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I’d hazard a guess that the only people who haven’t heard of Coca-Cola live in the deepest depths of the jungle cut off from all civilisation, and even then I bet a lonely can has come floating downriver. They have a huge 44% market share in the soft drinks sector, more than one and a half times that of their closest competitor, PepsiCo, who gained half of their market share through the phrase “Is Pepsi alright, mate?”.
So, why when they’re so far ahead of the pack do they still spend an extraordinary amount of money on marketing and advertising?
Getting to the top is one thing, staying there is another entirely. Complacency has been the downfall of many businesses who thought they were simply untouchable! Toys ‘R’ Us, for another example, announced this week that they would be closing all of their UK locations. Once the crown jewel of the toy sector they simply failed to innovate or maintain their market position and have paid the ultimate price.
No matter how secure you feel perched on your throne at the top, there is always a competitor waiting in the wings, hoping you’ll become lazy and overconfident. I would think that years ago, Nokia probably couldn’t see a reality where they wouldn’t lead the mobile phone market and we all remember excitedly renting a video from Blockbusters.
Nobody knew all of this better than Henry Ford, founder of the Ford Motor Company, who was famously quoted as saying:
“Stopping advertising to save money is like stopping your watch to save time.”
Advertising isn’t an expense, it’s an investment, one that you can’t afford to do away with, no matter where you are positioned. As a general rule of thumb, we always recommend that our clients dedicate at least 5% of their turnover to marketing and advertising, and maybe even 10% for market leaders.
Being top dog in an industry is always a precarious position as it means you’re the one with a target on your back. Going back to Coca-Cola as an example, not only do they maintain their marketing spend, they tend to increase it year on year to account for inflation!
Of course, we’re not all huge multinationals and the vast majority of us will never have to make decisions on the same scale as Coca-Cola or have access to their marketing budget. There’s a lesson here to be learnt by businesses of all sizes, and it’s a simple one: Don’t be tempted to save money by “turning off” your advertising efforts, even if you’re as busy as you can handle. It’s not a tap, and it can be far more costly to advertise sporadically than consistently.
Instead, try to figure out how you can expand your capacity for work and grow your company to capitalise on the influx of business coming your way.