Maximize Marketing Home Products during Hard Economic Times
Posted by Steve Kleber on Aug 01, 2009
A Smart Company poll conducted last year found that 44 percent of companies had made plans to cut their marketing budgets in response to tighter economic conditions.
This raises a need for all companies and their marketing professionals to reconsider the quick fix and look ahead to an economic cycle change.
Long-time marketing analyst Graeme Chipp said in a Business Victoria article titled Ten Tips for Marketing in a Downturn, “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.”
Pareto’s 80/20 Rule
19th century economist and philosopher, Vilfredo Pareto established a rule relating to wealth and income that’s important for us as marketers to keep in mind. His 80/20 rule says that 20 percent of the population creates 80 percent of the revenue. In harder economic times, it’s more important than ever for companies to strategically identify and narrow down its target market as much as possible. When done effectively, marketing to this narrow segment generates results by increasing brand awareness and preference.
Building upon Pareto’s 80/20 theory:
- Businesses must understand that the customer is their most valuable asset.
- Whether customer needs are being met will determine their brand loyalty.
- The job of a successful marketer is to determine the needs, wants and demands of the consumer and to then offer them in an efficient and effective manner.
When a company decides to stop all marketing efforts, it risks the possibility of weakening the brand because it becomes more difficult for the customer to see what’s in it for them.
How to Market in an Economic Downturn
Imagine the impact that could be made if we expand or strengthen our marketing efforts in an industry where competitors have decided to reduce or terminate marketing tactics. Not only will smart marketing-driven companies potentially reach a new target market, but they can expand brand awareness and overall market share.
If funds are extremely tight, it may be wise to decrease the marketing budget, but not eliminate it entirely. At that point it is time to get creative and look for more affordable methods of marketing, like blogs, newspaper advertising (in local markets), e-mail campaigns, direct mail and customer loyalty programs.
An economic downturn is a time when targeted marketing initiatives have the potential to provide significant opportunities to strengthen brand name and visibility.
A final thought from Chris Lockhead, CMO at Scient Corp.:
“Go ahead. Cut your marketing budget when things get tough. I get it. That’s like saying ‘I’ll throw some logs on that fire when it warms up in here.”