From the Publisher: Spending money to make money

Company’s that eschew advertising in hopes of saving a few dollars are failing to see the bigger picture. 

I had an interesting encounter with a manufacturer’s director of marketing during a recent trip to the Midwest. Seth Mendelson

As we discussed the state of his company and sales for his leading products, he bluntly said that things have not gone as expected over the last few years. In fact, he related that the company has finally decided that it needed to put some marketing muscle behind its upgraded product line, which, he assured me, is pretty good.

Then he hit me with a doozy. In the past the company really did not do much traditional or even New Age advertising or promotional activity, he said. Instead, it relied on a “word-of-mouth” advertising strategy to build interest in his product.

Lets set the record straight: If you do not want to grow sales, do not do any advertising. More importantly, do not hide behind the theory that “word-of-mouth” advertising is going to be enough to get your company and its products to the forefront of consumers’ thoughts as they shop for themselves and their families. If you are looking to run a bake sale for the local Girl Scout troop, word-of-mouth may work; but it will not if you are trying to build a regional and national brand.

From this angle, at least, relying on “word-of-mouth” advertising is just another way of saying that the top brass either just do not understand marketing or they are simply too cheap to spend money reaching out to consumers.

In nearly every case, word-of-mouth advertising does not work well enough to sustain a brand. Today, more than ever, manufacturers must make consumers, and retailers, aware of what they are offering, why it is different than what else is currently available and, most importantly, why consumers should purchase it (i.e. a better mousetrap or better pricing).

That is why the largest companies do the most advertising and, hence, why they are the largest companies. A classic example of this is Apple and its desire to stay ahead of the curve with its iPad. Despite similar products flooding the marketplace, the iPad has managed to maintain a dominant share of sales. That is probably because Apple continues to spend many millions of dollars each year promoting the product and making it known to consumers why they should buy a tablet and, if they do, why they should purchase the iPad.

Another classic example, and one that hits home for supermarket retailers, is the battle for advertising space among the largest beer companies. Do Anheuser-Busch, Heineken and Miller/Coors each need to keep spending millions of dollars to reach consumers? The answer is yes. If one stops advertising consumers will soon stop putting them top-of-mind. The result will be a downtick in sales.

So if you really want to be a player in the marketplace, understand that success comes with a price. If you do not want to spend the bucks, get ready to fire the marketing guy because odds are you are not going to need him for long.

Seth Mendelson can be reached at 646-274-3507, or smendelson@groceryheadquarters.com.

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