10 tips for marketing in a downturn
Thursday, 3 April 2008
Last Updated: Thursday, 3 April 2008
Mike Preston
Marketing is often the first thing to go when tough economic times put the squeeze on cash flow, but experts say those who maintain spending often emerge the strongest when things pick up.
The latest SmartCompany Poll found many business owners are finding the temptation difficult to resist, with 44% saying they plan to cut their marketing budget in response to tighter business conditions.
While some businesses clearly see little choice but to slash marketing spending, it is a step that risks a decline in current market share and the loss of future growth opportunities.
But that doesn’t mean marketing strategies don’t need to be changed to suit the tougher market conditions. Here are ten tips for avoiding the pitfalls and getting the biggest bang for your marketing buck in an economic downturn.
1. Don’t panic
When the customers stop coming and all the signs point to doom and gloom, the first instinct of many business owners is to batten down the hatches, cut budgets to the bone and wait until the economic sun comes out.
But according to Graeme Chipp, managing director of marketing firm Growth Solutions Group, there is plenty of evidence to suggest that it is during tight times that marketing can be used to get a jump on the competition.
“Marketing should be seen as an investment, not a cost. Time and again I’ve seen companies cut marketing and they get into a spiral of cutting costs and that leads to a lower presence in the market, revenue and profit margins decline, that puts more pressure on costs and the spiral continues,” Chipp says.
Chipp says there are many examples of businesses achieving big gains in market share once in good times after investing in marketing during down times.
“Hershey in the US concentrated their marketing spending on core flagship brands during a period of weakness and saw a real uplift when things improved. In 2001 Heinz foods increased their marketing spend by 16% and saw market share go from 56% to 59%, so keeping faith in marketing spending can yield results,” Chipp says.
2. Make the most of the customers you’ve got
A change in marketing strategy to focus on drawing greater value from existing customers rather than finding new ones can be a cost effective strategy.
Luke Baylis, the founder of health-focused fast food chain SumoSalad, says that is something he is already considering in light of predictions that Australia is heading for an economic slowdown.
“We’re not cutting back our marketing spending, in fact we’re increasing it, but there is definitely a bit of change towards incentivising repeat business and a bigger spend from our existing customers,” Baylis says.
Baylis says his business takes concrete steps to increasing the value obtained from existing customers such as:
- Build and emphasize loyalty programs that reward customers for repeat business or spending more.
- Give customers a reason to return at non-peak times when, in slower conditions, staff might be underutilised.
- Emphasize the value customers are getting from your brand as opposed to competitors – in SumoSalad’s case, health benefits.
Other tips include:
- Make sure sales staff are trained in upselling techniques – 'would you like fries with that?' - and structure product offerings accordingly.
- Send letters or emails to customers reinforcing their value to your business and backing that message with a purchase linked reward.
3. Look for advertising bargains
The most expensive component of many marketing budgets is advertising and the first to go when cuts are needed, especially given that return on investment for advertising can be hard to measure.
But tight times can mean cheaper advertising, if you know where to look. Distressed advertising - ad space that is unused or abandoned by an advertiser at the last minute – can be used to deliver a message at cut-price rates.
Ad it Last is a business based on finding and selling distressed advertising to small and medium businesses that operates in Australia and the US. Chief executive Christina Tutone says distressed ads sell for an average discount of 40% on normal rates, but that could increase if the economy stalls.
“It requires thinking outside the square a little bit, but distressed advertising is often available up to a week in advance and there are substantial savings to be made,” Tutone says.
Advertisement
