The debate on whether strategic brand-building or tactical promotional activity is more important has been solved – to the satisfaction of most marketers, at least. The broad consensus is that a combination of the two is optimal.
“There is plenty of evidence indicating what proportion of your budget you should spend on each, according to the maturity of your brand and the category it’s in,” says Ross Farquhar, marketing director at ice cream company Little Moons.
But we’re living in strange times here in the UK. An enduring cost-of-living crisis, coming hard on the heels of the pandemic, has changed a lot of consumer behaviour. Does this widely accepted marketing principle still apply under such unusual circumstances?
Don’t ditch the gold-standard mix
The rule of thumb is that a 60:40 split in favour of brand-building generally works best. Books such as The Long and the Short of It, by Les Binet and Peter Field, which suggested the ratio, are considered essential reading for marketers.
Companies build their brands at the top of the sales funnel to ensure that there are always customers circling it. A large body of research indicates that firms which continue this process during recessions stand to gain the most. Further down the funnel, they use a mix of promotional messages and calls to action to close their sales.
In a downturn, it can be tempting for companies to adopt more short-term measures to boost sales. But, while the 60:40 principle varies by sector and can be hard to achieve, Farquhar argues that marketers should aim to stick as closely as possible to it, even when the economy is faltering and trading conditions are deteriorating. The cost-of-living crisis may change the execution of campaigns, but it shouldn’t affect that fundamental ratio.
“Your short-term tactics might have to become a little more price-led and promotional, because that’s just what the game becomes when everyone is being far more price-conscious,” he says.
Measuring the benefits of short-termism
In a crowded category such as ice cream, a long-term focus will always be important – particularly so for Little Moons. This 14-year-old company is competing with a host of far longer-established and better-known rivals.
“Ice cream is a category full of powerhouses where we’re an insurgent,” Farquhar says.
Ongoing work to establish a strong brand therefore remains essential, even if his firm’s short-term tactics need to be adjusted from time to time.
If you’re going out with a strategic set of messages that doesn’t align with the insights into how customers are feeling, that’s a losing strategy
Pizza company Crosta & Mollica (founded in 2009) is another relatively young player battling for a slice of a similarly competitive sector. The firm is reaching a point where it needs to adjust its long/short balance, according to its marketing director, Dean Lavender.
The business, he says, has been “growing very quickly, but doesn’t have a history of long-term brand-building activity”.
Short-term promotions have worked well for Crosta & Mollica. Lavender credits the use of front-of-store displays in mid-May for the brand’s “biggest-ever week” in Waitrose, for instance.
He explains: “We’ve been fairly reliant on shorter-term activity close to the point of sale. This is very seductive – you can say: ‘I spent this and got that from it.’ But there’s an understanding here that you’ll reach a higher level by investing in longer-term brand-building activity.”
A C-suite communication problem
Because Crosta & Mollica has got to the point where its goods are distributed throughout the UK, it needs to make more long-term marketing investments, according to Lavender. The firm was working to a 50:50 split until recently, but it’s edging towards the classic 60:40 ratio.
“I think we’ve done an amazing job of being very distinctive in stores and convincing people by driving a bit of trial,” Lavender says. “The key for us now is the ‘pre-shop’. We have little mental market share of people going into stores with the intention of purchasing our brand specifically. They’ll just go in to ‘buy a couple of pizzas’ instead.”
Yet it can be challenging for a marketing chief to convince their leadership team to invest more in long-term activity, given that its benefits take time to accrue and have an appreciable effect. And so can explaining to a board why perception metrics have improved but short-term sales haven’t, despite increased marketing expenditure.
Crosta & Mollica chose to experiment by briefly investing very heavily in short-term messaging to determine when the impact of this activity plateaued. The results of this trial “demonstrated that we needed to find a larger pool of people to make the short-term activity far more efficient”, Lavender says.
Building a brand that lasts
In contrast to Little Moons and Crosta & Mollica, high-end furniture company USM has been in business for six decades. The Swiss firm’s marketing campaigns focus on the quality of its modular ranges. As a premium brand, it’s been insulated from the cost-of-living crisis.
“I wouldn’t even know how to define whether our marketing is long or short term,” says the CEO of its UK business, Mirko Müller. “We’re focusing on our heritage and the fact that we’re the manufacturers of the original USM. In some of our markets (although not so much in the UK), we have competitors imitating our products.”
The company, which doesn’t engage in price promotions, has evolved gradually from being a B2B brand for the workplace to one that sells more than 60% of its products in the UK for domestic use.
Buyers of USM products trust these designs to remain available in case they choose to expand or reconfigure their furniture in years to come – a classic example of long-term commitment. More than half of its customers do return to the brand after their initial purchase, according to Müller.
USM increasingly emphasises that there’s a strong second-hand market for its products, such is the demand for them.
Jonathan Earle is MD of commercial and operations at Sportradar, a provider of tech for the sports, media and betting industries. He believes that long-term brand-building is vital even when times are tough, as it enables firms to earn and maintain trust, demonstrating the value they provide. But their marketing messages must reflect the challenges that consumers are facing. Thinking for the long term doesn’t mean persisting with the same ideas.
“If you’re going out with a strategic set of messages that doesn’t align with your insights into how customers are feeling, that’s a losing strategy,” Earle warns.
He notes that retailers such as Aldi and Lidl have emphasised their long-term position as consumer champions during the cost-of-living crisis and attracted new customers as a result. Those people have then reacted positively to more short-term marketing activations.
“You have to absolutely nail those strategic and tactical messages,” Earle says. “These have to meet what is happening on the ground with customers.”
Understanding changes in buying behaviour
Consumers don’t all react the same way to financial pressures such as the cost-of-living crisis, of course. And some might respond in extreme ways that companies don’t expect, notes Kate Nightingale, a consumer psychologist and founder of the Humanising Brands agency.
“It boils down to this being an existential crisis,” she says. “People either become much more controlled in their spending, or become very indulgent and impulsive.”
A well-timed marketing message might easily sway shoppers in the latter category, therefore, whereas a brand’s hard-earned trustworthiness may be the deciding factor in the purchasing choices of those in the more controlled cohort.
Much as with our true (non-fair-weather) friends, we tend to remember entities that have cared for us in the past, adds Nightingale who says: “We choose the people who were there when we were at our lowest. It’s exactly the same with brands.”
The debate on whether strategic brand-building or tactical promotional activity is more important has been solved – to the satisfaction of most marketers, at least. The broad consensus is that a combination of the two is optimal.
“There is plenty of evidence indicating what proportion of your budget you should spend on each, according to the maturity of your brand and the category it’s in,” says Ross Farquhar, marketing director at ice cream company Little Moons.
But we’re living in strange times here in the UK. An enduring cost-of-living crisis, coming hard on the heels of the pandemic, has changed a lot of consumer behaviour. Does this widely accepted marketing principle still apply under such unusual circumstances?
