Marketing and selling in tough economic conditions:

Frequently asked questions in marketing

Article - 26

Series by : Prasanna Perera

Marketing and Management

Consultant, Chartered Marketer, CIM U.K.

In the present economic scenario, I have been inundated with numerous questions relating to marketing strategy and tactics. For the benefit of the majority, I will endeavour to address a few issues in this brief article.

Q: Should we target quality conscious customer segments or price conscious customer segments or both?

A: The answer depends on the product or service marketed and the external market conditions prevalent at a given time.

Generally, the price conscious segment is growing in Sri Lanka due to the limited disposable income. There is a quality conscious segment, but unfortunately this segment is not growing. My advice therefore would be to target both market segments.

Q: Should brand building be done, if customers are not brand conscious?

A: Irrespective of whether customers are brand conscious or not, brand building is a must. Brand building is not a short term activity and although customers may not demonstrate loyalty to brands in the short term, they will definitely be brand conscious in the long term.

Marketers would do well to keep faith in their brands and enhance brand equity. Another strong reason to build brands is the linkage that brands have in delivering shareholder value.

Q: Should we carry out ATL marketing communication or BTL marketing communication or both?

A: Ideally a blend of both. However, there are several aspects to be considered such as budget, duration of campaign, target audience profile and marketing communication objectives.

The key aspect to remember is the importance of integrating all marketing communication activities.

Q: Modern trade retailers are demanding higher discounts and credit terms. How can we overcome this threat?

A: Modern trade is growing slowly but steadily in Sri Lanka. Sri Lankan manufacturers have still not faced the real pressures that powerful retailers can enforce.

This will become increasingly apparent in the future, specially with the rapid development of retailer / private labels.

The brand manufacturers would do well to strengthen their brands and customer equity, so that end consumers will demand their brands from modern retailers. Good negotiation skills coupled with a partnership approach, can help in dealing with retailer pressures for higher discounts and credit periods.

B: How should marketing budgets be determined?

A: In most situations, percentage of last years sales or future sales is the method adopted. The problem with this method is that marketing budgets are allocated based on past or future sales.

In reality, marketing budgets are required to achieve sales!! Therefore, the most prudent method is to first workout marketing objectives for a given period and decide on the strategy to be adopted. The marketing budget would be the finance needed to effectively implement the decided strategies.

Q: In many instances, other functional areas in a business attempt to do the job of Marketing. Why is this the case?

A: Unfortunately, the Marketing function is not given the due respect and recognition deserved. In many organizations, there is a perception that Marketing is all about advertising a product, providing customer service and selling a product.

The strategic value of Marketing is forgotten. Other professionals should respect Marketers and permit them to perform their job functions without undue interference.

Q: Should new products and services be introduced in the present economic situation or should existing products and services be consolidated.?

A: The answer is that both activities should be done. New products and services are essential for the future prospecting of a business. Present products and services provide the cash flow essential to finance new products / services.

In the case of new products and services, their introductions should be done in a timely manner. World class organizations are very proactive when it comes to new product / service developments.

Q: What is the best method to adopt in determining selling prices, given the extreme price sensitivity of the market?

A: Pricing is critical for success, specially in third world countries. The reasons are obvious. There is no, one best method to determine price points. It depends on the nature of the product, the reputation of the brand, the characteristics of the target market and the objectives of the organization.

As a rule-of-thumb, take a market perspective to pricing, rather than a cost perspective. Further, pricing should be considered as an offensive strategy and not as a defensive strategy.

If you have a good quality product / service, why should you be defensive in pricing? A point to note, is that the leading brands in most categories are not the cheapest around. Take for example, Signal, Lux, Anchor, Sunlight, Munchee, Samahan, Panadol to name a few.

(To be continued next week)......