Maintain marketing now to make bigger gains when the recession ends
By Cinda Orr
It seems as if no matter where you turn, one economic prediction is gloomier than the next. Even here in Kearney, a relative bright spot in the economy, orders for many companies are down, sales are off and customers are becoming increasingly scarce.
Faced with declining sales and profits, the natural thing for businesses to do is cut back on their marketing and preserve their cash, right?
Actually, that depends on whether you think the current downturn is ever going to end — and though it may look endless now, every economic recession the world has ever encountered, including the Great Depression, eventually gave way to economic growth and prosperity. This recession will be no different. So while cutting back on your marketing may seem the right thing to do, the opposite is true, and here’s why.
Thirty years and more ago, research at the Harvard School of Business established a positive correlation between awareness, market share and profits. HSB said that, generally speaking, as a awareness of a product or service goes up in a particular market, its market share also rises, and that as market share increases, so do profits. When the economy goes into recession, consumers spend less, manufacturers manufacture less and advertisers advertise less…but media usage by consumers remains stable or trends slightly up.
That means now is a great time to buy “share of voice”. (“Voice” in this context is the total marketing and advertising expenditures aimed at a particular market segment or audience.) In a recession, if you merely continue marketing and advertising at the same levels while your competitors cut back, it gives you a greater share of voice and a chance to build awareness — and consequently market share — at bargain-basement prices.
In this recession, we are making three basic recommendations to clients:
Stay the course. No matter how troubled the times, some sales are always being made and they’re usually being made by brands people know and trust. Now is no time to disappear from your customers’ radar.
Concentrate on target marketing. Now more than ever, you should be talking to the customers you want most, with a message they want to hear. Win their loyalty now.
Reassure your customer base. Remember, it’s usually more profitable to build incremental business from your existing customers than to acquire new ones. Spend some time, money and energy in rewarding past loyalty with special discounts or other frequent-buyer perks. Cross-sell. Call customers to inquire about their needs and concerns. Maintain a reassuringly high profile with your bread-and-butter customers to make sales now and position yourself to make solid gains when better times return.
Don’t be afraid of a recession. Instead of viewing the current economy as a disaster, see it instead as a buying opportunity — one that could really benefit your market share, and profits, down the road.
