Marketers cling to the glass half full

Optimism has been in short supply among marketers over the past few years, but a survey by the CIM shows the advertising world’s positive mood cannot be shaken

Marketers are still positive and remain in an upbeat mood despite tough trading conditions and further predictions of an economic slowdown, according to the latest Marketing Trends Survey from the Chartered Institute of Marketing (CIM).

The survey shows that the strong level of marketing optimism recorded in the spring has largely been sustained. This contrasts with previous results when a period of confidence has been followed by a sharp nose-dive in the next instalment. Indeed, this is the first time that two consecutive surveys have shown such a positive level of confidence. While the confidence index in this survey has dropped slightly to 97.5 per cent, this remains at its fourth-highest level in the history of the survey.

It also shows that predictions for sales growth remain high. Again, they are slightly less buoyant than earlier in the year, but remain at an historically high level. This year is likely to see total growth in sales of 8.5 per cent, which is slightly higher than the average of six per cent achieved in the previous year.

Marketers across the industrial and commercial sectors are planning for growth of at least 2.5 per cent, but it is notable that manufacturing sectors are more optimistic than three months ago. The largest change in sales growth is expected in the machinery and equipment sector, which forecasts 9.5 per cent sales growth this year, compared with just 2.3 per cent last year.

However, optimism among those in retailing has waned, which is consistent with reports of a slowdown in the retail sector. But even in this sector, there is no evidence of an imminent collapse. The smallest companies are the most optimistic. Those with a turnover of below &£1m and &£1m to &£10m are expecting sales growth this year of 10.2 per cent and 9.2 per cent respectively.

The proportion describing their sales plan as either “realistic” or “likely to be overachieved” has risen slightly from 74 per cent to 75 per cent since spring. Under a quarter of respondents, at 23 per cent, said that their sales plan was “very challenging”, while only two per cent described their sales plan as “unrealistic”. The survey does shows that the North is the least optimistic, with half of those taking part describing their sales plan as “very challenging”, and a quarter stating that it was “unrealistic”.

The research also shows that marketing is putting its money where its mouth is and hard cash is supporting this optimism. Just three per cent of respondents said they had plans to cut marketing spend or activity. However, the survey shows that overall, companies are planning a 4.9 per cent increase in total sales resource this year.

The largest increase is expected to be on the internet, where spend will rise by 5.5 per cent. The survey also shows that there is likely to be growth of about four per cent in spend on information systems and public relations. The most optimistic sectors in terms of total sales resources are food, beverage and tobacco, with all three forecasting growth of 12.1 per cent this year.

The only sectors that are expected to increase expenditure on all marketing activities are the electrical, electronics, chemicals and light manufacturing sectors. In the service sector, the retail and utilities sectors are planning to increase their total sales resource by more than ten per cent. Companies in financial services and other service sectors are forecasting growth of just 2.2 per cent and 2.3 per cent respectively.

Companies in Wales, East Anglia and the North are the most optimistic and expect to increase their total sales resource by 14.2 per cent, 8.3 per cent and 7.8 per cent respectively. Companies based in the South-west are planning to increase spend by just 1.3 per cent.

Just under a third of those taking part in the survey claim that increasing their share of the UK market is the main focus of their marketing. In addition, more than a quarter of respondents mentioned volume growth, improving customer loyalty and improving product specification as their key priorities. In the survey earlier in the year, improving customer loyalty had been cited as the top priority by more than 40 per cent of respondents.

Expectations of inflation have edged up slightly, and price increases are predicted to rise from 1.5 per cent to 1.6 per cent. However, this figure remains low, in line with the forecasts of most external commentators.

Experts at the Centre for Economics and Business Research believe that growth in the UK economy is likely to slow down. However, it remains to be seen whether the slowdown is likely to be severe or whether it will be a soft landing. But if business spending remains strong, it could offset a cut in consumer spending.

The CIM believes that the Marketing Trends Survey indicates that growth in marketing spend is likely to remain at a record level. This, coupled with the other positive results of the survey, would suggest that a softer landing is more likely than a hard one.

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