primed to buy if encouraged to do so.
On the other hand, there are people who have no interest in or maybe even hate your brand. Perhaps they're Boston Red Sox fans who associate your brand with the New York Yankees. Forget about winning them over. They're unlikely to ever consider, let alone use, your brand no matter what you do. Why waste marketing dollars on them?
3. Will they tell their friends?
Buyers who enable marketing efforts will also do a whole lot more for your investment. The greater the level of influence buyers have among their family, friends, and acquaintances, the more your marketing ROI will benefit.
Buyers who do some of the work for you—because they are more likely to spread the word about a product they found that really works or a service that solved a serious problem—are like money in the bank.
4. Are they happy with you?
There are many ways you can use information about customer satisfaction when it comes to selecting a market target.
Obviously, buyers who express a high level of satisfaction with your brand or your firm have a lower likelihood of switching brands, a higher likelihood of making repeat purchases, and a greater chance of enhancing marketing activities.
Happy buyers are much less costly—you don't have to invest significant resources in reversing their negative opinions or undoing the potentially damaging effects.
Also consider the people who are using competitive brands but aren't particularly overjoyed with them. Given the right incentive, they will bring their business over to your brand. Wouldn't that be nice?
5. How loose are the purse strings?
Price sensitivity is another important indication of a buyer's value to a brand. Management intuition suggests that most consumer and business decision makers become more price-sensitive during a recession.
We'd agree that price very likely does become a more-important consideration as budgets get tighter, but that does not mean it becomes the most-important consideration.
In fact, our research has found that price is the primary consideration for only 15% to 35% of buyers in most categories. That finding suggests that knowing which buyers are relatively price insensitive could provide a solid competitive advantage.
6. Do they want something new?
We'd wholeheartedly agree that introducing new products and services—in good times and in bad—can generate the kind of organic growth that companies crave. So why not ensure that your new products and services will generate bottom-line growth by focusing on the buyers who are most interested in considering your latest offerings?
7. How big are their problems?
A problem is something that's important and that no one currently solves. The bigger the problem a brand or company can solve for a target group, the better the market response.
Uncovering insights about the magnitude of problems buyers have that, if solved, would lead to brand consideration or a switch is another way to help prime the sales pump.
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Remember, decisions that flow from a profitable and responsive target not only will help a brand make more money, but will also make marketing programs more effective and efficient.
Looking for new ways to improve your marketing strategy and boost revenue? Get inspired by case studies, which are a great way to see how other companies handle the same challenges you face. For example, our Twitter Success Stories case-study collection shows you how 11 companies are achieving their marketing objectives via Twitter campaigns.
