When the economy is down, consumers are more cautious with their spending, while businesses are trying to limit expenses in an effort to ensure increased profits at a time when costs are rising but revenues are stagnant. And marketing is often seen as an expense that needs to be cut in times like these. It is always a victim of the crisis.
In fact, recent marketing surveys show that marketing cost cuts are being made at most large companies, with 60% of these companies making or planning to make cuts to their marketing budgets, only 16% considering increasing their marketing budgets, and 29% considering cuts.
The trick in an economic situation like this is to not make large-scale purchases, but to increase investments in less risky areas in a calculated sequence to build up potential and increase strength when the economy begins to recover.
In fact, the most successful marketing initiatives often come during tough economic times. Wal-Mart ran its “Everyday Low Prices” campaign during the 2000–2001 recession, while its “Intel Inside” program was ramped up in 1990–1991. During the worst recession in U.S. history, Procter & Gamble continued to ramp up production of Ivory soap.
Even before the economic downturn began, senior executives were increasingly accountable for marketing investments, emphasizing the impact of marketing on business results. In the current economic climate, efforts to improve marketing effectiveness using smarter approaches, such as testing and learning, are urgently needed to smooth the way forward.
UnitedHealthcare has begun to adopt a systematic approach in an effort to ensure its marketing effectiveness to ensure competitive strength and win less risky markets. It has used a test-and-learn (or in-market experiment) approach to evaluate price, product, and distribution changes, combined with outdoor, print, radio, or online advertising.
The results show how price changes have occurred, for example, the virtual growth of business when implementing promotional activities. The company also discovered how important product recognition and pricing are in price and product management. This successful combination is reflected in the expanded market with more positive results in business operations, and this will demonstrate the role of marketing.
It is more than a systematic approach, UnitedHealthcare has used. It is a strategy that goes beyond past practices, it is also a process of creating continuous innovation that emerges in the running of the business.
Similarly, other companies are also trying to demonstrate the impact of marketing on the entire business, which allows them to start their own business thanks to changes in their way of thinking.
It starts with a clear understanding that brand and business health is enhanced by more than just advertising. A healthy marketing budget requires a focus on the bigger picture – and a business that focuses on all 4Ps…individually and where they interact with each other.
All of these investments, whether they are within the marketing department or not, need to be recognized and controlled. Marketers must therefore use their understanding of the flexibility of marketing investments across the various marketing-related departments to mitigate the impact of cost cutting on the business.
Depending on the background of each business, the test-and-learn method provides a very practical method that allows for a more optimistic evaluation of investments. It is an approach that allows marketers in several business sectors to create a website that is built to serve the purpose of evaluating their products and services before launching them in the market. In addition, this method needs to be done in real life with real consumers' pockets to ensure that what is being tested matches their expectations and can drive business growth.
The approach allows for faster problem solving in making or not making decisions. While also allowing for greater coordination between activities – and once again the 4 Ps come together.
Think about it. Too many marketers do what they do to justify their existence. They set up a campaign and wait until it’s over to fix what needs to be removed from their design. The test-and-learn approach fosters adaptability and flexibility so that the business can be managed effectively while the discovery of strategies, tools, and methods is made – this is the winning formula for businesses that thrive in tough times.
A greater focus on marketing effectiveness is not a quick fix for the challenges marketers face. Data, analytics, processes, and systems capabilities need to be nurtured and developed, and marketers’ mindsets need to change. But by experimenting with test-and-learn approaches to speed up processes, marketers can improve the effectiveness and feasibility of their programs while achieving greater efficiency in their overall marketing and business operations.
