Critical Marketing Actions for a Tough Economy

Today I had the pleasure of joining in a Chief Marketing Officer (CMO) roundtable hosted by GameStop and the Marketing Leadership Council. Other attendees included representatives from Dell, American Airlines and Dickies apparel. The discussion centered on the marketing efforts most valuable in this economic climate. Following are my notes from the discussion:

Consumer demand is depressed both for the short and longer term, driven by reduced access to credit, but also by declining wealth, focused reduction of debt and increased savings, and new sensibilities that find excess inherently less attractive.

Business demand is also depressed due to reduced access to credit, reduced sales, and an increased focus on margins. This reduced business demand is seen primarily in reduced discretionary spending, reduced future hiring and reduced current hiring and capital spending. Other expenses are seeing reductions as well, but to a lesser extent.

According to the Marketing Leadership Council,

the primary drivers of Brand growth are:

(these are important in any market, but particularly so in difficult markets)

1. Predictive ROI-based investing – only helpful to bring a company up to the median in terms of performance. Once a company has reached median performance, a focus on ROI in investing is actually counter-productive.
2. Future Needs-based investing – making decisions based on educated judgement about where the customer needs will be in the future. This is more important the higher the company is outperforming the median.
3. Aggressive segment orientation – dividing customers by segment (other than purely demographically-developed segment) was equally important regardless of the company’s relative performance, and was the single biggest contributor to brand growth success overall. Particularly important was a knowledge and implementation of segmentation outside of just the marketing and sales departments.
4. Generalist-first talent strategy – the more companies focused on building a broad range of talent into all employees, the better the impact on brand growth.

Key priorities during the downturn, then, should be to:

1. Maintain budget/ROI discipline.
2. Stay on top of changes in what drives customers to buy.
3. Improve implementation of and focus on customer segmentation.

The tough thing in this environment in maintaining budget discipline is anticipating uncertainty and incorporating it into your plans. It is difficult to do so because we inherently gloss over uncertainty and actually are more likely to make uninformed decisions the more uncertainty exists. Make the effort to work against this tendency and have pre-established triggers to warn you of and contingency plans for unlikely but important events should they happen.

The easiest way to stay on top of changes in drivers of customer purchase behavior is to incorporate consumer feedback. Some

critical guidelines for a successful key consumer co-development program

are:

• Special Treatment for the individuals in the program – make sure they know they’re appreciated and their participation is considered valuable.
• Mutual respect – make sure the company and customer participants interact in an environment where each group/individual’s opinion or suggestion is respected.
• Clear ground rules – make sure they know that not everything will be adopted, and even those that do may not happen on their time preference.
• Veto rights – apply sound business logic to the suggestions received and implement those that truly add value to the organization.

There was much more presented of value, and of course the specific examples presented by the attendees were particularly helpful. For both space limitation reasons and confidentiality, though, I’ll stop here for now.

I highly recommend the Marketing Leadership Council to any firm looking for great ideas, case studies and best practices. Being a member for the past two years has certainly helped me, and I’m sure it will help others as well.