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Philip Kotler
Philip Kotler, the S.C. Johnson & Son Professor of International Marketing, offers five key questions in Chaotics to help business leaders prioritize their marketing budgets.  Photo © Nathan Mandell

Critical reading

Kellogg Professor Philip Kotler's new book aims to help marketers survive tumultuous times

Philip Kotler, the S.C. Johnson & Son Professor of International Marketing at the Kellogg School, has partnered with global business expert John A. Caslione to write a new book — and it couldn't be more timely. Chaotics: The Business of Managing and Marketing in the Age of Turbulence (AMACOM, 2009), outlines a survival plan for marketers in the current economic climate.

In a chapter entitled "Designing Marketing Systems for Resilience," the co-authors explain that addressing the following five questions will help leaders determine how to reduce and reallocate their marketing budgets.

  Chaotics: The Business of Managing and Marketing in the Age of Turbulence

1  Do you have a complete inventory of your growth investments and can you identify waste (or inefficient spending)? Periodically taking an investment inventory will reveal wasteful spending of as much as 15 percent of the total almost every time, along with proven winners that must be supported no matter how much the budget must be reduced. A thorough inventory identifies obvious wastes and clear producers, as well as spending areas that pose bottom-line opportunities for more efficient and effective spending.

2  Do your investments change your customers' buying behavior? Share of market and revenue goals are too general to be true barometers of effectiveness. It's more important to know what specific behaviors you are trying to drive among specific segments of customers. For one customer segment, it may be driving an annual versus biannual service package upgrade; for another, it may be to motivate them to buy 50 percent more each time they order. By identifying growth-generating behaviors, you can judge your marketing investments by their ability to drive those behaviors.

3  Are your investments focused on customers' barriers to buying your brand? Try to understand the barriers to buying and choose the marketing vehicles and messages that will overcome these barriers. For example, one high-market-share company spent heavily on mass advertising to build awareness — efficient if examining the cost divided by the number of prospects. But the brand was already well known. A better course would be to spend money on closing the sale — a shift that actually could significantly increase growth. Conversely, a low-market-share company first needs to bump up awareness and consideration to higher levels, and here mass advertising works best.

4  Do you have the right mix of marketing levers among your investments? All marketing investments do at least one of three things: 1) Change customer perceptions to encourage them to buy more; 2) Provide temporary monetary incentives for customers to buy more; 3) Make the brand more available so customers can buy more. Focusing too heavily on any one lever can hurt the others. Instead, thinking has to shift to better weigh the right mix of investments to generate profitable growth.

5  Do you have a system to maintain "winners" and cut "losers"? As you assess your winning and losing investments, it's critical to think about both the potential long-term and short-term impacts of those decisions. Four considerations should guide this evaluation: 1) effectiveness and efficiency; 2) maintenance versus growth; 3) proven versus experimental; 4) direct and indirect impact.

Adapted from Chaotics: The Business of Managing and Marketing in the Age of Turbulence

© 2009 Philip Kotler and John Caslione All rights reserved.Published by AMACOM Books A Division of the American Management Association

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