As financial markets show signs of uncertainty, many brands, both B2C and B2B, will look to reduce costs as they near the end of the year. For marketers, this means the dreaded conversation with their finance teams about reducing spending or even staffing.
Veteran marketers know the drill. When times get tough, marketing budgets are some of the first to get scrutinized. Despite new systems for pinpointing the direct link between marketing activity and bottom-line performance, marketers are still often asked to reduce spending on items that can generate leads and drive customer conversions. But, while marketing expenses are reduced, the expectation of delivering the same marketing performance remains high. So, what’s a marketer to do?
1. Minimize margin erosion while focusing on retaining market share
Businesses and consumers are more price-conscious during times like this. Discretionary purchases are likely to be hit hard, and marketers need to re-assess their product pricing trade-offs to adapt to this new reality. Most companies are already seeing early signs of a slowdown and can use data analytics to identify areas of pricing weakness. For each of those areas, it’s important to focus on trade-offs customers are willing to make based on their budgets and the new economic outlook.
Consider a conjoint study to provide answers about your product and pricing quickly. Conjoint studies are used to understand how consumers value specific product features and pricing. By understanding the attitudes of those customers most impacted by the economic tightening, marketers can tweak product portfolios and pricing to match.
2. Adapt your marketing tactics to the new economic reality
When interest rates surge along with the price of many consumer products, almost everyone is impacted. The datasets and research marketers have access to often covers trends, brand health, sales information, and social media monitoring. This historical data can be combined with economic indicators and consumer confidence surveys to create predictive models that illustrate the different scenarios your business may face and can serve as a foundation to develop new marketing tactics to implement in different economic scenarios. For example, if surging prices in the alcoholic beverage aisle are impacting your brand’s share of wallet, then discounting may be required.
3. Update your audience targeting and messaging to fit the market
With consumer priorities changing, most segmentation models may already be broken. Audiences that were considered aspirational just last year might now be more price sensitive. Rolling out a full new segmentation takes a long time to get right, but refreshing an existing segmentation based on what’s happening in the current market is a much faster process.
Most marketers already have the data needed for a basic segmentation refresh. Adding external signals from digital and syndicated media studies can provide a quick way to adjust an existing segmentation. Tweaks to this can result in changes to both messaging and marketing that can massively increase effectiveness in tightening times.
4. Adjust your media mix to reduce advertising budgets
The paradox of any economic slowdown is that brands are forced to cut back on advertising at just the time when they need to convert more audiences and win a greater share of the consumer wallet. This means making existing advertising budgets work harder without the time to do a deep dive and review your full media mix. The simplest approach is to take existing syndicated advertising datasets and make them work harder.
Running a simple mix model on top of MarketCast’s Brand Effect ad resonance data shows how media plans can be optimized for cost by reducing the audience size and honing in on the audiences that are still converting. A tweaked media plan that reduces costs by 20 percent goes a long way to maintaining margins.
MarketCast specializes in the marketing research and advanced analytics disciplines mentioned here. If you’d like to learn more, contact us!