Chaotics: the case for marketing in a downturn

Here’s today’s interesting quote from “Chaotics” written by Philip Kotler and John Caslione.  This is from the chapter “Management’s Wrong Responses to Turbulence”:

Reducing Marketing, Brand, and New Product Development Expenses

When it comes time to make cuts, marketing always seems to get the first swipe, and new product development the second.  This is always a mistake because it destroys market share and innovation.

The knee-jerk reaction from most companies is to cut marketing.  When you cut marketing, you are leaving room for your competitors to get their message out in the forefront and to gain greater market share as yours slips away. (pages 55-56)

That was written in late 2008 or early 2009.  Here we are nearly a year later.  Marketing has been cut dramatically.  Advertising expenditures are plummeting — more for some media than others — and media prices are falling.  Consumer demand is down.  The only real pick-up in the economy has come from the government stimulus package.

It is still too early to see if those companies who made the biggest cuts suffered more than their competitors.  We know this has been true in past recessions.  I’ve seen some data in some categories that supports the hypothesis.

This does not mean that marketing should not be cut at all — just that the degree and strategy of the cuts need to be well planned.

It is the relative difference in the cuts that is most important.  If everyone cuts spending by 10%, then there is no comparative advantage.  If one company cuts marketing in half and a competitor stops entirely, then the comparative advantage is great.

Cutting marketing that is effective (and not all marketing is effective) becomes a self-fulfilling prophecy because it leads to declines in sales.  Declines in sales then become the justification for further cuts in marketing.  It becomes part of the “Downward Spiral of Doom” as James Kilts calls it.

Kotler and Caslione say, “Marketing is muscle, not fat.”

In the current economy, we all want a little more muscle…