Ask Mr. Marketing: Why Coke still markets

By Rob Weinberg

When can you stop marketing?

Ronald Graham

In a word: NEVER!

Lest you think that statement to be self-serving, consider Coca Cola — arguably the best known brand in the world. This purveyor of sugar water generates $35 billion in annual sales, but spends $10 billion of its hard-earned revenue on marketing.

Why don’t they just pocket the money and ride on their reputation? After all, they’ve got 127 years of visibility, right?

Basically, because if Coke banked that $10 billion each year — an obvious temptation — they’d invite those fun folks at Pepsi to market more and take over as #1. Coke’s lost profits would dwarf any money they’d save.

Watching their business shrivel, Coke would try battling back to the top. Their marketing hiatus would cost them significantly more than $10 billion to recapture customers, many of whom would now have tried Pepsi and might be lost forever.

Not too smart, huh?

Coke’s not alone with this strategy, either. Procter and Gamble allots a full 12 percent of their $85 billion in annual sales to marketing. They’re leaders in many of their product categories.

And it’s why American cereal manufacturers spend $600 million each year trying to persuade you to buy sugar-coated “cardboard.”

The U.S. Federal Trade Commission finds that as a group these guys spend twice as much on their marketing efforts as they do on their ingredients. REALLY!

Of course, your question isn’t at all unusual. At almost every seminar I lead there’s someone asking if he has to market, how much to market, and which ways make the most sense.

Successful businesses understand marketing is an investment, not an expense. Many textbooks answer the “How much?” question by suggesting 2 percent of sales. Over 33 years as a communications professional, I’ve learned 6-9 percent is more like it. And whatever you have budgeted for marketing, it still won’t be enough for everything you want to do.

Still don’t think you need to market? That’s fine, provided you recognize your cost of lost opportunity from not marketing.

My take: Not marketing yourself consistently and aggressively will cost you business sales, momentum, and market share. Only a carefully planned, adequately funded, intelligently executed plan can prevent this.

With that said, I wish you a week of profitable marketing.

For ideas on how to execute a well-constructed marketing plan, reach Mr. Marketing at www.askmrmarketing.com.

Related posts:

  1. Mr. Marketing: Investing builds the bottom line
  2. Ask Mr. Marketing: Kiss me. Buy from me.
  3. Ask Mr. Marketing: Is your marketing run down?
  4. Ask Mr. Marketing: Now I’m afraid to eat anything
  5. Ask Mr. Marketing: Don’t live by bread alone

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Posted by Karen Brainard on Jun 28 2013. Filed under Ask Mr. Marketing, Business, Columnists, Columns. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

1 Comment for “Ask Mr. Marketing: Why Coke still markets”

  1. Sanjay

    Yes can't agree more with you that " Marketing is Investment" and it reaps benefits that not only leapfrog the top line but also pushes back the competitors by miles

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