Invest in marketing before you fall

Everyone knows the importance of “The Valley of Death” in business, but only few pay enough attention to the next one – The Marketing Valley of Death. It’s like a swamp, where both new, unexperienced brands and market leaders get sucked into if marketing investments are not big enough.

The Marketing Valley of Death is relevant for both new challengers and market leaders. New brands have to scale up their awareness and engagement in order to speed up sales. Market leaders need to continuously acquire new customers and renew the brand from time to time.

Luckily getting out of the Marketing Valley of Death is simple; just make sure that your marketing investments are systemic and big enough.

Phases of Marketing Valley of Death

The Marketing Valley of Death can be divided into three phases:

Phase 1: The Slope

New brands often start their marketing activities in digital channels. Marketing is usually extremely effective and different targeting and messaging easy to test. Activities are often “always-on” type of activities. The first signs of The Slope for a new of the new brand are increasing contact prices and declining conversions. Marketing can no longer be scaled up without a drastic increase in costs.

A market leader can get into The Slope for many reasons. New rivals may have entered the market, customer behavior has changed or the brand is simply lacking emotional availability, i.e. disappeared from people’s minds. The brand may need to be repositioned or investments simply increased in order to be on the consideration set again.

Phase 2: The Abyss

In the second phase, the brand either renews itself or simply starts scaling up its marketing. Brand renewal can be a new package design, a new brand position or an advertising idea. When scaling up, the brand increases its investments and typically enters new channels to gain more reach.

In the Abyss phase, the effectiveness of marketing increases for many reasons. Bigger budgets enable bigger media discounts and broader channel mix improves reach and frequency levels. New packaging or new advertising idea appeals to customers better than before. 

Improved marketing efficiency increases sales, but not yet to a full extent. The reason is simple; marketing quickly affects the minds of the customers, but they don’t become active buyers in the category until the category need is triggered. In the Abyss phase, the brand’s cumulative cash flows are still negative, due to the front-loaded marketing investments.

At this stage the brand has to look long-term and keep on investing.

Phase 3: The Acceleration

In the last phase brand’s perseverance pays-off. Customer needs have fully triggered so the accumulated brand equity, i.e. awareness and engagement, impact fully on sales. Cumulative cash flows turn positive.

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