Spending Strategy at Commoditized Firms

When you sell a commodity-like product, price competition is usually fierce. Think airline seats, insurance, hotel rooms. So it pays to be the low cost operator. Marketing in this environment is inherently an evidence of optimism by the senior team. When you are marketing for these type of commodity products, you are fighting the evidence and the instincts of the majority consumer. Why not use that available pool of money for something smarter ? There MUST be superior ways to get more bang for the buck. Why not use all the money to set up more customer service lines, monitor the conversations about the brand online, or (omg!) participate and control it.

I think a low cost operator reputed for great customer service, in the long marathon, will beat a low cost operator with memorable ads. Any money diverted from customer service to marketing should be scrutinised more sharply by the CFO and CEO versus expenses related to T&E and Headcount (traditionally the ones that was closely monitored)

The Chief Marketing Officer of a commodity-like product should be only moved into that role after he has done a 3 year stint in Customer Service. That’ll really dampen her urge to promise the moon to customers when she knows the team in the kitchen can’t deliver that and Customer Service will face the flak.

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