The CIM’s confidence index has oscillated wildly in recent months – from a record high at the end of 2002, it has now plummeted to its lowest ever
As concerns about war in the Middle East mount, and the reality of economic slowdown begins to hit home, confidence among UK marketers has crashed to a record low. The latest Marketing Trends Survey from the Chartered Institute of Marketing (CIM) shows a dramatic turnaround: after reaching an all-time high last November, confidence has tumbled to its lowest level in the eight-year history of the survey (MW last week).
At the end of last year, marketers were optimistic about the future. Confidence was running high at the time when sales plans for 2003 were being put together. As a consequence, sales plans were bullish, and sales were expected to grow by 6.3 per cent this year. This was an increase from 4.8 per cent this time last year.
CIM’s confidence index compares projected sales plans with marketers’ belief in their ability to meet these targets. Over-ambitious plans prepared three to six months ago may be one cause of the fall in confidence, as marketers lack faith in their ability to meet these tough targets. At the end of last year, marketers were relatively certain that they would achieve their – less aggressive – targets, and the confidence index stood at a record high of 98.5. It has now plunged to 82.5.
This month, only 36 per cent of respondents describe their sales plan as realistic – a dramatic fall from 58 per cent in November. A substantial 62 per cent say their sales plan is “very challenging”, up from 20 per cent in the last survey, and only three per cent describe their plan as “over-achievable”, a fall from 19 per cent in the last MTS.
Small companies remain the most optimistic: only eight per cent of marketers from companies with a turnover of &£1m or less say their sales plans are “challenging” while 69 per cent say that their targets are “realistic”.
In a number of sectors, notably consumer services, marketers managed to command higher prices for their products, leading to an average reported inflation figure of 1.5 per cent. However, marketers do not expect this to be repeated this year; they plan to increase prices by just 0.7 per cent on average over the next 12 months – one of the lowest figures on record.
As a consequence of the reduced optimism, companies have slashed planned growth in their marketing spend. Budgets are expected to increase by just 1.7 per cent, another record low in this survey.
Activities aimed at increasing general awareness, such as public relations, (where expenditure is likely to be cut by 0.3 per cent compared with a predicted rise of 2.9 per cent in the last survey), advertising, and sponsorship will be hit hardest. Areas such as lead generation and internet marketing are likely to fare comparatively well, with marketers anticipating the largest increases in expenditure in these areas. But prospects for both general awareness-raising activities and lead-generation activities are slightly down on the figures recorded in the last survey. Promotions is the only area of activity where there is increased optimism about expenditure: the average growth prediction is up from 2.3 per cent to 2.4 per cent.
But these depressing figures are not, as yet, reflected in plans for staffing levels. Despite the gloomy predictions, only seven per cent of companies intend to reduce the strength of their marketing and sales forces. Five per cent say they plan to increase the size of their marketing department, and 89 per cent say they are happy with the current size of their team.