My experience in two organisations exposed me to Chief Executive Officers (CEOs) who often perceived marketing as cost, while grudgingly budgeting for it. In view of what I recognise marketing to be, I view this as a big mistake. As a guru in this field, what’s your view? – A. I. Aigbodion
I agree with you completely for acknowledging that CEOs who view marketing from the angle of cost are holding on to a perception which may likely ruin their firms. They must have failed to quantify the positive outcome of their expenditure on marketing (such as what customers are really worth), and not realising that it makes sense to spend in order to attract and secure customers. This is really why organisations should have marketing structured in ways that marketing related activities or initiatives yield measurable returns on investment (ROI). My hint to these ‘ignorant’ CEOs is for them to take another look at determining what every existing customer is worth to the firm, and then derive what should be spent to prospect for new customers.
Going by what effective marketing yields at the end of the day, there is every justification to view every Naira spent on marketing as an investment rather than a cost. I acknowledge that there is bound to be cost (marketing cost), considering typical reflections in the firm’s books (of accounts). Costs encored from marketing activities embody promoting the goods or services being sold, or the distribution of the product to points of sale; storing goods in warehouses pending delivery; expenses associated with transferring title; and moving goods to the customer.
In other words, cost of marketing remains reflective of the total sum spent for goods or services including money, time and labour associated with delivering those goods or services to customers. Nevertheless, these must be counterbalanced against company’s incomes which are outcome of superior marketing programmes – Hence my standpoint that marketing remains an investment rather than a cost.
Even this definition of marketing (among others), “The management process through which goods and services move from concept to the customer”; and my ‘self composed’ version, “All that should be needed to favourably make product or service available to the end-user” all convey a central theme – Fallout of marketing efforts often overrides whatever that is alluded as ‘unfavourable’ cost. The same also holds even for marketing for experiences, events, persons, places, properties, organisations, information, ideas or concepts.
Bear in mind that marketing is based on thinking about the business in terms of customer needs and their satisfaction, and is less of getting customers to pay for those products (or services). Here, the emphasis is on developing demand for and fulfilling the customers’ needs. Quantification of all these depicts the sense in not even perceiving marketing as cost.
However, it still remains completely out of place to look forward to ‘free marketing’, as this does not exist. It is indeed not feasible to effect all those related promotion activities or obtain customers for free. Even without taking cognizance of payment with one’s time, note that ultimately positive result from marketing payment is a “sure banker”. This is the reason I view whatever expenses on marketing as investment. Appreciate marketing, the title of my sequel to this piece, which comes up in due course, further buttresses the standpoint about the need for not viewing marketing as that ‘resentful’ cost.
For business operators who are so inclined to reducing costs, with marketing coming first on their list, I suggest certain ways of pruning expenditure in this area without jeopardizing the growth of the enterprise. This comes with the awareness that the growth or survival of any business is hinged on the existence of customers, of course which marketing generates. I am quite aware of marketing being the easiest cost to cut, but also the fastest way to reduce profit and subsequent annihilation as a business entity.
Those encumbered with trimming likely marketing costs should learn from these:
– Marketing programmes which are not delivering desired outcome should be evaluated to put them right or expunged. This is a way of eliminating waste, which serious enterprises can ill afford.
– Do not shy away from outsourcing. Keeping all those marketing related skills under one roof can be sometime quite ‘weighty’. There is no gain saying the fact that staffing an in-house team, with all amount of expertise, would cost more than some businesses would be willing and able to invest. The best bet is to obtain such know-how from outside (outsourcing).
– If you do not have someone with good background in marketing or a marketing pro on your management team you’re probably wasting money. Having one merely on the staff list is not good enough.
– Let your marketing budget be pegged to either a percentage of your income or that of your profit; even start-up capital or a certain allocated amount. Sticking to this comprises a suitable platform for pegging marketing cost.
– Subtly promoting your venture through multiple channels of moderate cost components will help a great deal. Prospects are more likely to translate to buyers if they read about your offering in the newspaper, notice your low cost ads, subscribe to your competition, grab a brochure, visit your website, listen while you speak at a seminar, and learn what a superb firm yours is from a third party (networking).