How to market in tough times? Take advantage of the opportunity! Economic downturns are Darwinian events in the marketplace. The weak perish and the strong and agile survive, even thrive. During downturns, some companies disappear or are swallowed up by rivals. Others emerge stronger than ever. There are basic principles which apply during all downturns. How those principles are dealt with determine which companies will eat and which ones will be eaten.
What's a marketer to do? Cut prices? Ask Detroit how rebates worked for them. When sales stalled, the three American car companies flooded the market with so many off-price deals that nobody would buy Detroit again without a big rebate or a 0% financing offer. Cut product quality or service? Remember Schlitz? Just thirty years ago The Beer That Made Milwaukee Famous was America's second-best-selling brew. Someone decided to trim costs by switching to high-temperature fermentation. Customers wouldn't notice, right? Wrong. Six years later the company was out of business. Cut advertising? When Netflix began making serious inroads into Blockbuster's customer base in 2005, Blockbuster cut its 4.2 million advertising budget to .7 million. No surprise that Netflix grew from 4.2 million subscribers then to 7.1 million now. How'd the ad cut work for Blockbuster? In 2007, they closed 500 stores and saw a .4 million profit turn into a 5 million loss through the third quarter.
Advertising
The Opportunity? Absolutely! Advertisers should go all out in the media that produce quantifiable results, especially since their messages will be more prominent as competitors reduce spending. No matter how deep the recession is or how long it lasts, it's the perfect opportunity to become aggressive and grab market share as competitors scale back their marketing efforts.
An aggressive approach will pay some dividends early but down-the-road rewards are even greater. Companies that gain share during downturns historically keep that increased share when the economy bounces back. Each share point gained during the recession is worth incrementally more as the market eventually recovers.
A McGraw-Hill study showed that four years after a downturn, companies that maintained or increased marketing communications during the economic slowdown typically experienced 14 times more growth than companies that cut back. As far as today's overall gloomy consumer confidence, there is one thing that is emerging. Even though consumers are cutting back, they're not doing so entirely. Consumers are finding ways to maintain their quality of life.
Even in a time of belt-tightening, Americans are demonstrating a strong reluctance to give up on everyday pleasures. According to CNNMoney.com on 7/15/2008, many are leaving the car in the garage and staying home. A whopping 50% of Americans plan to buy an HDTV in the next year.
Also, despite the expense, consumers are refusing to give up entirely on vacationing. Even in these tough times, 59% of Americans plan to take a trip of 100+ miles in the next six months. To grapple with fuel costs, they just plan on closer-to-home trips: Epcot instead of Europe.
Advertising in Tough Economic Times
Pete Michuda is a Certified Radio Marketing Consultant and Certified Professional Commercial Copywriter working in the Chicago market radio industry. He's successfully worked with many small to mid-sized businesses by helping them learn how to properly market their companies and how to realize a positive net return on their marketing investment. He can be contacted via e-mail at pmichuda@nextmediachicago.com