Survey: Marketers Cut Traditional Spending, Focus On New Opportunities

In these difficult economic times, top marketing officers are turning to new and often unproven strategies that focus on the Internet, partnerships, new markets, new products and services to help their companies.

These are some of the results of The CMO Survey, a poll of 581 U.S. marketing executives conducted in February 2009. The survey was conducted by professor Christine Moorman of Duke University’s Fuqua School of Business in conjunction with the American Marketing Association.

Overall, the survey indicates that 59 percent of marketers are less optimistic about the economy than they were one quarter ago, a reduction from the 77 percent of respondents who reported a decrease in optimism during the August 2008 CMO survey.

“While marketers in general remain unexcited about the economic situation, it is encouraging to at least see that pessimism is not increasing among the marketing community,” Moorman said. “This could either indicate that marketers think the worst times are behind us, or they have simply adjusted to operating in an adverse environment.”

Survey participants reported their firms failed to reach their goals for marketing return on investment and overall profit during the past year (falling short by 0.6 percent and 3 percent, respectively), but they expect increases in both categories during the next 12 months.

“Even though firms are experiencing some disappointment right now, their predictions for future ROI, profits and building knowledge are good signs that they continue to strive for growth,” Moorman said.

MARKETING SPENDING AND PRIORITIES

Marketing spending is expected to grow by only 0.5 percent over the next 12 months, with a 7 percent decrease in traditional advertising and 10 percent increases in both Internet marketing and new product introductions. Business-to-consumer marketers will make the most significant shifts to the Internet, for both product and service advertising.

“The observed shift is part of a broader movement to the Web and social media as key ways to reach customers. However, it also reflects marketers’ hopes for improving return on marketing investment with a cheaper and more effective set of tools,” Moorman said.

“Companies are also responding to customers’ desires for innovation by putting significant investments into new products and new services,” she added. “This requirement is coupled with ongoing demands for low price. Companies must stretch to reach this value sweet spot that has emerged for customers.”

Marketers continue to respond to consumer interest in social responsibility and report planned increases in marketing efforts that highlight their company’s benefit to society and minimal environmental impact. Moorman points to this strong trend as a “key to customers’ trust in the firm and not just ‘nice to do’ as in the past. Customers expect firms to do this now.”

Survey respondents predict a 4.5 percent decrease in spending on marketing consulting services over the next 12 months. They also report that hiring will remain flat in the near term.

Despite these trends, respondents point to the critical role of managing knowledge in their marketing strategies. Marketers rated a strong emphasis on customer insights (4.3 out of 5, where 5 is excellent performance), on sharing marketing knowledge (4.1 out of 5), and on the integration of existing marketing knowledge (5 percent increase in spending).

Moorman finds this choice logical. “In an economic downturn, firms try to get an advantage by building new insights and also try to do more with the resources, including knowledge that they already have.”

The survey asked respondents to identify firms across all business sectors that excelled at marketing. Top vote-getters for the “CMO Survey Award for Marketing Excellence” were Apple, Procter & Gamble and Coca-Cola. “All firms should investigate what these great marketing companies are doing and consider what might be learned or transferred to their context,” Moorman said. “It may be business process or it may be growth approaches. There is always something to learn.”

Other key findings of The CMO Survey include:

-- Thirty percent of marketers believe low price will be their customers’ top priority over the next 12 months. Another 20 percent selected trusting relationships and 19 percent chose superior product quality as their customers’ priorities. The focus on trust increased dramatically since the August 2008 survey.

-- Firms are increasingly turning to new product and service developments (24 percent of firms) and market development (18 percent of firms) to drive growth. Firms appear to be taking on reasonable risk to pursue growth during these tough times.

-- Most marketers (71 percent) expect to achieve this growth from within their firms. However, they are increasingly turning to acquisitions (9 percent), partnerships (13 percent) and licensing (7 percent) as alternative approaches.

-- Marketers’ orientations toward channel partnerships (firms, such as retailers and distributers, that move products from manufacturers to customers) have changed significantly, with only 26 percent of respondents more optimistic than last quarter and 41 percent less optimistic, about prospects for revenue growth resulting from channel partners.

-- Marketers indicate they do not expect growth in revenue from end customers (customers in households), with 59 percent less optimistic and only 25 percent more optimistic about these prospects compared to last August.

-- Marketers predict no increases in rivalry among competitors, but instead stronger cooperation on non-price strategies. This trend may reflect a greater emphasis on open innovation among firms.

“Results indicate marketers are looking for ways to help their firms not only survive but thrive during these tough times,” Moorman said. “Close proximity to customers, partners and competitors gives these executives special insight into spending and growth that may help buoy their firms and the overall economy. This knowledge improves cash flows and reduces the risk firms face in strategic activities.”

-----
www.fayettefrontpage.com
Fayette Front Page
Community News You Can Use
Fayetteville, Peachtree City, Tyrone
www.georgiafrontpage.com
Georgia Front Page