Key Takeaway: Even in an economic downturn, marketing should be thought of as a necessary business component.
While many companies find it simple to slash marketing budgets during recessions, others use it as an opportunity to increase awareness, improve positioning, or steal share.
Marketers understand the business from all angles, making their input invaluable during a crisis.
GE focuses on a framework of “optimize today, build tomorrow” in which marketing serves a crucial role in the overall strategy and has contributed to the company’s continued success.
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Excerpted from BusinessWeek, “A Marketer Is a Terrible Thing To Waste” by Beth Comstock, September 21, 2009
As a result of the economic downturn, marketing budgets are being slashed and the stewards of many of the world’s largest and most prestigious brands have been forced into hibernation mode—waiting for the economy to turn around and the dollars to return to their function area.
But at GE, where I work, we’re trying to increase the volume on marketing, even in the face of these tough times.
In fact, once marketing was recognized and embraced as a potential growth driver at GE, we marketers were only too happy to hang our hats on good fortune—confident we could deliver for the company 8% or 10% growth year over year, more than double our historic rate.
Marketing budgets and resources can be an easy target because they tend to be more flexible—they’re not tied to fixed costs or capital expenditures. Some may even see marketing budgets as a good-times luxury. The reality, though, is that marketing serves as a hedge against economic crises. Good marketing minimizes negative impact and even slingshots the best ideas, innovations, and products forward.
In the current economic environment, those of us in marketing at GE have found that this framework—optimize today, build tomorrow—is incredibly useful to focus our efforts and to remind our colleagues of the vital role marketing plays in good times and bad. For most of GE’s businesses, our ambidextrous strategy unfolds as follows: 60% to 70% of our marketing efforts support today’s initiatives, with the remaining focus on building tomorrow’s initiatives. We think that’s a realistic alignment of energy and resources.
There are three core strategies we have adopted to help us Optimize Today:
• Understand the needs of customers like never before,
• Gain share, and
• Reexamine value and how to measure success.
A wide body of research indicates that companies that spend more time understanding their customers in a downturn are better positioned to do business with them when the economy recovers. On one level, it’s counterintuitive. You know your customers aren’t buying, so why bother? The reality is that there is no better time than now—no matter the environment—to listen for clues, discern insights, and refine value. Customers remember the partners who picked up the phone and called when times were tough and they were not in a position to buy.
In tough economic times, some companies will hunker down until the crisis passes. But winning organizations will take advantage of the opportunity presented to them, capture more share, and achieve lasting success.
We’ve increased our promotions spending at GE, using the current climate as an opportunity to remind customers and investors that we’re an innovative technology company with staying power—and we’ll be here when the recession is over, emerging stronger and smarter from the experience, just like we always have.
At GE, we’ve been particularly focused on understanding customer profitability. Do we understand the true cost of serving our customers? Which ones represent the highest value? Marketing can give you a laser focus on which customers are worth investing in—and which are destroying value for your company.
If your marketing radar is tuned to leading indicators and trends, maybe you were able to see signs of the downturn early enough to be prepared. It’s this ability to see the world in panoramic view that makes marketing so vital to an enterprise’s long-term viability. No other function focuses on and can integrate these key elements:
• Intelligence: What’s going on in the market, and how is the crisis affecting it?
• Customer insights: What do my customers need, and how do I serve them best?
• Value proposition: How do I articulate the value of my product or service and create differentiation?
• Commercial activation: How do I deliver via channel, marketing communications, training, etc.?
Ultimately, marketing is the key to sustainability and vitality—in good markets or economic crises.
Edit by JMZ
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Full Article:
http://www.businessweek.com/innovate/content/sep2009/id20090921_471157.htm
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