This post is by Julian Barrans, Business Director, Asia for TrinityP3. Julian has worked as a business, marketing and branding professional for over 30 years, with more than half of that time in the APAC region, working both client side and agency side. A creative business leader who truly understands the importance of team building, working with the right partners as well as making decisions based on sound business strategy and practices.
There’s been so much in the news about climate change and how an individual country can impact the global ecosystem by it’s actions.
In particular, the impact of deforestation in Brazil’s amazon area and how the more it is cleared in the interests of development and profit, the more the global temperature will rise due to increasing carbon dioxide levels that would have previously been absorbed by the now gone trees.
So something that happens in one part of the world can impact the whole world. We live in an interdependant global ecosystem.
This is pretty much the same as a brand exists within an organisation, with its suppliers and also in the market place, where it coexists with many other competitive brands, meeting the needs and wants of customers and consumers.
So the brand can be impacted positively or negatively by actions within it’s ecosystem…. the brand itself….the organisation….competitive brands….customers and consumers.
There’s a lot to get right to keep the brand growing and delivering the profit expected….and conversely….a lot that can go wrong too.
You could say that dealing with competitive brands’ innovations and activities is something that you have to take stock of on a regular basis and decide on your own brand’s response, if any.
Similarly, shifts with customers and consumers should be tracked and managed effectively too and again, any adjustments needed to your brand, managed appropriately to help maintain market position and relevance.
The more worrying trend of late has been what’s going on with the brand, within the organisation and with its marketing suppliers.
So what has been going on in the brand’s ecosystem?
Brands are under greater pressure to survive, evolve, grow and drive profit than ever before. A lot of this is coming from the need to reduce within the organisation. Particularly, in recent years, it’s not been uncommon to see many organisations cut marketing budgets 20+% …..and not just in one year either.
These have mostly been cuts, based on c-suite directives to prop up the bottom line. They are not derived from some breakthrough in the cost of goods or services, or some marketing based efficiency and effectiveness gain, so they impact brand activities. They are just plain and simple budget cuts. Do what you need for less.
However, the demand for short term growth still continues and the reduced marketing budget ends up being focused on short term sales generating activities, rather than brand building activities which are responsible for building sales over the medium to long term. To compound the problem the brand activities are often approved or denied based on finance driven ROI measures, that expect payback in the same financial year.
I’m sorry, but brands don’t work that way…. starving a brand of the right balance of strategic investment and tactical investment is very dangerous for the long term future of the brand and business. The brand’s ecosystem is being changed and not in a good way.
Just look at what’s been happening at the Kraft Heinz business where 3G have managed to damage the brands and business value by applying cost cutting measures in a way that certainly doesn’t work for the brands within it. Their competitiveness in the market has been damaged and consumers are either not buying as much, or worse, some have deserted the brands altogether and moved their preference to other brands.
The consumers’ loyalty has been betrayed.
It costs a lot more to repair the damage to the brand in time and money than what you save in the short time period that leads to such a disaster.
Another common way that cost savings are sought is to just cut fees with marketing suppliers, but then expect the same SOW coverage and media value for those lower fees. Yes it’s true ….many clients have done this with or without going through a competitive review, but either way the motive has been to cut costs ….not seek better value through efficiencies and effectiveness.
So does this cost cutting approach work? In the first year you may see cost savings as outlined in the new financial arrangement, but what happens to quality? The suppliers have to make their margin, so they have to make savings.
You are going to get less time or less senior time spent on delivering your requirements. Unless you have introduced some amazing new way of working that helps your suppliers deliver what you need with less time, or seniority, then I’m afraid the quality is going to suffer somewhere along the line. The brand’s equity will diminish and with that the ecosystem will change, growth will not take place and the cost cutting gamble will not have paid off.
Another impact seen on the brand ecosystem is between marketing and its suppliers. This relates to the fact that over the years the activity sets now encompass far more digital based activities….some up to 50% of the budget… some more. Yet, often there has not been an overhaul of systems, processes, skills within marketing, or making sure the roster of suppliers offer best practice to do the required work.
A few final thoughts on the brand’s ecosystem…
The above comments do not mean that cost savings cannot be made, but that they should only be made where analysis shows how you should proceed without damaging the brand’s ecosystem.
You can overhaul processes, ways of working and skills within marketing, the roster of suppliers used to offer best practice, whilst improving efficiency and effectiveness, thereby creating the opportunity to reduce costs.
The good news for clients facing these kinds of challenges is that help and guidance is on hand with the right consultant, so you don’t over-promise on the savings front before you know you can and how to achieve them.
By being on the front foot you can evaluate what’s achievable and be ready to manage the potential impact of a budget cut by knowing what you can and should do to make changes without destroying the ecosystem that has made the brand successful in the first place.
You are managing the ecosystem to ensure it stays healthy and growing the brand….and not suffocating under the weight of indiscriminate, poorly thought through budget cuts.
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