reduce marketing costs

3 simple strategies

Research has shown that around the world, marketing expenditure increases in tougher economic environments. The opposite is the case in Australia.

While the Australian approach is often short sighted, there are ways of reducing marketing costs, or at least minimising them that make sense, particularly in Australia.

Three ways of reducing marketing costs, all too often ignored in Australia relate to:

  • Customers
  • Quality
  • Differentiation

If I had a dollar for every business person who has suggested that the best business is repeat business and or referral business, I would be a wealthy man today. This is said so often that it is now platitudinous.

There is no doubt that building a business on the back of referral and repeat business is a key to minimising marketing costs. I would argue that it is the best way of minimising marketing costs, and given that few businesses are good at it, it is a good way for most to reduce marketing costs.

Despite this however, few business limit their drive for repeat business and referral to giving customer’s what they asked for and then following them up – when effective repeat business and referral rates require much more than this.

I would argue that to maximise referral and repeat business it is essential to understand exactly what customers want and giving it to them.

Despite this most Australian businesses do little research and know little about what the customers want. They rely on gut feel and common sense, both of which are extremely unreliable. Really understanding customer’s needs and wants is the starting point of every great referral and repeat business strategy – and therefore driving down marketing costs.

I would argue that quality is the key to value and value is the key to driving referral and repeat business. But quality is not an absolute concept. It is best defined as the ‘fit between customer needs and product delivery’.

The best quality product is the product that best meets the expectations (needs and wants) of consumers. If you don’t truly understand exactly what customers want, you will find it difficult to offer a quality product. It you do not commit to exceeding customer expectations then you will not have a quality product or service.

I would argue that if your product or service is not tangibly different from the competitive offering it will be much more expensive to market. Research suggests an inverse relationship between the level of differentiation and the level of marketing expenditure required.

Differentiation makes a product stand out from the crowd and gives you something to hand your marketing campaign on. Differentiation in a tangible and relevant way makes your product or service more likely to satisfy your customer and drive referral and repeat business.

You only have to look at the Australian residential building industry, Australian retailing, professional service firms, and indeed the majority of business in Australia to understand that there is little tangible differentiation leading to unnecessary marketing expenditure.


  1. Understanding customers will help reduce marketing costs
  2. Offering true ‘quality’ and ‘differentiation’ will drive costs down
  3. The investment in research and development will be more than recovered

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