Marketing in the Age of Turbulence

Opportunities lie within the economic downturn. You can take advantage of them if you start marketing strategically instead of blindly, says Marshall Goldsmith

By Marshall Goldsmith

Of late, marketing has been over-identified with marketing communications, to its detriment. Great marketing operations find opportunities and develop and launch successful solutions, and if properly used, are the company's growth engine.

I recently interviewed Philip Kotler, the well-known marketing guru at the Kellogg School of Management, Northwestern University, about the value of marketing in today's turbulent environment. Who better to give us his insight on the subject than Philip, who has just recently published (with co-author John Caslione) a book called Chaotics: The Business of Managing and Marketing in the Age of Turbulence. Following are excerpts from our conversation.

Philip, in these troubled times, companies are cutting their marketing budgets—in fact, marketing is one of the first departments to be cut. Do you think it is a wise move to cut the marketing budget?

Yes, if the marketers cannot provide performance metrics for their expenditures. Marketers have had it easy in the past, getting lots of money for 30-second commercials without having to produce any evidence of their sales or profit impact. Advertising was a matter of faith, not reason. The plot was to get a large share of voice so that the brand was locked in the customers' memories. Hopefully the message promised something distinctive and the customer who wanted that point of difference would automatically choose that brand.

My guess is that only 1 out of 10, maybe only 1 out 20, advertising campaigns really makes a financial contribution. That means that the average company has only 1 chance in 10 or 20 that its ad campaign will create a memorable and motivating message. I don't like those odds.

Years ago, Will Rogers quipped, "If advertisers spent the same amount of money on improving their products as they do on advertising, they wouldn't have to advertise them." This theme was recently elaborated by Jean Claude Larreche in his new book Momentum. He claimed that heavy advertising spending is often on products that have little distinction. The company would be smarter to save that money and use it to build a better product.

Is cutting out the less-defensible parts of the marketing budget enough to do in difficult times?

No. I can even imagine where the proper step is to increase the overall marketing budget and spend more. A down period introduces as much opportunity as it does chaos. For example, customers are ready to switch to lower-price store brands and away from the more expensive national and international brands. Retailers such as Kroger (KR), Tesco (TESO), and others are strengthening their private brands and offering two or three private brands on the model of "good, better, and best." Today, more people are fishing to solve the problem of having a good dinner with little cost. This is good news for companies that make fishing rods, nets, and bait. Some companies see cracks of sunshine in this otherwise gloomy picture.

Are there any marketing maxims that must be preserved even in bad times?

Yes. I would mention three:

1. Understand your target customers and solve their problems in a better way than your competitors.

2. Build your brand promise that is delivered by everyone in your business network (employees, distributors, suppliers).

3. Innovate continuously in your products, services, and supply chain.

What changes should marketing departments make in these times?

Most marketing departments are tactical, not strategic. They can do marketing research and marketing communications (ads, brochures), and have other skills for developing and launching a product. But they don't really drive the company's growth strategy. I know of a pharmaceutical company that only calls in a marketer when it wants to decide on the color for a new pill.

Business Exchange

Track and share business topics across the Web.