Purge the peripherals

If you have to cut costs, should you cut the marketing budget? This is a question that polarises opinion and is reckoned to sort the accountants from the salesmen.

The arguments on both sides are well known and I won’t repeat them here. The question is, how do you resolve it and create financial opportunity from marketing spend, without undermining the business?

In my experience, marketing budgets are rarely spent consistently.

A company’s strategy may be very well articulated, and it might be really clear how a marketing plan should support that strategy, but in retail you will always find that some of the money (and often quite a lot of it) is being spent on things that are not central to the strategy.

How does this happen? Well, here are a few reasons/excuses I have had over the years: the supplier is part-funding it; competitors are doing something similar and we have to compete; someone thinks it’s a really unique idea that will grab attention; the marketing guys don’t entirely understand/agree with the strategy; the ad agency is too influential.

It seems to me that there is a natural law of marketing in retail that causes it to tend towards fragmentation, with consequent loss of focus.

This is where money is wasted, or at least poorly spent. By reappraising the purpose and impact of all spend, it is nearly always possible to achieve financial savings or greater impact of core messages, or both.

At Superquinn, for example, we have a decent marketing budget, but a lot less than our larger competitors. We have been clear for months that the overriding priority of our marketing is to deliver clear value messages to customers struggling with a severe recession.

Yet until recently, we found that money was allocated to things like a glossy Christmas magazine; ‘brand-building’ ads for top of the range luxury products; local competitions to win a car, and so on.

By purging all of this activity from the roster, we created a surprising amount of scope to cut marketing cost without affecting core activity.

In fact, we kept the budget intact but managed to strengthen our main messages significantly.

Good cost control is not about cutting expenditure per se, but about cutting waste. Marketing is a honey-trap for the unwary executive, offering opportunity to do sexy things, win awards, stand out, be seen as creative and pioneering, etc. In retail we rarely, if ever, have the budget to indulge in this stuff. We need, especially in times like this, to focus ruthlessly on spreading our key message.

So go after your marketing spend if you need to pare back or be more effective. But you don’t have to cut off your nose to spite your face. Leave the core messaging alone, and go looking for all those sexy but largely useless programmes that we all fall for, and cull them ruthlessly.

You’ll be surprised how much headroom you can create.

Simon Burke is chairman of Majestic Wine and Superquinn