COVER STORY: Why Marketing Matters – Top Tips For Recession Survival

Does marketing matter? Is it really revenue generator and protector or just cost? These are questions many business leaders are asking as they pass newly sharpened cost-slashing pencils over departmental budgets. And if marketers can’t answer – clearly and compellingly – they risk losing some hard-gained ground.
That’s already happening in recession-hit economies like the United Kingdom where, after an arduous struggle to gain their place in the boardroom sun, chief marketing officers (CMOs) last year found themselves on the back foot peering down the barrel of record third quarter budget cuts. Just when they thought they’d proved their worth.
It’s foolish stuff, says NZ Marketing Association CEO Sue McCarty.
“Bringing CMOs into organisations has had huge influence on the success of business and on their ability to be nimble, flexible, customer focused and market led. And there are many case studies to show this. In fact [companies] have been celebrating CMO success in the past few years. But when times get tough, they say let’s slash this and chuck out these good people – it’s crazy. They’ve already forgotten the lesson they had just taught themselves.”
Marketers never really reached such giddy heights in New Zealand so have less distance to fall. But whether New Zealand companies suffer similar crisis of confidence or not, it’s certainly good time to get clear about the connection between marketing spend, revenue and brand value – and maybe to get whole lot braver in terms of generating customer engagement. That, after all, is marketing’s area of expertise, notes McCarty.
“Marketers should be the ones that are really championing the need to look after customers. Even if you’re not deriving as much revenue from them as before because they’re in trouble too, you need to keep them loyal and engaged and intimate with you and really that is marketing’s job.”
Like any relationship the process can’t be based on intermittent wooing or short-term sales sprees.
“It’s not just about marketing communications – it’s so much more than that,” stresses McCarty. “You need to talk about the brand because the brand at the end of the day brings the company’s vision to life through an identity and promise out to the market,” she says.
“So business leaders should be looking to their marketers to say – is what we’re doing still appropriate? What is the marketing dynamic we’re playing in right now? Do we need to change anything? And marketers should be focusing their efforts around bringing the intelligence back to business leaders so they can make good informed business decisions about what they should be doing, what they should cut and what not.”
Sadly, marketing is positioned in number of organisations as cost rather than as revenue generator and revenue protector, says McCarty. And while she and other marketers busily cite evidence to prove that cutting marketing budgets during downturn puts companies at competitive disadvantage come the inevitable upturn, is that enough to convince local companies to boldly market their way through tough times?
The picture is mixed. Yes, some marketing budgets are getting the chop; cost pressures are pushing others into different, more cost-effective channels. There’s also much stronger emphasis on marketing metrics. If you can’t connect the dots between marketing endeavour and organisational health, then you end up on the back foot – perhaps deservedly.
Visiting global brand commitment expert Jannie Hofmeyr – Synovate’s global director of innovation – sums up the challenge. Brand building is long-term thing and he can now draw on new understandings culled from evolutionary psychology and neuroscience to prove it.
“When learning happens it does so because neuro-physiological changes have actually taken place in the brain – and it takes time for this to happen. It takes time to create what I call the embedded connections between say brown, fizzy, sugary water and people’s sense of fun, good memories, social times.”
So you just need to link the product with the imagery you want – and be ­patient. Not easy in the face of hard financial facts, says Hofmeyr.
“I think the difficulty marketers have is that when you make these investments, it shows up slowly because we are slow-moving creatures. Unfortunately, money is the lifeblood of company so the people who understand its ebbs and flows end up, correctly, running companies and they come with fair question to the marketer.
“That fair question is: show me why this is money worth spending? And when your customers are busy migrating away because they just can’t afford you any more, it becomes almost impossible to answer.”
But, he adds, the evidence is certainly there that in post-recessionary times people do migrate back to premium brands. “What we can do now is build much better arguments around why this is the case.”
Designworks creative director Sven Baker has plenty of good arguments – and believes brand is not just something that can be left to the marketing department.
“It’s the responsibility of the CEO and it affects the whole culture of the business – the commercial decisions as well as the corporate decisions – how and where capital is invested. I think the appreciation of how important it is to define your unique attributes around your brand and translate that into an experience that consumers develop preference for is greater than ever. It’s more competitive so you have to be better at it.
“But I can tell you I don’t think any company is going to communicate their way out of this crisis. They are going to have to be much smarter and look much more deeply at their brand promise and how it is engineered into every aspect of the company.”
Recession, he adds, offers real opportunity to do just that.
“For us change has always forced keener need for appreciating how you are truly going to compete. It forces you to re-evaluate everything you are doing to ensure you are doing it in the best possible way.”
One company holding the faith in its brand-building efforts is Kiwibank – that’s because it is focused on the long term, says general marketing manager Sadhana Ramen.
“I guess when you look at the life cycle of the brand, recession that may last year or two is just wee blip in the overall scheme of things. My view longer term is that it will be cheaper to stay in the game and keep your presence in the market than to withdraw and then have to spend lot of time and money to build up some presence and momentum again.”
It helps that Kiwibank has brand with “good value” proposition ideally suited for recessionary times, adds Ramen. And there are opportunities in maintaining high-profile presence when people are making critical decisions about their financial needs, she says.
Air NZ general manager marketing ­Steven Bayliss also focuses on the up-side.
“I think it is terrific opportunity for marketers to demonstrate to their business that not only can they steward the long-term health of the brand or the portfolio but they can also be very active contributor to the immediate revenue needs of the business.
“It’s good time to sharpen the strategy – not to retrench away from the market.”
Instead of getting caught up in the gloom and doom of it all, he believes the role of marketer is to “be voice of optimism for what’s possible”. Not, he adds, in naïve or over-fanciful way. “But to say there is path through here and there’s an opportunity to leverage these challenging times to improve our relative competitive positions – so let’s not squander that.”
Recent Air NZ promotions push the fun buttons. Last year’s “cranial billboards” – messages hennaed onto the shaved skulls of volunteers to highlight the company’s new domestic terminal facilities – attracted lot of local and offshore interest. More recently, the company has been having not-so-gentle poke at the misleading pricing tactics of some airlines via an internet marketing campaign about fictitious compan