A recession calls for innovative marketing planning to keep a business afloat, even when dollars are short.
All experts agree the worst thing a company can do during a downturn is to slash the advertising budget and fall off the radar entirely. “A lot of business people hunker down during a recession, hoping they can just ride it out without creating too many problems.
That’s actually more risky (and scary),” writes DJ Francis over at the Experience Matters blog. “It’s OK to be afraid of new marketing tactics, but it’s not OK to allow that fear to stop you from taking risks.” Given the current climate, there are many reasonable market plans that will give you a good return on your investment.
“If firms blatantly go out and increase their spending on marketing, a lot of them are going to fail,” warns Dr. Gary Lilien, author of a Penn State study about recession business marketing planning. He says successful firms need three characteristics in order to succeed during an economic downturn. First, he says, “You need a marketing emphasis. You can’t all of the sudden start focusing on marketing… but if you know how to do it, if you had a marketing emphasis before, that’s one characteristic.”
He adds that companies also need to have the guts to increase marketing. “You need the will to do it, which is characterized in our research by an entrepreneurial culture, a willingness to say, ‘Things are getting bad, should we push harder?’ Firms with entrepreneurial culture are used to doing that,” says Dr. Lilien. Lastly, you need the capital. “The technical term is slack resources, in other words, having the budget to do it. Even if you have the first two, a marketing emphasis and an entrepreneurial culture, it’s risky. Make sure you’ve got the resources to do it,” he said. “The firms that had all three characteristics did very well in a recession. But firms that are missing any one of them, they’re in trouble. Frankly, most firms in our analysis cut their [marketing] budget in a recession.”
Despite the recession, some companies can arrange their marketing planning to get ahead, Dr. Lilien says. “Companies that run their business on customer intelligence; Amazon is the first that comes to mind. They understand their customers, they experiment with everything, and they’ve got resources,” he explains. “Companies like Amazon â€“ I don’t think they’re going to cut back at all.
This is a good opportunity for them to knock off some flies and probably pick up some relatively inexpensive acquisitions along the way. Companies that have been looking at marketing as an investment, and not an expense, and have been running their business through customer knowledge are the ones that are going to come out of this [recession] really, really well.”
As Henry Ford once said, “A man who stops advertising to save money is like a man who stops a clock to save time.” Indeed, it is futile to give up on marketing planning so soon. During a recession, allocate some of your big budget funds — like street promotions, billboard ads, magazine spreads and radio ads — to digital avenues like email, marketing newsletters, web articles, blogs, social networks and pay-per-click advertising. “It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times,” adds John Quelch, a professor at Harvard Business School.
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