We’ve been hearing about it every day for months.
Bank busts, bailouts and buyouts. Gloom and doom, 24/7. It sent some companies into a defensive mindset, paralyzed by fear and a focus on “laying low” until the storm subsides. Others threw long-term strategy out the window. Cost cutting and short-term revenue-generating activities are their only immediate focus.
When times are tough, there’s a tendency to push the panic button; and given what we’re going through, it’s not surprising.
But, let’s be clear: there’s plenty of historical data out there to show that companies do harm in the short- and long-term to their businesses and their brands by knee-jerk budget slashing and running scared. Hundreds of studies of marketing over 10 recessions in the 20th century have concluded that not only did sales and profits decline for companies that cut brand-oriented activities during the recession, but also that performance continued to lag upon recovery.¹
Marketers, this mess is your opportunity.
This is your time to bring leadership; to advise and act strategically; to be a brand steward; to recommend action with sound business, financial and marketing rationale. The time for defensive measures is over. No organization can sit by twiddling its thumbs until we see a rosier economic outlook.
Focus on the following strategies and actions to persevere during the recession and ensure that your organization is poised to capitalize when better times return:
Don’t compromise your brand promise—keep investing in it. The brand promise defines how your organization is different, the value that makes you stand apart from competitors.
- Right now, you may be seeing an internal push to cut back on product quality or service quality to squeeze out a little more profitability. Don’t do it. If you compromise your brand promise, your customers will be the first to know.
- Instead, prioritize. What investments will have the greatest impact on the brand? The best brand investment may be in R&D, customer service or employee hiring and training. Every move that could impact the client or customer should be viewed through a “brand lens” to ensure short-term business gains won’t weaken your brand promise for the long term.
Invest in focused market research. Yes, I know. Research is the first to go when you’re asked to cut your marketing budget. You’ll hear, “We don’t need that. We already know the market, our prospects, our customers … .” Well, the game has changed. It doesn’t matter whether you’re in a business-to-business or business-to-consumer environment. Consumers and clients have changed values, beliefs and behaviors. It’s absolutely pivotal to your success to figure out who it is your marketing to and what they value when they make a purchase decision.
Reassess your segmentation. When was the last time you stepped back and looked at the full universe of your market? Are you focused on the right segments?
- Target customers and clients with the greatest potential to affect the top line and the bottom line.
- Force yourself to look at things differently. Seek out adjacent markets and consider expanding your target to include segments that are not feeling the pain of the economy as severely as others.
Evaluate your brand portfolio. Is your current product and service mix tailored to the targeted segments where you can grow?
- Now is the time to do some tough rationalization. Start by getting rid of under-performing products and services. They cost money to support and distract attention from the products and services that drive your brand and are critical to continued growth.
- And never stop innovating your core offering. A few, new basic improvements will build brand loyalty. Right now, product management is all about agility and adaptability. If clients are hesitant to invest in your premium offering, unbundle some of the features and create a lower-priced “flanker brand.” Rather than turning to sales and discount strategies, adding new products and services at lower price points will enable you to retain customers and win new ones.
Retain your existing clients and customers. Customer retention is the new acquisition. Invest more money and time in relationship marketing, reward customers for their loyalty, offer them incentives, provide free trials of your products and services, extend warranties, or offer higher levels of service for preferred customers. Do whatever it takes to keep the good business you have.
Focus on delivering and showcasing value – and avoid slashing prices. In times like these, companies compromise their brand value with deep discounting. We’re all seeing it, and it’s the worst thing you can do. A recent study referenced by the American Marketing Association asserts that companies that frequently slash prices might create an adverse effect on their long-term brand equity.2
- Discounts provide a temporary boost in sales, but frequent and deep price cuts alter the client and consumer’s perceptions of the brand’s quality and the overall value of your offering. Do what you have to do to be competitive, but keep your long-term strategy in mind when you make pricing decisions.
- The fact is, this environment is not just about price. Show the customer where the true value of your brand lies. Communicate the differentiated value, of your brand. Recessions and discounts come and go, but trusted brands and their appeal to the market place live on.
