The oft-forgotten P of price seems to be out of favour with marketers in the current economic climate as they rank defending and growing profit margins through price the least important task for a marketing department.
Marketing Week’s Language of Effectiveness survey, supported by Kantar, reveals less than a fifth (19.7%) of the 1,300 brand-side marketers who responded believe growing profit is the main task of marketing, putting it joint last out of eight different jobs.
This is despite 56.7% claiming price has been a more important focus of marketing given the current economic climate, which is leading many brands to increase prices.
The lack of importance put on growing and maintaining profits through price is particularly true for larger businesses (those with more than 250 employees) where just 15.3% of respondents consider marketing a job for growing and defending profit margins. This increases to 22.7% for SMEs (less than 250 employees) but still leaves it as one of the least desirable traits (seventh overall).
How Tyrrells moved away from the ‘drug of promotion’ to grow sales valueThis difference could be because marketers in larger organisations feel they have less control over the lever of price as it is considered a job for the finance department.
The lack of enthusiasm for price is felt equally by marketers in B2B and B2C firms. Both B2C and those with a mix of B2C and B2B have price at the bottom of the list (19.8% and 18.1% respectively). While purely B2B marketers consider it slightly higher it remains a fairly miserly 21.7% of respondents who see it as vital to their day-to-day work.
This continued negation of price could be a problem, particularly at a time when marketers are under increased pressure to boost sales. We revealed previously as part of the Language of Effectiveness study that increased pressure is causing marketers to focus more on performance marketing over brand.
But looking to increase sales with a lack of deference towards maintaining profit margins could lead to a renewed focus on promotional marketing, something Marketing Week columnist Mark Ritson strongly warned against in a recent column showing seven steps to kicking marketing’s promotion addiction.
Likewise, Les Binet has said it is imperative marketers understand the importance of price in the current economic climate: “If you don’t get your prices right, you don’t make money. Optimising your prices in this turbulent world is priority number one and to do that you need to understand supply and demand in your sector.”
Marketing’s most important job
Increasing market share ranks as the most important job for a marketing team, with 50.9% of respondents looking to achieve this with their marketing communications. This is followed by communicating a consistent and desirable brand image (45.8%) and defending and growing sales (36.1%).
Les Binet cautions against ‘senseless’ price promotions as recession loomsOther tasks that are voted above influencing price include maximising cut-through with target audiences (34.4%), ensuring the product portfolio is right for market demand (33.2%), ensuring the mental and physical availability of brand/products (25%) and – in joint last place with growing profit margin through price – growing the brand’s category (19.7%).
Growing market share was the top metric for both SMEs and larger companies (47.6% compared to 54%) – as well as for B2B, B2C and companies with a mix of B2C and B2B where it received 47.5%, 49% and 55.9%, respectively.
Market share as an effectiveness measure, however, has long been debated with many believing it can be a false sign of growth for a brand when viewed in isolation.
Marketing Week has published a series of content based on the Language of Effectiveness data, including a report. In the coming weeks we will be looking further at the role of market share as a metric and creative effectiveness.