Blog_Banner_Asset
    Homebreadcumb forward arrow iconBlogbreadcumb forward arrow iconEntrepreneurshipbreadcumb forward arrow iconFrugal Marketing: 5 Ways to Spend Less on Marketing & Do More

Frugal Marketing: 5 Ways to Spend Less on Marketing & Do More

Last updated:
30th Jan, 2017
Views
Read Time
9 Mins
share image icon
In this article
Chevron in toc
View All
Frugal Marketing: 5 Ways to Spend Less on Marketing & Do More

This is a Guest Blog Post by Jaideep Prabhu and Ritchie Mehta.

In 2006, Devita Saraf, CEO VU Technologies, set out to create a luxury technology brand in India. Her target was the emerging middle-class, a fiercely aspirational yet highly value conscious segment. Devita knew she would have to carefully balance ‘affordability’ with ‘aspiration’ in everything she did. Since then, her company has sold over 100,000 televisions in the sub-continent. While this number may not seem like a world record, it is the business model she used: it has realised 40% cost savings across the value chain! Devita has done this by bringing to life many of the key principles of frugal marketing.
While businesses based out of emerging markets excel at the art of doing ‘more with less’, firms in the West are quickly catching on too, thanks to an increasing number of Western consumers who are looking for affordable luxury and value for money.
A recent survey by PwC finds a systematic 15% upward shift since the financial crisis, (from a base of 50%) of consumers responding yes to questions like ‘Do you seek discounts often?’ And ‘Do you accept living with less?’
In such a world, frugal consumers pass the challenge of doing more with less onto the brands that serve them. And yet many organisations struggle to get to grips with the need to manage marketing budgets more efficiently and engage the consumer for less.
Frugal marketing isn’t, however, about “penny pinching” Devita says, but the need to re-look at and refresh the approach where it matters most to the customer. Here are five key principles that frugal marketers from around the world can adopt to drive greater efficiency and customer impact, in equal measure:
Why Brands Need To Do More: Lessons from Google, Airbnb & Uber

Learn Best MBA Courses from the World’s top Universities. Earn Masters, Executive PGP, or Advanced Certificate Programs to fast-track your career.

  1. Stop talking: let your product do it for you


Seth Godin, the American author and entrepreneur, famously popularised the notion that sliced bread only became ubiquitous when the American brand Wonder made the idea spread. Although, the importance of getting ideas out there is important, the frugal marketer spends a disproportionate amount of time developing a product that stands out in the first place.
Companies such as VU Technologies focus on creating great products that deliver and exceed consumer expectations. They ‘earn’ great product reviews which in turn propels them ahead of their competitors, in the market. By letting the power of the product do the talking, frugal marketers not only save marketing spend but they also gain customer advocacy at the same time.
The big game changer here is the explosion of people to people (P2P) marketing which makes it easier for customers who use a great product to spread the word in their networks. The flip-side of this customer empowerment is something Devita is obsessed with avoiding: a situation where many companies don’t “build to last” and where consumers spread bad news about the brand in their networks.

  1. Focus on the last mile: communicate at the point of conversion


If you have to communicate, do so where it matters most to customers. Traditional marketing theory suggests that consumers go down a linear path from awareness to purchase. Companies literally spend billions on brand building to get their name out there. The archetype of this approach is a Super Bowl ad that costs $4 million for a 30 second slot. But it is crucial to remind oneself that the single most important point in the customer journey is the point at which a potential customer becomes a customer.
Frugal marketers know this better than anyone and focus relentlessly on the ‘last mile.’ They build their sales funnel as close to the point of conversion as possible in order to maximise the opportunity at the point of purchase. Activities that promote purchase are key.
Take, for instance, the insurance industry. Often brands that feature at the top of a comparison website are ones you have never even heard of before. These are typically the brands of the frugal marketers who build their sales and brands simultaneously, at the end of the customer funnel.
Devita invests the majority of her marketing spend on the ‘last mile.’ These include activities such as promotions to, and training of, retail distributors as well as working directly with third-party e-commerce websites such as Amazon and Flipkart (India’s leading online retailer).
How To Evaluate an Influencer Marketing Campaign?

  1. Your next customer is already a customer

Every evening the frugal marketer recites the mantra,

“it is 5 times cheaper to sell to an existing customer than a new one.”

Often, organisations forget about the opportunity at the ‘BoB’ (Bottom of the Bucket) and focus instead on ‘one hit wonders.’
VU Technologies has a culture centred around delivering a real, human feel through their product and marketing, to their existing customers. Investing in the relationship is critical in frugal marketing.

“Often a small token of appreciation goes a long way in retaining customers for years to come,”

says Chris Paterson, Managing Partner, The Marketing Lounge Partnership.
This is a point echoed by Rory Sutherland, Vice Chairman of Ogilvy Group UK:

“Very small things can create disproportionate joy just because they are unexpected. Take the case of 5 Guys, the fast food chain. You can choose to have large, medium or small fries. Either way, the server will take a cup, fill it with fries and then take another bunch and throw them in the bag for you. The very fact that they didn’t have to do this but did makes you grateful. Unfortunately, this is often the first thing that the accountant would want the company to cut.”

Herein lies another emerging trend. Conventional marketing focuses on giving preferential treatment to new customers or exhibiting low-high pricing behavior. While one would expect frugal marketers to adopt the converse and offer preferential pricing to existing customers (high-low pricing), this is not the case. A ‘third-way’ has emerged where companies offer ‘low-low’ pricing to earn trust and give customers a consistently good deal. NatWest has been vocal about this approach and has consequently gained traction in this area.

  1. Be selective with social

One would expect ‘social’ to be the buzzword on the tip of every frugal marketer’s tongue. Despite the benefits of the effective use of social media (look no further than the ALS Ice Bucket Challenge), it is important to be selective in this area.
Frugal marketing, after all, is about tight control and measured spend. But this is notoriously hard to achieve in the messy world of social media. Second, social media cannot replace core functions that are better serviced through other channels. For instance, despite a social presence, VU Technologies chooses to have all customer service done through the phone and face to face.
Third, as Mark Evans, Marketing Director for Direct Line Group, suggests that if you relentlessly focus on trying to get a campaign to go viral, you could inadvertently lose focus when it comes to your core marketing strategy, which is fundamental to success.
How to Make Facebook Ads Work for B2B Marketing

  1. Take the horse to as many ponds, directly

Getting your product out there is critical for success. Today, there are many distribution channels a firm can use to achieve this. Historically, organisations opted for an indirect route; marketing through a plethora of wholesalers and retailers. The end result, however, was an erosion of margin and value for the customer.
Then came Dell and the direct distribution model was born: a win-win for the organisation and the customer. However, direct routes too can be expensive and restrictive. In today’s market, consumer expectations are at an all-time high, and this does not lend itself well to a direct-only distribution model. But is there a middle ground?
VU Technologies adopts a direct/indirect distribution approach where they access the market through retail re-sellers (but negotiate directly with them), own several stores, and also have a significant online presence. No route to market is shut down and instead, each avenue is optimised to remove unnecessary layers within the chain. It is a simple but effective way of getting the best of both worlds.
All in all, organisations can and need to become savvier as they compete for greater customer share and advocacy. However, tomorrow’s winners will not be determined by how much money they throw at a problem but rather how they solve the customer value equation to win both hearts and minds.
As Ronnie Screwvala, Founder of UpGrad, said in a blog post:

“… a lack of funding today is less of an issue than it has ever been. Frugality and bootstrapping are assets in any business, anywhere in the world. An entrepreneur with frugality in his DNA will make fewer mistakes, build more efficient cost models, plan better for the future and increase his chances of success over the person next door who just got well capitalized and feels, mistakenly and arrogantly, that he doesn’t need to make those difficult decisions.”

