Marketing in tough times
During the recession of 2001, Kmart made the fateful decision to decrease marketing expenditures for September and October. The result? A 5% sales drop in October of that year. Kmart’s CEO, Chuck Conway, later remarked “by the fall, the company had lost far more in sales than it saved in advertising costs.”
The current market downturn is projected to be deeper and more protracted than the recent shallow and short recession of 2001. Slashing your marketing investment may seem like a smart fiscal maneuver to improve cash flow, but I urge you to analyze before you cut. In fact, we have research, dating as far back as 1927, which shows strong gains in long term market share and profitability from companies that invested wisely in marketing during a downturn.
Marketing investment leads to growth. A 1993 study published by Penton Media confirmed that “businesses that maintain aggressive marketing programs during a recession outperform companies that rely more on cost cutting measures.” Those companies with the foresight to sustain, or even increase their marketing budgets often pursue similar strategies to achieve the best results.
Create a downturn marketing action plan. Your existing marketing plan may be flexible, but it does not likely include the required actions that successful companies pursue in a downturn. Market leaders:
- Shorten their time horizon to 90-day action plans
- Apply focus and energy to weekly progress
- Look for ways to launch long-term market leadership initiatives
Focus first on your existing customer base. The best marketers use this time to establish and grow unbreakable bonds with their existing customers. They know that their best customers are their competitors’ best prospects and will do most anything to protect them. Market leaders:
- Communicate constantly and consistently using email, direct mail and the telephone
- Look for ways to redefine the value proposition to minimize price cutting
- Dive deep into customer data for insights and answers to grow the business
Businesses that lean into the market downturn with a commitment to long-term growth by putting together plans and sharpening their focus are those businesses that emerge from a market downturn with a stronger position and increased market share.
Dana VanDen Heuvel is available to answer your marketing questions on a monthly teleconference at www.askmarketingsavant.com. Visit his blog at www.marketingsavant.com for daily marketing updates.