Continue marketing efforts, with a focus on results. It is well documented that companies that increase marketing during a recession, when competitors are cutting back, can improve their brand awareness, distinguish themselves as market leaders and achieve return on investment at a lower cost than during good economic times. Brands that remain visible, you believe that they’re still doing well. Brands that go dark, you have doubts.
- With that said, make sure clear objectives and metrics drive everything you do. A marketer not comfortable talking about ROI in this economy better get comfortable, fast.
- In terms of messaging, focus on conveying confidence and trust—confidence that your organization is strong today, trust that you’ll be here to serve customers and clients tomorrow.
Some will say that these ideas are completely off limits in their organizations. Nonsense. This is the time for marketers and communications leaders to shine by bringing new ideas to the table, being the strategic voice of reason, and delivering results. This economy certainly has its challenges for marketing and communications, but that means it’s no time to be timid. Some companies are going to come out of this environment very strong.
Make sure yours is one of them.
References:
¹Why it is important to invest in communications during an economic downturn, IVCA.org, 2009; 2Marketing Science, a journal of the Institute for Operations Research and The Management Sciences, 2009
Manage Your Brand to Persevere – and Capitalize
We’ve been hearing about it every day for months.
Bank busts, bailouts and buyouts. Gloom and doom, 24/7. It sent some companies into a defensive mindset, paralyzed by fear and a focus on “laying low” until the storm subsides. Others threw long-term strategy out the window. Cost cutting and short-term revenue-generating activities are their only immediate focus.
When times are tough, there’s a tendency to push the panic button; and given what we’re going through, it’s not surprising.
But, let’s be clear: there’s plenty of historical data out there to show that companies do harm in the short- and long-term to their businesses and their brands by knee-jerk budget slashing and running scared. Hundreds of studies of marketing over 10 recessions in the 20th century have concluded that not only did sales and profits decline for companies that cut brand-oriented activities during the recession, but also that performance continued to lag upon recovery.¹
Marketers, this mess is your opportunity.
This is your time to bring leadership; to advise and act strategically; to be a brand steward; to recommend action with sound business, financial and marketing rationale. The time for defensive measures is over. No organization can sit by twiddling its thumbs until we see a rosier economic outlook.
Focus on the following strategies and actions to persevere during the recession and ensure that your organization is poised to capitalize when better times return:
Don’t compromise your brand promise—keep investing in it. The brand promise defines how your organization is different, the value that makes you stand apart from competitors.
Invest in focused market research. Yes, I know. Research is the first to go when you’re asked to cut your marketing budget. You’ll hear, “We don’t need that. We already know the market, our prospects, our customers … .” Well, the game has changed. It doesn’t matter whether you’re in a business-to-business or business-to-consumer environment. Consumers and clients have changed values, beliefs and behaviors. It’s absolutely pivotal to your success to figure out who it is your marketing to and what they value when they make a purchase decision.
Reassess your segmentation. When was the last time you stepped back and looked at the full universe of your market? Are you focused on the right segments?
Evaluate your brand portfolio. Is your current product and service mix tailored to the targeted segments where you can grow?
Retain your existing clients and customers. Customer retention is the new acquisition. Invest more money and time in relationship marketing, reward customers for their loyalty, offer them incentives, provide free trials of your products and services, extend warranties, or offer higher levels of service for preferred customers. Do whatever it takes to keep the good business you have.
Focus on delivering and showcasing value – and avoid slashing prices. In times like these, companies compromise their brand value with deep discounting. We’re all seeing it, and it’s the worst thing you can do. A recent study referenced by the American Marketing Association asserts that companies that frequently slash prices might create an adverse effect on their long-term brand equity.2
Continue marketing efforts, with a focus on results. It is well documented that companies that increase marketing during a recession, when competitors are cutting back, can improve their brand awareness, distinguish themselves as market leaders and achieve return on investment at a lower cost than during good economic times. Brands that remain visible, you believe that they’re still doing well. Brands that go dark, you have doubts.
Some will say that these ideas are completely off limits in their organizations. Nonsense. This is the time for marketers and communications leaders to shine by bringing new ideas to the table, being the strategic voice of reason, and delivering results. This economy certainly has its challenges for marketing and communications, but that means it’s no time to be timid. Some companies are going to come out of this environment very strong.
Make sure yours is one of them.
References: