As we near, or endure, an economic recession (depending on who you speak with), I have noticed companies of all sizes cautiously pulling back on expenses, cutting staff and severely limiting their marketing budget. It is understood among these companies that the solution to decreased sales is to quickly compensate losses by cutting costs. In hopes that this bridgegap, short-term, reactionary strategy will carry a company over to more prosperous times, it usually ends up costing more than it saves.
Itis the smart marketers (Yes, Iim talking to you!), who realize that isurfis upi and there is no better time to surge forward. It is true that by just maintaining promotional spending, you can sustain or even igrowi market share and revenues. Furthermore, stealing ishare of mind (or how often consumers think about a particular brand as a percentage of all the times they think about all the brands in its category) is usually a bargain during recessionary times. And letis not forget: you have competitors and your customers have choices. Therefore, defending your existing position and avoiding further losses should always be top-of-mind.
So, wax that marketing surfboard of yours and paddle your company into position. The big Kahuna of all sales waves is on the horizon.
Only the Strong Survive
Go figure! Similar to historical cycles in stocks, housing and technology, we can also expect, as marketers, that what comes down, eventually goes back up. The greatest gains come in times of the greatest risk. Customers recognize real value and, as such, opportunity can knock at the least expected times. With marketing, there is usually some lead time (cycle) to sales, so a proactive approach now may land you the lead position later when the sales tides start to rise.
Justifying sustained or increased marketing spend during a recession is, however, not for the faint of heart. It takes a resilient, trackable plan, long-term thinking, steadfast execution and management buy-in.
Here are a few examples of companies that outdid their competition during challenging economic times:
Kellogg beat Post during the Depression.
Revlon and Phillip Morris gained share in the 70s recession, where Avon and Hershey lost share.
Taco Bell and Pizza Hut gained market share from McDonaldis during the ’90-’91 recession.
So, why did these companies gain in a time of loss? And, better yet, how did they do it without betting (and losing) the farm?
Augmenting Your Marketing Mix
Tough economic times are as good a time as any to dust off and re-visit your marketing plan. Are you tracking your existing marketing tactics? Have you diversified your mix to hit consumers where and when itis most effective? Are you efficiently using your resources to optimize your exposure? Are you getting the right message to the right people at the right time using the right media and methods?
Consider utilizing PR, and other efreei forms of media, to continue to stay topof- mind with your customers.Itis true that magazines, newspapers, and online/offline newsletters are a great way to maintain or increase exposure through changing times. Published and/or broadcast epressi you receive in the form of press releases, news clips, targeted guest editorial, and/or other inewsworthyi events and items, about your company during this time could be the lift that elevates your business above the pack.
Leverage Word of Mouth Marketing (WOMM), or activities that companies undertake to generate personal recommendations as well as referrals for brand names, products and services, to stimulate marketing/sales activity. Contact your best customers, generate testimonials and ask them for references. Itis a dog-eat-dog world out there so pool your best resources and use them to your advantage. You might be surprised at the results. (For more on WOMM, see Business Currents, October, 2007.)
Target your marketing efforts for improved results. Take aim at a specific audience for precision effect and improved results. Where is the greatest opportunity to gain market share? Where can your business gain greater share of wallet growth from customers? Perhaps thereis a target audience out there looking for your business as an alternative to their current provider at this point? (For more on Target Marketing, see Business Currents, March, 2008.)
Massage your messaging and leverage your brand. Take your unique selling proposition and really promote it! I read recently in a real estate magazine (My wifeis a Realtor — talk about a competitive market!) that in the automobile industry of brands, Lexus is known for iluxury,i BMW for iperformance,i and Volvo for isafety.i So what is Ford known for? HmmnnOe not sureOe suggesting that now is certainly NOT the time to be all things to all people and to enforce your USP to new and existing customers. (For more on Unique Selling Proposition, see Business Currents, February, 2007.)
Communicate frequently with customers. iOut of sight, out of mindi (and eventually out of wallet) is so often experienced by those who under estimate the power of the business/ customer relationship. Use efficient email communications and/or regular phone calls to maintain mindshare with new and existing customers. Ask questions and stay on top of their needs and concerns, beyond just price. Heck, you may even identify new opportunities to help serve them and a different audience.
Pass on Value n Not Costs
Itis important to keep in mind that, during a recession, customers do not go away. They simply just become more conservative. Their decision to purchase is more critical and well thought out. Keeping your existing customers by renovating your perceived value to the customer during this time is probably one of the most proactive things you can do. What does this mean? If your product or service is something that could easily be reduced, eliminated or replaced with a competitive offering, itis time to rethink the value youire providing to your customer. A $5 gourmet coffee that consumers indulge in on a regular basis is a little harder to swallow (or sip) when times are difficult. Now the $5, imore conservativei gourmet coffee decision to purchase could be proactively offset during this period by the provider with an increase in perceived value of that product/service/experience. That can come in the form of improved service, value-added extras, improved/enhanced product offerings, etc.
My landscaper just raised his rates 14% due to iincreased gas prices.i Now, I appreciate the work my landscaper does and they have been servicing me and my lawn for over two years. Iim a loyal and on-time paying customer and I understand gas prices have increased dramatically for not only my landscaper, but everyone who drives. However, itis no surprise that, in this time of critical and more thoughtful decision making, passing on costs for this service has got me thinking about the competitive choices available. I would probably not have thought about the competition otherwise. Those choices are plentiful during this time. Remember, if youire not at least maintaining or increasing your sales/marketing efforts to gain market share during this time, your shark-like competitors most likely are. So, converse to adding value in an effort to maintain and/or increase market share — prepare to experience decreased market share and revenues if you plan to offset your increasing costs by passing that along to your customers.
The Best Offense is a Good Defense (AND a Good Offense)
Embrace these challenging times by providing more value to your customers. Let them know you appreciate them and their business. Proactively provide value added products and services when applicable. Address the needs of new customers with precision targeted solutions. Make sure all (yes, all) of your customers are overly satisfied andOe be relentless! Did I fail to mention — itis urgent! Your business depends on how well you develop, execute and track a ismart marketing plan,i especially during this period.
Do you have what it takes to ride this wave like the seasoned surf-marketer you are and ihang teni? Prove it, and your business (and sales) will thank you for it.
Sources; Johnson, Tera, idfa.org presentation on iMarketing in a Recessioni; Green, Lewis, BizSolutionsPlus iLead with Your Heart: Sell Happiness and You and Your Business will Flourishi.; Godin, Seth, iMarketing in a Recession,i Blog, 02/2008.; Brandchannel.com, Definition of ishare of mindi. Angelo Biasi is General Manager of SMART Marketing Solutions, LLC, a leading full-service integrated marketing company in Naples, FL. Angelo has an MBA in Marketing from the University of Connecticut and has taught Marketing at New York University for over five years. For more information or to learn more, visit www.smartmarketingllc.com or call 239.963.9396.