faculty speak

Myth 7: More the expenditure better the Marketing

“If one does not know
to which part one is sailing
no wind is favorable.”
– Lucious Annaeus Seneca

Some time back I was advising a real estate development firm on marketing. Their project was a self-content township in the outskirts of the city. Around the same time another project of similar size was launched, again in the outskirts but on the preferred side of the city. In terms of expenditure on marketing, this competitor had outdone my client several times. For instance, while we had 20 odd billboards across the city, they had 50 odd, that is in a 1:2.5 ratio.

Going by the simple logic and common sense, the project with inherent advantage (of location) should have had a distinct edge over any other. To top it, they also spent at least twice the amount on overall ‘marketing’.

However, the reality was far from this. Measured in terms of sales as well as brand recognition and reputation, my client’s project had a distinct edge over its competitor’s. This again is no stray incidence. There are ample examples of this kind, where despite more expenditure on marketing the success is not achieved or is not to the extent of money spent.

So, where is the catch? Why doesn’t the extra expenditure on marketing always fetch higher returns?

The answer to these questions lies in deep understanding of ‘marketing’. Many people look at marketing merely as ‘advertising’ or as ‘pushing the product through promotion schemes’ (for consumers as well as trade partners). And these add to the ‘expenses’ on marketing. Unfortunately such expenses do not guarantee ‘returns’ in the form of enhanced sales or better brand recognition and brand equity.

If a closer look is taken at ‘marketing’ activities conducted by such firms, you will observe that there is a complete absence of strategic plan for marketing their products. They would not have identified the ‘target customer’ for their products at all, leave alone ‘positioning’ of the product. In the absence of this, their product offering would be too vague for any customer segment to identify itself with. Their pricing also will be completely off the mark resulting in necessity of offering price corrections by way of discounts or promotion schemes all the time. Their distribution channel will also be ‘undefined’ due to this lack of clarity. And most importantly their promotion will be too general forcing them to utilize any and every media of promotion. This is where the ‘costs’ get escalated.

On the contrary a marketing oriented (rather focused) organization will have its ‘strategic marketing plan’ firmly in place even before going to the market. They will go far beyond advertising and sales promotion while drawing out their strategic marketing plan. Moreover, all their marketing efforts will be in sync with each other which will result in optimization of money spent on every marketing activity. In fact, for such organizations every single penny ‘spent’ on marketing will work more as an ‘investment’ in their brand from the long term point of view.

The marketing focused organizations derive a ‘gestalt effect’ out of their all-round activities on marketing front. They plan their media advertising in such a way that each media ends up supplementing the other. They also do not have to resort to ‘carpet bombing’ when it comes to advertising, since they clearly identify their target audience and communicate with them without wasting their resources on ‘general awareness’ campaigns. There is a misunderstanding among many entrepreneurs as well as amateurs that ‘more the visibility better is the brand recognition and hence sales’. This statement is just partly true. Partly because, visibility of a brand through mass media alone is not enough. In today’s times, equal amount of efforts are required on every aspect of marketing. And all these efforts need not necessarily get better with higher spends.

I have already discussed in some of the previous articles in this series that marketing comprises of several actions around your product (or service) offerings. To make a success out of your product each of these actions should be well thought out and in strategic sync with each other.

For instance, if you have not defined your STP (i.e. Segmenting, Targeting & Positioning) then how will you decide which media to advertise your product in? Media selection largely depends upon your target audience and the desired positioning of your brand. Selection of media without this homework is like grappling in the dark, which not only leads to higher expenses but is also detrimental to the brand personality.

Coming to the 4Ps of marketing, if you introduce a product in the already cluttered market without any apparent and sustainable differentiation, no amount of marketing expenses will make the product successful. A few years ago Haier launched its product line with much fanfare and huge promotion budget in India. But more than a decade on, the brand is nowhere in the top slot in any of the product categories it operates in. To start with, their ‘positioning’ itself was very vague, giving them no edge, whatsoever, over their already established competitors. Same was the case with Uninor, which entered the market with huge promotion budget. However, their messages in different media were different and quite confusing resulting in confusion in the minds of potential consumer as to ‘what the brand stood for?’    

On the contrary, think of a brand like Raymond. It has a very well defined segment of target customers. It remains in touch with them constantly, without wasting its money on mass media advertising. Its product offering is also very relevant to its target customers. Same is the case with brands such as Lakme, Samsung and several others.

It must be understood well that there cannot be a ‘general’ way of marketing any and every kind of product or service. The ideal mix of various efforts on the marketing front will vary from product to product or service. Invariably what works for ‘x’ product category, does not work for ‘y’ product category as it is. Hence, efforts must be made to first understand the marketing needs of your product category before getting down to ‘spend’ money on them.

“The secret of business is to know
something that nobody else knows.”
– Aristotle Onasis

Prof Rajeev Kamble
Associate Professor
Marketing