Richard Ivey's Niraj Dawar says this is a good time to
invest in skill sets
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Niraj Dawar is professor in marketing communications at the
Richard Ivey School of Business. Here he explains how marketing
departments can adapt to better deal with the economic slowdowns,
and how an MBA programme can help prepare marketing executives
for similar situations in the future.
How does the role of a marketing department change
during an economic downturn?
Marketing departments tend to have a longer term view of the
business than a sales department. Their role is to develop brands,
and market positioning that is of value to customers and defensible
in the face of competitive efforts. In a recession, marketing
departments must demonstrate how they contribute to immediate
results. Current sales revenue is valued more than the promise
of future brand strength, with the result that marketing budgets
are often cut. But this is counterproductive in the long term.
After all, many of the best known brands have been around for
a very long time and are strong today because they invested
in brand building in good times and bad.
What effect will a recession have on marketing departments
and what will be the difference between those departments that
survive and those that fail?
As in many other fields, a recession separates the best from
the rest. The most innovative, the most effective and the most
efficient marketers are rewarded. Those who can demonstrate
that they can achieve results despite curtailed budgets, and
those that can improve sales without sacrificing the long-term
health of their brands clearly win. One benefit of building
a brand in a recession is that many competitors are slashing
their marketing spend. So if you maintain yours, you have more
bang for the buck.
If you were advising a retail client today, what tips
can you give on how its marketing approach could best address
the economic environment?
Retailers need to do three things: drive traffic through their
stores, get customers to buy more when in the store, and gain
customer loyalty so that customers come back. To achieve these
goals, they need to shift their advertising to tactical messages
in the short term, adapt an assortment of products that appeal
to more price-conscious consumers, and enhance their points
programmes and preferred customer programmes. High-end retailers
have difficulty attracting new customers in these times, so
they must sell more to existing customers.
What are the most common mistakes made in these times,
and how can an MBA better prepare executives to better respond
to change of this sort?
A common marketing mistake in a recession is to become so revenue
driven that the tactical focus eclipses the strategic imperatives
of brand building. The marketing curriculum of an MBA programme
instils a deep appreciation for long-term value of brand building.
Marketing efforts pay off over years and even decades, not in
the next quarter. Losing sight of these long-term goals when
under short-term pressure is probably the most common marketing
error in a recession.
How important is it to ensure that what is taught in
an MBA programme reflects the present business environment?
How do business schools achieve this?
A good MBA programme emphasises long-term skills that students
will use throughout their careers. The Ivey curriculum, for
example, prepares the candidate to be a manager that is adaptable
to different economic conditions and is flexible in working
in different parts of the world and in a variety of industries.
Our faculty are experienced and understand the challenges of
the economic environment. Our programme is geared towards helping
managers see and creatively work with the opportunities that
are present in the midst of downturns.
Marketing professionals of all types will suffer during
this recession. In what ways could laid-off marketing professionals
benefit from using their enforced unemployment to commit to
an MBA? How could the investment pay back?
We typically see an increase in applications for our programmes
during an economic downturn. Smart managers recognise that this
is a good time to invest in their skill sets, and the opportunity
cost of being away from a job is far lower in a recession than
in boom times. By training themselves for the next stage of
their careers during a downturn, they are ready to take advantage
of the opportunities when the economy turns around. The investment
in their own skills pays back in terms of wider horizons, better
job opportunities and higher potential earnings during the remainder
of their career.
SCMP
4th March, 2009
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