Go forth and be frugal!
5 High Impact Digital Marketing Strategies

– This post has been co-authored by Ritchie Mehta, a learning design and CRM expert. He is a marketing professional who is currently a Scholar at the Marketing Academy, London. Prior to this, he was a Fellow of Marketing at Cambridge Judge Business School, UK.

If you want to learn more about marketing and entrepreneurship, Liverpool Business School & upGrad offers Master of Business Administration (MBA) Liverpool Business School which helps you to transform your career. The program provides 1-on-1 mentorship from industry leaders, 1-week immersion program at University campus, dual credentials (MBA from LBS & PGPM from IMT), network with peers at offline basecamps and more.

Profile

Jaideep Prabhu

Blog Author
Jaideep Prabhu is a professor of marketing at Cambridge University. He is the co-author of Jugaad Innovation described by The Economist as "the most comprehensive book" on the subject of frugal innovation. He has consulted leading digital brands such as Barclays, Vodafone, Nokia, Phillips. He is an alumnus of IIT-Delhi and the University of Southern California. He is on UpGrad's Advisory Board and teaches the fundamentals of marketing and branding in UpGrad Digital Marketing Program.
Get Free Consultation

Selectcaret down icon
Select Area of interestcaret down icon
Select Work Experiencecaret down icon
By clicking 'Submit' you Agree to  
UpGrad's Terms & Conditions

Explore Free Courses

Suggested Blogs

5 Simple Ways To Think Like An Entrepreneur: How To Make it Happen
5967
How to think like an entrepreneur? The ‘Entrepreneurial world’ could be a mind-boggling place for a first-time business owner. With the overwhelming v
Read More

by Anirudh Challa

26 Jun 2023

Are ESOPs a Good Option to attract the Best Talent for Startups?
6141
Employee Stock Option Plans (ESOPs) are part of policies to attract, motivate and retain employees by organizations. Thanks to the startup ecosystem,
Read More

by Himanshu Puri

25 Mar 2023

The Future of Jobs – Automation Mimicking Human Intelligence
899159
This is an excerpt from the book ‘The Fuzzy and the Techie – Why the Liberal Arts Will Rule the Digital World’ by Scott Hartley. Scott Hartley f
Read More

by Kechit Goyal

19 Mar 2023

How to Become an Entrepreneur :Steps, Tips and Best Degree
5702
It’s mostly a dream for everyone to become the master of his own business. And why not? The time for following the bosses’ orders has now shown a tren
Read More

by Rohit Sharma

07 Mar 2023

Top 7 Success Tips for First Time Entrepreneurs
5291
Renowned Silicon Valley investor and serial entrepreneur Peter Thiel wrote in his best-selling book, “Going from 0 to 1 is the hardest thing in the wo
Read More

by Dilip Guru

24 Feb 2021

The Emerging Technologies to Watch for 2018 – 2024
6440
A few years back, a research was conducted by Forrester about the progressive behaviour and pattern of the B2B customers. The study revealed that 74%
Read More

by Anshuman Agrahari

08 Jan 2021

Top 10 Essential Tools For Startup Business in India 2024
6291
  In a start-up, absolutely nothing happens till you make it happen. – Marc Andreessen If you are a start-up or nursing the idea of start
Read More

by Anirudh Challa

08 Jan 2021

Startup and Mid-tier business: Can they grow in 2024?
5254
The world is evolving at a rapid rate as new technologies disrupt traditional business practices. Almost every industry has been transformed by new te
Read More

by Helen Cartwright

08 Jan 2021

4 Pillars of Scalable Startup Entrepreneurship & Seed-Funding!
5556
The startup entrepreneurship landscape in the 21st century is phenomenal. Startup entrepreneurs are working on brilliant ideas in their quest to be th
Read More

by Dilip Guru

03 Jan 2020

Schedule 1:1 free counsellingTalk to Career Expert
icon
footer sticky close icon