Marketing expenditure: how to transform a cost burden into a very powerful weapon

All companies – in whatever industry (both B2C and B2B) – wonder what the best way to influence and convince clients is. The following example – taken from our direct experience with a key client of ours, a major player at global level in the consumer arena – very well illustrates how powerful answering that question can be. The key objective of our client was, given a more and more increasing pressure on margins, to get very tangible results on the effectiveness of their Marketing expenditure in a very short term.

To do this, we applied our proven methodology that tackles the return on Marketing topic in an extremely effective way, and which is built on the following 3 consequential steps:

1. Identify the issues
2. Identify the causes
3. Achieve rapid bottom-line improvements.

One of the major mistakes that companies usually make on Marketing is to address only a small and incomplete part of the topic. What we instead do is to take into account the 4 key aspects that influence and drive the Marketing effectiveness equation, i.e.:

1. Internal perspective
2. Client perspective
3. Competitive perspective
4. Consumer perspective

For example, our client thought that the best Marketing allocation is a function of each specific competitive arena: for instance, that in a specific category the best results were obtained by leveraging the TV media. The following graph of ours, that presented the Marketing allocation of 3 equally successful brands (one of which was theirs), proved them that their belief was completely wrong.

Also, our client was convinced that they were managing the “direct-to-client” Marketing expenditure in a very effective way, obtaining the best results from those clients where their direct investment was higher. The following graphs of ours, presenting a sample of key metrics of the return on Marketing expenditure (on Sales and EBT) proved them that their belief was again completely wrong.

As per our methodology, we also investigated the causes of the bad management of the Marketing expenditure by our client. In the end, one of their key issues was not knowing the final consumers’ behavior as to their responsiveness to the different Marketing levers (let alone to the magnitude of the budgets invested). Our work was able to proof a complete misuse of the levers by our cient, as the following graph well illustrates.

By combining together all the pieces of analysis that we performed and leveraging our methodology, we were able to reshape completely the Marketing approach of our client, making it possible for them to:

• Triple their Marketing effectiveness
• Achieving an immediate saving of 30% of their Marketing expenditure.