SUSTAINING A MARKETING COMMUNICATION BUDGET
One of the major challenges to a brand or marketing manager is the often discovered result of a budget cut or reduction.
Management decides to reduce expenses.
The budget is cut. Marketing communication and even sales forces are reduced or omitted entirely. What happens?
The answer, possibly surprisingly, but commonly, ‘Not a thing’. The reason nothing happens is because the marketplace momentum has been built up over time by the brand and the organisation. People will continue to prescribe, people will continue to buy, and thus, in the short-term, there will appear to be no impact on the brand or the firm.
Typically, this could continue for perhaps as long as 3–9 months. Senior management during this time would be right in pointing out that: ‘We took all your money away and the business kept bubbling along, what are you contributing?’ The only retort to this is that the situation is only short-term. But, once the momentum of the brand or the firm starts to slow down, the cost of turning it around, typically, is 6–12 times as much as it would have cost to maintain it. The story for management is brands are dynamic and brands must be maintained and this continuation of momentum is absolutely critical.
It is necessary to understand what makes up brand momentum. Generally, we can think of brand momentum as being composed of three parts: (1) marketing activities the organisation conducts, such as investments in the sales force, product materials, advertising and the like. The second part (2) environmental factors, has to do with the general economy, the kinds of illnesses and diseases that are rampant in the world today and so on. The third factor (3) is brand equity. This is often called the ‘goodwill’ of the firm. It consists of the trust and reputation the firm has developed, the number of customers it has and their loyalty and so on. Combined, these three factors make up the on-going momentum of the firm and success it has and will continue to have in the marketplace. The major problem is that this brand momentum is not part of the general accounting procedures and practices. Thus it is difficult to measure and difficult to recognize in the overall value of the firm. But, brand communication measurement is not all wine and roses. There may be some tax consequences from using a marginal cost and marginal revenue approach to short-term brand programmes. There may well be some consequences of changing the way the brand is looked at by the marketers and the overall issues of tangible versus intangible assets. Thus, taking a financial approach to brand and marketing investments does create some issues on the present versus future value of the organisation. But, given the current state of marketing, and brand measurement and return, they would seem well worth the cost.
CONCLUSION
In conclusion, this paper has suggested what is possible, practical, and can be done by marketers in terms of brand communication investments and returns.
Marketing and communication have to provide forms of financial measure.
Marketers require something that is practical and plausible, something that works globally, something that is relevant to manage, something that is technologically possible in most organisations and most of all, the organisation cannot be reorganised just to put in a measurement system.
Finally, this paper has suggested ways of how to make marketing, communication and branding a strategic tool not a tactical activity in the company. If communication can become a strategic, tool for the firm, it can become relevant at the senior management levels, Thus, the key element
in this approach is for marketers to start using management concepts, not just marketing concepts. By talking about the things that senior management is interested in, a substantial change can be made in how marketing is viewed within the organisation.