Low Budget Marketing: How to Successfully Compete and Win

Low Budget Marketing

This is a guest post by Julian Padurariu*. 

Low budget marketing is one of the most popular topics during marketing conferences and training camps I frequently attend.

As a marketing practitioner, I have been confronted with this exact challenge starting with the first serious projects I was involved in as a Marketing Manager or consultant during the early 1990’s, in post-communist Romania.

In those early days of free market economy local brands were invariably launched on a significantly lower budget than those of the direct competition, usually multi-national brands that wanted to establish a local presence.

The “low budgets” challenge has been the driving force behind my continuous search for new solutions, not just on a creative level, alongside my advertising colleagues, but also on a business model level.

Build Loyalty Through Gamification

One of the innovative solutions I strongly believe in is the concept of “gamification” – an extremely useful method to increase clients’ loyalty.

For those of you less accustomed to the term, “Gamification” at its origins, is a reverse-engineering technique used in the gaming industry, by adding game elements and dynamics in non-game environments (such as a business), in order to increase users involvement.

If this concept sounds new to you, it’s not too late to consider exploring it. Gartner estimates that it would take another 5-10 years until gamification reaches the “productivity plateau“.

But before looking for new solutions, we must understand the limitations of classical solutions.

We must adjust the way of thinking in such a manner that we would not allow ourselves to think “well, company X or Y – market leaders– succeeded, so I must succeed too”.

I would call that “a dwarf’s trap“: The dwarf wants to be a dragon, and struggles to throw flames out of his mouth.

I have bad news for you: the dragon’s strategy will never work for the dwarf.

Forget Mass Advertising

One of the “flames” the dragon is using to get the message out is mass advertising. New entrepreneurs who plan to start a business, be it a new online trading platform or selling potato chips, might be tempted to consider mass advertising to promote their new ventures.

Mass advertising should not be part of the ” low budget marketing” tool-kit.

People in advertising will tell you that the first rule of mass advertising is “Big or Nothing.“ The “Big or Nothing“ rule has been scientifically proven: success in media depends on two big parameters: quantitative and qualitative.

Qualitative parameters are extremely important and can compensate for the quantitative ones only up to a point. I will elaborate on the topic later on.

Quantitative ones though are pretty straightforward: you can’t get a fair media visibility unless the “coverage“ (how many people you reach) and “frequency“ (how many times you reach them with your message) components position you above the “efficiency threshold” and outside the area of excessive exposure.

In our low budget situation, before entering the actual exposure area, the concern lies obviously with “the efficiency threshold”. This is where the “Big or Nothing” concept originated from – when you have budgets that don’t help you go over “the efficiency threshold” barrier, you are better off allocating your low marketing budget elsewhere.

As for the quality indicators, they are obviously a lot more difficult to manage.

The lower the budgets, the more I need to emphasize how important being consistent is. That is, consistency of your marketing actions and the message being communicated.

Consistency allows companies with a low marketing budget to communicate efficiently.

One word of advice: the saying “measure 7 times, cut once” applies to low marketing budgets as well: Before pulling the trigger on your next campaign, think about the desired effect it should have on your target audience. Otherwise, every change you make while the campaign is running will get you back to square one.

When it comes to relevance, things get a bit complicated. Being relevant in business means how the consumers perceive you. Generally speaking, relevance is closely connected to with the answer to the question “Who are YOU?”

Vitamins versus Painkillers

In his very successful book “Hooked: How to Build Habit-Forming Products”, Nir Eyal divides the problems businesses are trying to solve into two categories: “vitamins” and “painkillers”.

According to Nir, “vitamin” solutions are “nice to have” people can live without. “Vitamins” usually come in the form of enhanced product features, rather than radically innovative products. Consumers have a choice to pay a price premium for a “vitamin” solution, or leave without it.

Businesses that offer “painkiller” solutions solve a burning need. “Painkillers” don’t require price premiums-they solve a real problem in a certain way, for which there is already a set budget. “Painkillers” are much easier to sell once the need-solution connection is clearly presented.

To illustrate the difference between “vitamin” and “painkiller” solutions, think of your cell phone. The device itself solves a “painkiller” need: the need of people to communicate remotely. The Camera feature on most phones in a vitamin: people can leave without taking pictures with their phones (although some might argue otherwise).

Once the difference between “vitamins” and “painkillers” is understood I believe the answer to the question “Who are YOU?” can be much more easily structured by using elements of the problem you’re trying to solve, the market you’re targeting and the resulting solution.

Let’s think of Netflix. Who is Netflix? Netflix is an online movie rental company that targets movie lovers with easy access to a huge selection of content from the comfort of their house, without charging late fees.

Choose a “Descriptor”, Not a ”Tagline”

The lower the budget, the more important it is for a business to choose a “descriptor” rather than a “tagline”, as you might not have a second chance to become visible to a potential customer.

My suggestion is to put creativity aside for a moment and look for a descriptor, the essence of your business compressed in a few words that clearly define positioning or the solution to potential customers ‘problem.

Hootsuite is the Social Media Management Dashboard. No poetry here, but anyone can decrypt on the spot what Hootsuite is all about in the very crowded segment of online apps.

Think “Community”, Not “Target Audience”

If you are thinking about sending messages to your  “Target Audience” instead of building a “Community”, your low marketing budget will quickly evaporate.

When you have a low budget, “community” can represent a very powerful force that can work to your advantage.

Unlike the dragons that have a message to send to the “target audience” through advertising, you must build a community and manage it bit by bit as you see fit.

Even some dragons, such as Apple, Bosch, Ducati, Harley Davidson, Nike, have understood the importance of building a community.

The members of their communities not only act as true brand “ambassadors”, but are also generators of ideas meant to improve products and services.

The major difference between “target audience” approach and “community” approach is the way the information flows. With the “target audience” approach, the information is spread by the “only transmitter” to “receivers”, somewhat like an artist on stage trying to entertain us with his performance.

With the “community” approach, the company sets up a conversation platform that is accessible to the masses, which is being used not only to receive the company messages, but to become “message transmitters” within a given area of influence.

The task of transforming a potential client, who had just stumbled across your company website, into a brand ambassador who would eventually set up a local fan club for your brand, might seem impossible, or extremely expensive.

This is not the case. Generating community involvement happens gradually, but almost naturally and effortlessly if guided accordingly.

In the end, the solution to the question “How do I make to most of my low marketing budget?” is provided by answering some vital questions:

  1. Who are you (as a business)?
  2. What solution does your business provide: a vitamin or painkiller?
  3. Do you use a business descriptor or a poetic tagline?
  4. Are you an entertainer for the “target audience” or a community facilitator?

Julian Padurariu is one of the most famous business strategy consultants from Romania. He began the entrepreneurial life in 2005 with the opening of Jack Trout’s consulting office in Bucharest. Based in Vienna since 2008 he is actively involved in many European countries through various consultancy projects and  workshops focused on entrepreneurship and innovation. With a General MBA from Webster and a Professional MBA from Vienna’s Wirtschaftsuniversität specializing in Entrepreneurship and Innovation, Julian Padurariu is a major supporter of entrepreneurship, often bringing to attention innovative concepts and business design methods around the concepts of positioning and differentiation.

You can contact Julian via LinkedIn.

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