Here are some things you can do to weather the recession. Using these concepts as a guide will help you wait out the bad times and place your business in a good position when good times return.
1. The key to successful recessionary marketing is emphasizing value. You need to know more than ever how consumers define value as they respond to the recession. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less. Must-have features of yesterday are today's can-live-withouts. Interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent.
2. Focus on family values. When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising to replace images of extreme sports, adventure, and rugged individualism. Zany humor and appeals on the basis of fear are out. Greeting card sales, telephone use, and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home, but also stay connected with family and friends.
3. Maintain marketing spending. This is not the time to cut 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. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions. Brands with deep pockets may be able to negotiate favorable advertising rates and lock them in for several years. If you have to cut marketing spending, try to maintain the frequency of advertisements by shifting to smaller advertisements or increasing the use of direct marketing, which gives more immediate sales impact. Web sites that pulled well in past times will continue to pull new customers, and maintaining an existing site is one of the most inexpensive methods of advertising available to us.
4. Adjust product mix. Marketers must re-forecast demand for each item in their product lines as consumers trade down to models that stress good value, such as cars with fewer options. Tough times favor multi-purpose goods over specialized products, and weaker items in product lines should be pruned. In grocery-products categories, good-quality generic brands gain at the expense of national brands. Industrial customers prefer to see products and services unbundled and priced separately. Gimmicks are out; reliability, durability, safety, and performance are in. New products, especially those that address the new consumer reality and thereby put pressure on competitors, should still be introduced, but advertising should stress superior prices and performance, not corporate image.
5. Support customers. Now may be the time to upgrade your sales force by recruiting those sacked by other companies and cross training existing personnel to do many tasks. Better customer service keeps existing customers happy. Expanded sales staff gives you a larger market to service, which will propel your business to new heights as the economy inevitably improves.
6. Adjust pricing tactics. Customers will be shopping around for the best deals. You do not necessarily have to cut list prices, but you may need to offer more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers, and price smaller pack sizes more aggressively. In tough times, price cuts attract more consumer support than promotions such as sweepstakes and mail-in offers.
7. Stress market share. In all but a few technology categories where growth prospects are strong, companies are in a battle for market share and, in some cases, survival. Knowing your cost structure can ensure that any cuts or consolidation initiatives will save the most money with minimum customer impact. Companies such as Wal-Mart and Southwest Airlines, with strong positions and the most productive cost structures in their industries, can expect to gain market share. Other companies with healthy balance sheets can do so by acquiring weak competitors or by encroaching on competitors' marketing areas.
8. Emphasize core values. Although most companies are making employees redundant, chief executives can cement the loyalty of those who remain by assuring employees that the company has survived difficult times before. Maintaining quality rather than cutting corners and servicing existing customers, rather than abandoning your good customers, are signs you see a future and are getting ready for it. Successful companies do not abandon their marketing strategies in a recession; they adapt to them.
There are many things you can do to survive, and hopefully thrive during our recession. Think your strategy through and keep planning for better days. They are coming!
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