CFO's: Shoot all the marketers and while we're at it devalue the brand !

11/27/09 02:14 PM Filed in: Management Marketing

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In a recent survey 60 percent of the CFOs answered "no" when asked, "should your CMO have a larger marketing budget ?" Surely this comes as no surprise to most marketing people who have seen companies continue to reevaluate the value of marketing so they can add results to the bottom line. Once the budget cuts are over however you will eventually have to find ways to increase revenue without cutting people & budgets.

Established brands are in danger of low repeat sales as a study showed 80% of global consumers say they are very or somewhat likely to switch from their usual brands to lower-priced brands or brands that are on sale during an economic downturn. Moreover, 72% of consumers say they would switch to store or generic brands. Now let's be clear about something, the response to this is NOT to raise prices of branded products. What has changed is the value that consumers place on these products and now brand marketers have to rethink branding to leverage these new brand attributes.

Raising prices is going to be great news for private label products. By raising products it will make private label products that much more attractive and if retailers decide to raise prices on private label products to keep the disparity between branded and non-branded product prices than they will wind up making more money on higher marketing private label products.

So what is a brand marketer to do? Trust and awareness are no longer the sole determinants of how customers perceive brand value. Instead, consumers now focus on fewer brands, primarily exciting ones with new features. These brands distinguish themselves with a concerted effort called “energized differentiation.” Brands with this energy capture public attention, causing a demonstrable improvement in their ﬁrms’ ﬁnancial results.

When brands demonstrate creativity, they generate energy, win renewal in the market and reinvigorate their consumers, who, in turn, feel happy to be on the receiving end of this innovation and vigor. Marketers whose brands achieve this level of renewed energy often have tried to understand the future, and have applied their creativity to building innovative approaches and new business models. A brand that makes positive steps attracts dedicated customers. However, the proliferation of new technologies and innovations also erodes brands that do stay up-to-date.

New technology has altered the way consumers react to brands in many ways, including:

• Brand managers no longer control brands – Power has shifted to consumers, who now create powerful brand messages based on their experiences.

• Brands no longer communicate directly with consumers – People are more diffused and get information from many more sources, so brands have to lure consumers to come to them to get their messages.

• Marketing has become a dialogue – Marketers must listen to attract customers.

• Customers value personal experience and community ties – People want to know and share a brand’s features, so marketers must embrace transparency.

• Market segmentation is dead – Marketing messages should avoid class and background distinctions. Companies must deliver what consumers want, exactly when they want it, or the opportunity will vanish.