Cost-effective marketing in an economic slowdown
During a slow-down or even a recession, the bulk of business continues to grow. Real global GDP has not shrunk year-on-year since comparable records began in the mid 20 th century - even the final quarter of 2007 saw Eurozone GDP growth of 0.4%. Businesses and households continue to function and to purchase the goods and services needed to do that.
The marketing budget is often one of the first to be cut in a slow-down; and while this might help the bottom line now, it's likely to have a negative effect on market share and profit in the longer term. So when your competitors are slashing their budgets, you have some opportunities to shine in the darkness.
1. Displace incumbent suppliers while keeping your own customers happy
Think about customer purchasing behaviour for a moment. During periods of slow growth, more pressure is exerted on suppliers to deliver value. Existing suppliers will be subject to increased scrutiny and switching suppliers is more likely. And you're slashing marketing? You should be at least maintaining your investment in your own customers, and looking even more proactively at promoting yourself to others.
2. Increase market share and ROMI (return on marketing investment)
Effective marketing during a slow-down is an opportunity to increase market share and benefit from the recovery when it happens. Increasing share before the recovery and reaping the benefits will make your marketing ROI during a slow-down higher than normal.
An economic slow-down could be the time when your marketing budget can give you most bang-for-buck. Sam Walton created the World's biggest retailer Walmart. During the last recession, he had this to say: "Recession? I thought about it and decided not to take part." Granted, Walmart's strategy of selling essentials at low prices favours customer needs in a recession. But the same was true of Walmart competitor Kmart - yet they cut spend and as a result ended up citing ineffective marketing and recession as reasons for filing for Chapter 11 bankruptcy protection in 2002.
3. Adapt your proposition or messages to win new customers
It is important to realise that your marketing messages may also need to change in response to changed customer needs. For example, demonstrating that your product or service saves money for your clients may be more important. What's more, if you maintain your market presence while others around you are cutting theirs, who will be top of mind when customers are in a position to buy more?
4. Use the power of the internet to target buying customers and identify changing needs
Web stats and keyword searching can tell you what customers are looking for, so online marketing can come into its own in tough times. Precise targeting eliminates waste and will give you a cost effective insight into which of your messages customers are responding to and which they're not.
None of these ideas are new and we are not alone in believing them. In 1993, Coopers and Lybrand and Business Science International came to the conclusion that "Businesses that maintain aggressive marketing programmes in a recession outperform companies relying more on cost-cutting measures. A strong marketing programme enables a firm to solidify its customer base, take business away from less aggressive competitors and position for recovery growth."
