Marketing in a Credit Crunch 'Scottish-style'

Despite the recent heroics of our athletes at the Beijing Olympic Games, there hasn't been much to cheer about back home, has there?

The rising price of oil, gas, electricity, water and food, coupled with the collapse of the property market and consumer confidence is guaranteed to make most marketers go weak at the knees.

So are you one of those marketers who believe that in times of economic downturn the best medicine is for companies to spend more on their marketing in the hope they can maintain market share and even grow their customer base? Well, if you do, you're not alone.

But the bad news is that you're hopelessly wrong. It's a common trap for marketers to believe that an increase in marketing expenditure will compensate for a less than compelling business offering.

It won't. And you don't have to be a professor of business to understand why. It's not that difficult to distinguish the winners from the losers.

The winners -- or those companies most likely to succeed -- often behave very differently from the losers who often compound their problems by trying to spend their way out of them.

The net result of poor marketing is that it creates a trap for companies and triggers a free fall in a descending spiral of decline. Not the sort of outcome you want from your marketing, is it?

So what's the answer, I hear you ask?

Successful companies, on the other hand, know how to improve their competitive position by controlling costs, improving performance in key areas of their business and enhance their abilities to compete and win.

North of the border, many Scottish-based companies are doing just that.

According to Gordon Ritchie of Scottish-based marketing and sponsorship agency GMFCo (www.gmfco.co.uk) it all comes down to good housekeeping.

"The Key Performance Indicator (KPI) that marketers should look at is the ratio of marketing spend relative to sales. That may not sound exciting -- perhaps even dull - but it works.

"Our experience here in Scotland shows that companies that reduce marketing spend relative to sales are booming while those hiking their marketing budgets relative to low sales will be lucky if they break even this year.

"Often, it's these companies that have taken their eyes off the ball and often grasp at straws in the vain attempt that spending more on marketing will somehow cure any shortcomings within the business.

"The key for any self-respecting marketer -- irrespective of the market and customer segment that is being targeted -- is to understand the KPI of marketing relative to sales in their own situation.

"Our value as professional marketers comes from working with brand owners and rights holders in creating what we call ‘power offers' that their B2C or B2B customers actually respond to from a sales perspective.

"Successful organisations who continue to invest their marketing efforts in the development of more and better 'power offers' not only retain their market share but also have a big response to boot."

So reducing wasteful marketing expenditure and increasing marketing effectiveness is what all marketers should be looking to achieve from their marketing budgets.

Increasing marketing expenditure where the increase in sales is greater makes commercial sense, doesn't it?

In short, marketers need to work the ratio.

In this credit crunch world, less really can be more.

Ardi Kolah is a global brand marketing and sponsorship consultant who works with organisations to achieve a Return on Objectives and a Return on Investment from their marketing and sponsorship investments. He can be contacted at ardi@kolah.com