Today’s economic environment is tough. Consumer spending is low and at the same time consumers have become very knowledgeable and selective about the product they buy. Decision making is happening mainly based on word of mouth, though advertising is also playing a crucial role in decision making.
One of my readers recently wrote to me of what I think of the current economic environment and whether or not marketing has increased in its importance today? My answer is a resounding YES.
To understand the relationship between marketing and today’s environment, we need to define some of the traits of current economic environment.
Competition – Every brand and product is being affected by competition. There are ‘N’ numbers of products and brands present in any category. Each product has a USP of its own and each brand is targeting one particular niche. Thus the choices for consumers have increased a lot which causes loss of brand loyalty. Due to lessening of brand loyalty, customers can be lost to competition much faster than was previously possible.
The way to fight against competition is to offer better products and build a better process such that the customer is thoroughly satisfied and sticks with your product / brand. Thus, as you want to stand tall against competition, the importance of marketing is increasing.
Internet / word of mouth – Due to the advent and large spread usage of internet, customers are aware about your product in depth even before entering the store. Furthermore, there is a lot of reference selling wherein a customer buys a product because their friends have recommended it. For example – if 10 of your friends recommend 1 movie as very good, you will definitely check out the movie as early as possible.
Thus, internet marketing and digital campaigns have become an important part of marketing strategy. If a business is offering services, than they will need to have a higher budget for internet marketing as their potential consumers search for services through google or through online classifieds today rather than recalling TV ads or outdoor media. In India, Justdial is a perfect example of how consumers are searching for products and services online.
Consumer decision making – With so much competition already present in the market, and with a powerful medium like internet being used, there is too much noise for the customer to make a sound decision. Thus, today the focus is equally on the complete marketing mix as well as on manufacturing products which are unique.
The recent success of Micromax against Samsung is an example of how penetrative pricing can be used along with product development. Unlike Samsung, Micromax had not used much marketing communications. Rather it relied on solid product development, a penetration pricing and word of mouth as well as a digital marketing strategy. The result was that Micromax canvas phones are taking away a chunk of market share from Samsung smart phones.
So, the importance of marketing is rising because consumers are open to influencing today. They are so confused with the noise, that they think companies which are not making noise are not worth it. Marketing plays a pivotal role in consumer decision making in such cases.
Niche markets rising up – Today there is huge market for cell phone accessories, automobile accessories as well as home decoration. These markets are niche markets but they are on the rise and many of the SME’s have made it big by bulk supplying their products to OEM’s. In such niche companies, the importance of marketing is rising as communications and distribution plays a critical role.
For example – In ear phones and tablet covers, packaging and design is most important, whereas in spare parts of white goods and automobiles, distribution and marketing strategy is essential. Thus even in niche product, the company cannot survive without a proper marketing plan and strategy.
Combine the above four traits of a business environment and the environment becomes complex, dynamic, multi faceted and consumer driven. In such a market, the marketing mix is ever changing and hence the need arises of smart marketing managers and smarter marketing strategies.