Marketing Dilemma in Recession
Marketing had undergone a lot of changes in this century, from the product based theories to the customer relationship management based systems. Now when world’s economy is going down with recession, the marketing budgets are under strain in most companies. In Indian Information Technology companies the budgets are mostly on the basis of Billable and Non Billable resources.
Billable Resources are those employees who are on some active customer project and their salaries are getting billed to a live project that is they bring in the revenue from their projects, whereas Non Billable resources are not attached to any specific project like Accounts, Human Resource Department, Marketing etc.
Actually what is happening is when the companies in general are going for cost cutting in budgets, the first lot that gets their attention is marketing. Its inherent ego about their products or services that companies think, by pruning marketing budgets they could cut costs, as in recession, there are very few buyers so why to spend on marketing areas like advertising, sales personnel salaries etc.
Now the question arises that “This marketing Budget pruning or the so called cost cutting in Non Billable areas is good or counter productive for the Company’s growth as a whole in the future.” Well let us scrutinize this strategy.
In recession when the buyers are already less, it makes greater sense to market your product more, since lets say that the success ratio for your sales personal is 10% (just an assumption) in normal times, but since its recession, let us assume the success ratio drops to 5 %, but still what ever project or order your sales personal brings will help in your topline growth and it will help you to utilise your human resources better leading to lowering of costs on the human resources front and significantly lower dreaded word lay off. Moreover with better topline growth, the firm would be more resilient to the turbulent business environment.
The gist of the article is although on the first instance it looks we could cut costs by targeting marketing and these non billable departments, but in the long run, it would prove counter productive to the future growth of the company. The companies on the other hand who would push harder into the market via their marketing departments will bag elusive orders and also start new relationships with their clients in this recession.
There is another positive in not trimming your marketing workforce, that is when the times are good, the relationships are generally good, but in hard times there is lot of fire fighting that goes about in client company relationships. So to effective manage your key accounts you need relationship managers from your marketing department. Clients would keep on asking for cost cutting, but you as a company could give in only to the extent that those cuts do not start affecting your bottomline growth. So you need to have relationship managers working to harmonize the relations and we could draw a thin line from where we could say a polite no to our clients for further cost cutting.
“A firm cannot survive without a marketing department since no human or product is perfect in this world.”
