Beware Action Director on Board, Corporate Crash Diets Don’t Work, by Professor Malcolm McDonald, Academic Advisor to Oxford College of Marketing

OXFORD, England - Like most, I am heartily sick of hearing the expression “Marketing in a Downturn”.

For one thing, most of today’s Directors have no experience of managing in a recession. For another, it is painful to watch the sheer panic as budgets are cut and measures are implemented to counter the so called “value” brands.

So let’s get this price cutting hysteria out of the way first. There is overwhelming evidence that there is no country in the world where the low price segment is greater than 10%. “Primark”, “Aldi” and others, I hear you cry! Yet Primark has less than a quarter of one per cent of the UK clothing market and Aldi has less than 5% of the food market, so of course their results look dramatic at a time like this.

Much more fundamental is the fact that 85% of companies haven’t a clue what correct market segmentation is. 30,000 new products in the USA failed in 2006 because of poor segmentation (HBR Dec 2006). Any organisation that doesn’t properly understand the needs of its customers has no alternative but to drop the price at a time like this, because customers have such a wide choice of pimply little me-too products and services that perform more or less to the same standard.

I am not talking about the a priori rubbish that passes for segmentation, such as socioeconomics. Mick Jagger and the Archbishop of Canterbury are both As, but they don’t behave the same. Then there is demographics. All women between the ages of 18 and 24 do not behave the same. Geodemographics are equally useless unless used at a very high strategic level. Everyone who lives in my street does not drive the same car, read the same newspaper and so on.

My first point, then, is that companies who segment their markets properly never had, nor ever will, trade principally on price.

My second point is that the very worst thing an organisation can do in a recession is to cut its marketing budget. Again, the evidence is overwhelming that companies that retain their spend on their core products and markets in a recession do considerably better both in the short and long term, (PIMS, IPA, HBR etc).

My third point is even more painful for Directors to take on board, which is that in a growth market, Mickey Mouse or Donald Duck can make money - don’t mention Banks or the Construction Industry! What on earth most of them think they are measuring when they pore over their wretched profit and loss Accounts at Board meetings defies belief. In a growth economy, such financial information doesn’t seem to harm anyone.

To finish reading this article please go to blog.oxfordcollegeofmarketing.com/archives/369

Notes to editors

About Oxford College of Marketing

Oxford College of Marketing is one of the largest CIM accredited Marketing Colleges in the UK. With study centres in London, Birmingham, Uxbridge, Croydon, Gatwick, Milton Keynes, Liverpool, Reading, Brighton, Sheffield, and of course Oxford, the College has been running qualification Chartered Institute of Marketing (CIM) courses since 1997, with superb student results. The College offers CIM Introductory Certificate, Professional Certificate, Diploma and the Chartered Postgraduate Diploma qualifications through a number of study options, including distance learning, as well as short and one-day marketing courses and tailored in-house training programmes.

About the Chartered Institute of Marketing

The Chartered Institute of Marketing offers four levels of professional qualification at study centres in 130 countries. The CIM qualifications are internationally recognised qualifications that can help marketers at both an operational and strategic level. About 27,500 people sit CIM qualifications every year, 15,000 of which are overseas students.

About Malcolm McDonald

Malcolm, until recently Professor of Marketing and Deputy Director Cranfield School of Management with special responsibility for E-Business, is a graduate in English Language and Literature from Oxford University, in Business Studies from Bradford University Management Centre, and has a PhD from Cranfield University. He also has an honorary Doctorate from Bradford University.

He has written forty-two books, including the best seller ‘Marketing Plans; how to prepare them; how to use them’ and many of his papers have been published. www.malcolm-mcdonald.com

For further information or to discuss any CIM training or Oxford College of Marketing one-day marketing courses contact Jane Young, on +44(0)1865-515255 or janey@oxfordcollegeofmarketing.ac.uk. The college is a CIM top performing college with excellent exam results.

Source: Oxford College of Marketing Ltd

For further information or to discuss any CIM training or Oxford College of Marketing one-day marketing courses contact Jane Young, on +44(0)1865-515255 or janey at oxfordcollegeofmarketing.ac.uk