The media says we’re in a recession, and possibly heading toward a depression. The stock market is dropping daily, and you can’t turn on the news without hearing more doom and gloom.
What does a recession really mean? They are usually caused by a combination of Risk + Over Optimism + Over Investing + A Catalyst. The catalyst is often war, rising oil prices, or banks failing. Sounds familiar, doesn’t it?
How does a recession effect our companies? Businesses often start slashing expenses. This includes training, people and marketing. When businesses take this approach, they are being reactive, not proactive. By cutting back on marketing, businesses immediately begin losing market share. Consumers think twice about making purchases, and everyone wonders how cautious they should be.
The number one question you should ask about your business is, “Should we keep marketing, even though people may not be buying?” The answer to that is a resounding, “Yes!” When there is an economic downturn, you have opportunities galore to improve market share.
It’s proven that steady ad spending during recessions leads to increased sales. Watch your competitors. They are likely cutting their spending, which means there is less noise for you to compete against. Your customers may have cut back, but they didn’t go away. They are paying attention right now, and will be ready to spend again when the economy turns around. When they are ready, who do you think they will turn to? The businesses who marketed to them, or those who faded into the background?
Now that you know you need to be marketing, what should you do? We recommend that you develop a comprehensive marketing plan that works when the economy slumps. You should:
- Focus on improving your internal processes
- Develop creative ways to market your products
- Actually implement the plan
- Monitor and update throughout the entire process
- Remember to support your marketing efforts with your sales force
Once you’ve completed this plan, use it today, and keep it on hand for when times are tough again. The economy is cyclical. Whether we like it or not, it will happen again. Most importantly, think about your budget, be creative and be strategic. It will pay off in spades.
What does it mean to be strategic? You should:
- Keep an eye on your competitors
- Concentrate on your brand
- Reward your current customers
- Focus on communication
- internally and externally
- Enhance your processes
Check up on your competitors. See what they are doing, as well as what they aren’t. If they are weak in an area where you are strong, take this time to capitalize on that.
With your brand, emphasize the things that made you valuable in the first place [honesty, integrity, price, quality]. Market products that work; cut out products that don’t. Don’t cut back on quality. And, believe it or not, don’t cut prices. That will diminish your brand and make it difficult for you to bring your products or services back to pre-recession pricing.
Remember that customers are your biggest asset, reward their loyalty, keep in touch with them and let them know they are appreciated.
Keep in mind that media outlets are scrambling to fill their spots. Take advantage of lower cost media channels, invest in in-store marketing and make sure your creative work is better than ever. Your customers and prospects will take notice.
What kinds of things can you do to market your business? The options are limitless. Make sure you focus on:
- Integrating sales and marketing at all levels
- Using lead management to identify your prospects
- Remembering to communicate with your current client base
- Planning methods of communication for later in the buying cycle
- Building rapport and trust
Develop CRM solutions to manage your client data so you can easily manage how you market to your prospects and clients. Create new content of value to deliver to these people (whitepapers, top ten lists, check lists, buyer’s guides). This content will help you build rapport, but trust will help you win business. Trust through marketing comes from customer references, review, expert opinions, awards and other validation. However, nothing beats building honest relationships with people you would like to do business with. People buy from people they know, like and trust. Get to know your prospects, so they get to know you. Marketing is about getting to know the people you want to do business with, not about you.
By continuing with your marketing efforts, you will be at an advantage when the recession ends. Make the most of your marketing dollars by looking for bargains in advertising and printing. People want your business and are willing to cut you deals to get it. The bargains are there if you ask for them.
Stand out against your competitors. Showcase what you do best, and be distinctive when you are doing it. You will be remembered because of it. You will be positioned as a survivor when the economy picks up if you follow these strategies.
Here are some companies who decided to be more aggressive during an economic downturn, thus taking advantage of advertising cuts by competitors.
Procter and Gamble
A company noted for consistent spending during periods of recession (including the Great Depression), Procter and Gamble heavily promoted some of its brands including Crisco, Camay and Ivory soap. The result: these went on to become some of P&G’s best known brands. (1)
Intel
During the 1990-91 recession, Intel Corporation invested to improve their competitive position by launching its Intel Inside brand-building program, aggressively promoting the brand when there was little advertising competition.
“The belief at the company is that you don’t save your way through a recession,” notes a senior Intel executive. (1)
Nike
During the early 1990s, Nike tripled its marketing spending, resulting in profits nine times higher out of a recession than going in. They focused on promoting awareness and relevance and provided a set of aspirations for all those seeking athletic freedom and performance. This had the effect of destroying Reebok’s competitive threat and building the platform for Nike’s global dominance. (2)
Revlon
Revlon gained market share during the recession in the 1970s by maintaining intensive marketing spending while competitors pulled back. (2)
Stanley
In the heart of the 1974 recession, Stanley Works launched a huge advertising campaign aimed at driving home the Stanley name to the consumer market of hand tools. The campaign worked. In addition to the large sales and profit increase in 1974, the hand tool business continued to grow at an 8% annual rate – twice that of its competitors. (3)
Others
Other companies that have taken advantage of advertising during a recession to establish strong market positions while developing brand equity include such diverse company names as BristolMyers, Campbell Soup, Coca-Cola, Gillette, Nabisco, Pillsbury, R.J. Reynolds, Rubbermaid, Levi Strauss, Stroh Brewery, United Airlines and Welch Foods, among others. (3)
(1) Gary L. Lilien, Arvind Rangaswamy, and Raji Srinivasan. “Turning adversity into advantage: Does proactive marketing during a recession pay off?” International Journal of Research in Marketing, 2005.
(2) “Managing Value in a Downturn.” Branding in a Recession. Interbrand, March 2003.
(3) “Advertising during a recession.” Direct Marketing. September 9, 1991.