Cut back or cut through

Opinion / Marketing

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Cut back or cut through
John Holland, Member, Management Consultant, Canada

Cutting advertising to protect profits is not good strategy

It is well documented that when a recession approaches, business leaders tend to spend less marketing dollars as sales begin to slip. But on the brink of what some economist predict as a double dip recession, many business owners are going to radically chop their marketing budgets mostly because it’s an easy target and they don’t know what else to do to protect the bottom line. At Plutus, we have seen the consequences of cutbacks in the recessionary dips in the 1980’s, early 1990’s, and 2008/2010. We also saw that some companies went against the cut-back mantra, and achieved market share and volume increases. The cut back syndrome is driven out of a valid focus on the bottom line. But is there another way of protecting company profit, but at the same time continuing to invest in keeping the customer? There are six areas where successful companies havedone the right thing. - They have a passion for being close to their customers - They communicate traditional values( trust, value, integrity, openness, home and hearth) - The have sustained a level of marketing investment that keeps the brand visisble - They have tighten the product line. This means cut the poor performers. - They have maintained prices,and not cheapened the brand. ( Sure, some one-off discounts or offers are OK , if strategic) - All employees are aligned to company purpose, goals, vlaues, and each one is a "sales representative".

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