Opinion: Cost-cutting versus investment

Businessman drawing social media connection scheme on glass windCan marketing done right save a business that is struggling to survive? The short answer to that question is ‘yes and no’, and it all depends on your definition of marketing.

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If you see marketing as purely advertising (a mere fraction of what marketing really is all about), then it can often be the equivalent of shouting about the naked guy standing on the hill. It will bring a lot of attention to him but pretty much everyone will be pointing at him and laughing – or worse, calling the cops.

Advertising a bad business can’t make it better, and very often it will accelerate the decline.

True marketing is a process of rigorously identifying how a business adds value to the lives of the stakeholders it serves, then leveraging that focus to create a motivating connection with those stakeholders to profitably sustain and grow the business.

As Richard Branson once said, “businesses exist to make people’s lives better. Whether they are shareholders, employees, suppliers or customers, we continue to prosper only if we satisfy that criteria”.

Almost any retail business can be saved by good strategic marketing, provided the thinking is sound and the execution is disciplined. As any retailer knows, there are so many moving parts that the plan needs to be kept simple with an uplifting vision and a step-by-step implementation process that is methodical and pragmatically paced.

Changing a business is not for the faint-hearted. One of the main reasons that many retail leaders opt for cost cutting rather than real change is the risk and effort involved in meaningful realignment of enterprises. But cost cutting does not alter the fundamentals of the business – it only prolongs the inevitable. In Australian retail right now, there are too many retail businesses barely existing on the life support of extreme cost cutting.

In an economic environment where GDP growth is projected to be maintained at a low level for an extended period of time into the future, these businesses are in for a whole lot of pain.

Marketing can help under-performing retail businesses articulate and address core issues and realign their business models to attain growth rates above category trend. But only if it is addressed in its extended form in a way that unites all areas of the enterprise into a cohesive force that elevates the business above the transactional and into the strong evangelical relationships that combine all parts of the value chain and all stakeholders with clarity and purpose.

In a world where consumers are overwhelmed with choice in every single product category, the only thing that guarantees a future for a retail business is comprehensive, all of business marketing that provides a clear path forward for everyone involved in the enterprise.

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