Viewpoint

In my experience, I have found that the majority of brokers, and many insurers, are blind to the importance of marketing and the long-term value it can demonstrate to shareholders, as part of the overall business strategy. Many fail to see that an effective marketing plan can be the key to survival and growth during tough economic times.

The financial services industry is under a great deal of pressure and, in this climate, the temptation is to try to recover profits by cutting back on marketing. In the short-term, this approach will result in an improved profit margin, but, in the long-term, it could prove disastrous. When the market changes for the better, those who have not invested in marketing will not be in a position to take advantage and will lose market share.

Analysts' interest
Investment analysts take a particular interest in marketing investment, brand awareness and market share of the companies on which they report. In a recent survey, 71% of analysts questioned said that they would be most interested in looking at marketing investment figures, 62% were interested in brand awareness and 91% found that market share figures would be most useful to them (Brand Finance 1999). Despite these figures, a study has shown that only 10% of companies provide information regarding marketing investment in their reports. Only 8% provide information relating to market share.

Businesses are obviously underestimating the significance of successful long-term marketing strategy. A balance needs to be struck between financial strategy and marketing strategy, so that profit recovery is not simply sought through cost-cutting, but also by shrewd forward planning.

Action plan
Any company wishing to benefit from long-term profitability and sustainable competitive advantage should demonstrate the following:

a) A profound understanding of the marketplace in which they operate

b) Creative segmentation and selection - the identification and targeting of key consumers

c) Powerful differentiation positioning and branding - developing unique selling points

d) Effective marketing planning processes

e) Integrated marketing strategies

With these elements in place, businesses can survive the most testing times, especially when marketing planning is coupled with non-alarmist, short-term financial strategy. This could be best achieved through close co-operation between professional marketing people and financial directors.

It is time to remove the blinkers and see marketing for what it really is - an essential survival tool. Really successful businesses view marketing as a key strategy and have it in place continuously. When the marketing flow is turned on and off, its effectiveness is diminished and those stemming it will ultimately suffer.

Steve Manton is managing director of M Consulting