Marketing Managers Call Your Supply Chain Leaders

Let’s take it back to our marketing 101 class in college, the marketing mix or 4 P’s (Product, Price, Promotion, and Place). This is usually explained in the first chapter of every marketing textbook, but marketers often ignore Place (Distribution) or shift focus to the other P’s. 

However, we are in the middle of a global supply chain crisis that is causing delays, insane pricing fluctuation, and general chaos in the market. This crisis is making it abundantly clear that marketing and supply chains must have a symbiotic relationship and prudent marketing professionals should have their supply chain leaders on speed dial. 

Marketers who have the pulse on their firm’s supply chain operations are enabled to make decisions that positively impact firm performance through revenue saving and generating opportunities. There are several tactics that marketers can do to alleviate the impact of the supply chain crisis on their organization. For example: 

Adjusting Marketing Promotional Budgets 

DO NOT CUT YOUR AD SPEND. I wrote this in all caps because it is really that important. Several organizations do not see the value of marketing and its budget will be the first thing to be cut. However, that is a grave mistake. Businesses that cut their marketing budgets during recessions or supply chain crises will come out on the other side significantly behind competitors that continued to dedicate resources to marketing. 

Let’s say your marketing team was banking on a new product to introduce this quarter and your supply chain team told you a key component was stuck indefinitely in a port in Timbuktu. It would make sense to shift your promotional dollars to a product that you can deliver to customers versus a product they couldn’t get their hands on. Collaborating with your supply chain team in real-time in a situation like this can make or break a campaign at best or your firm’s quarterly earnings at worst. 

If your company is having supply chain issues across all product categories, focus your marketing budgets on branding and service after the sale messaging. Reminding your customers that you still be there after this crisis and for the lifetime of the product is worth every dollar.

Fluctuating Prices of Raw Goods 

The price of raw goods is constantly fluctuating and the demand for raw goods is increasing. When the price of raw goods increases in conjunction with the cost of moving goods through the supply chain, an opportunity arises. If we as marketers understand that it costs our competitors more to move raw goods through their supply chain we can adjust our market prices and force competitors into a price war.

For example, both Firm A and Firm B produce and sell aluminum bleachers. Firm A, located in the U.S., is more vertically integrated and takes the raw aluminum billets and fabricates them into the parts for the bleachers, applies the protective coating, and assembles the bleachers onsite. Firm B purchases the completed bleacher parts from China and assembles them in the U.S.

Firm A’s marketers know that Firm B sources its components from China and that it is difficult and expensive to get those parts. So Firm A slashes prices forcing Firm B to lower prices to a point where the firm is now losing money on every bleacher sale while it tries to overcome its supply chain limitations.

Brand Reputation and Customer Retention 

The Economist recently surveyed business leaders about the costs of supply chain disruptions and according to 400 business leaders and a brand’s tarnished reputation is the biggest consequence of the supply chain crisis. The report stated 30% of respondents noted an increase in customer complaints and 23% reported the loss of regular customers from November to December 2020.

Loss of customers and a dented reputation will severely impact a business far past the COVID-19 supply chain crisis. Marketers would be shrewd to create crisis communication plans and communicate regularly with their customers and distributors about the status of their products. With longer wait times, customers may continue to shop for substitute goods that will arrive sooner or at a cheaper price point. Use your marketing technology to your advantage call, text, email, send a carrier pigeon, but make sure your customers know the status of their order. You can also communicate when your products are available again. Active communication with your customers should alleviate some of the customer complaints because you set expectations.

Marketers, please do me a favor and reach out to your supply chain leaders. Creating or maintaining a symbiotic relationship between marketing and supply chain will better serve your customers, strengthen loyalty, and help your organization whether this disruption and come on on the other side stronger.