Skip to contentSkip to navigation

Turn a Growth Bump into a Boon

Traditional marketing tends toward rigidity and long-range planning, but firms must break out of this framework to exploit unexpected, one-off events.

Bottom Line: Traditional marketing tends toward rigidity and long-range planning, but firms must break out of this framework to exploit unexpected, one-off events.

After Kate Middleton was photographed in a pair of nude high-heeled shoes, the Marks & Spencer look-alikes flew off the shelves, making them one of the company’s best-selling products of all time. And when a video clip of Barack Obama singing Al Green’s “Let’s Stay Together” went viral, sales of the song skyrocketed.

In the social media era, when news spreads quickly and opinions change with the swipe of the finger, all it takes is the right product review or celebrity association to generate the kind of coveted buzz that can boost sales. (Similarly, a high-profile pan can gain traction quickly and damage a brand.) Yet this phenomenon presents a conflict for marketing departments at established companies. Marketers are under constant pressure to increase revenue. But there’s only so much sales growth that big-name firms can squeeze out of a brand — at a certain point, spending more on advertising becomes a case of diminishing returns, or at best defending one’s turf.

This makes the rare and unexpected sales bumps some of the best opportunities for marketers to lock in benefits for their brand, according to a new study. But there’s a problem. What companies need to do to take full advantage of these positive vibes — namely, be vigilant, flexible, and opportunistic — stands in direct contrast with the long-standing conventional marketing wisdom that effectively promotes rigidity and prizes a strict adherence to budgets based on long-term industry projections.

Marketers already know that for brands in mature markets, sales growth is not a gradual or consistent phenomenon. It tends to evolve in short spurts followed by longer phases of stagnation. Of course, some spurts are predictable. The toy industry knows it’s going to see a surge in holiday sales, so a great deal of its marketing is targeted for the end of the year, in harmony with the traditional framework.

But the other type of spurt — the one that catches firms off guard — is triggered by an occurrence outside the company’s control, and makes consumers rethink their opinion of a product. It’s the rare opportunity marketers should learn to train their sights on, and be prepared to take advantage of, according to the study’s authors.

The opportunistic tack requires managers to be vigilant and flexible enough to quickly turn temporary sales boosts into sustained gains — or to prevent slips from snowballing into prolonged slumps — before the window of opportunity slams shut. As noted above, this is especially important in the social media era.

Being vigilant means ditching the rigidity that can result from marketing planning, the study’s authors suggest. Managerial emphasis should shift from internal cost monitoring to external scanning for the trends, tastemakers, and sudden incidents that can influence the business environment. In turn, brands must insert enough wiggle room into their marketing budgets to be able to strike while the iron is hot, via short-term campaigns aimed at turning fleeting moments into lasting impressions. “Thus, brand growth can be fueled at possibly lower expense: instead of gradually increasing marketing budgets, the brand augments (temporary) windows of growth opportunity with marketing investments that alter the growth path of the brand,” the authors write.

Being vigilant means ditching the traditional rigidity associated with marketing planning, the study’s authors suggest.

The authors analyzed the weekly sales, marketing expenditures, and positive product reviews for the six leading brands in the U.S. digital-camera market from 2010 through 2012. In this otherwise mature and stationary sector, the authors confirmed that positive product reviews of cameras created brief chances for growth bursts that added significantly to a firm’s baseline sales. (For this study, the authors elected to look on the bright side and limit their analysis to positive appraisals, but we know that the effects of positive and negative word of mouth are similarly intense in many advertising contexts. So it stands to reason that keeping abreast of bad news requires the same vigilance and flexible budgeting as does spreading good news.)

Interestingly, these opportunistic periods cropped up much more often for smaller brands than for the industry dominators, leading the authors to suggest that vigilance is more important for smaller brands in gaining market share. The analysis also revealed that the tone of reviews — whether they were lukewarm or glowing — was a far more important predictor of unexpected short-term sales spikes than the pure number of reviews a camera received in a given time frame.

Some brands took advantage of positive reviews by slightly increasing their advertising spending to add fuel to the fire, the authors found. But the majority did not. The authors posit that firms ignore most fleeting growth opportunities because they fail to recognize the impact of external events. Most companies in the study simply based marketing spending allocations on past sales and advertising numbers, seasonality, and the introduction of new products. That standard metric indicates their budgets were all but set in stone, their media spots long since purchased, and their campaigns planned well in advance.

If they instead implement the tactic of exploiting spurts, marketers can take a brand to the next level — even if it’s a relatively small step up in an already crowded field — without spending ever-larger amounts on marketing, the authors suggest. But these transitory moments can’t be formally anticipated or endlessly focus-grouped. Only by keeping a close watch on external trends can managers identify when the moment is ripe to escalate spending and keep the momentum going.

That vigilance wouldn’t have been so easy in the old days, but the continuous influx of new data streams and analysis methods gives managers the chance to act decisively when a window cracks open. Not doing so, the authors suggest, would be a true missed opportunity.

Source: “Performance Growth and Opportunistic Marketing Spending,” by Dominique M. Hanssens (University of California–Los Angeles), Fang Wang (Wilfrid Laurier University), and Xiao-Ping Zhang (Ryerson University), International Journal of Research in Marketing, Dec. 2016, vol. 33, no. 4

Matt Palmquist

Matt Palmquist is a freelance business journalist based in Oakland, Calif.

Get s+b's award-winning newsletter delivered to your inbox. Sign up No, thanks
Illustration of flying birds delivering information
Get the newsletter

Sign up now to get our top insights on business strategy and management trends, delivered straight to your inbox twice a week.