How to Change a Marketing Strategy During an Economic Slowdown
The natural instinct in an economic slowdown is to cut costs, including the marketing budget. However, according to a 2008 American Marketing Association survey, 60 percent of the surveyed members believe that reducing or halting marketing expenditures is counterproductive during a downturn. There is no need to panic because, by changing strategy, it is possible to increase the return on invested marketing dollars.
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Instructions
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Realign marketing strategies to fit reduced operating budgets. This means repositioning marketing spending to sustain existing brands and gain share from potentially vulnerable competitors. According to marketing research firm Millward Brown, increasing marketing during a downturn can offer strategic benefits. For example, you can gain market share while others are cutting back. Share of market is directly proportional to share of voice, meaning the more you advertise your brand, the greater the market share. You can then consolidate the share gains during an inevitable recovery. Media buys tend to be less expensive during downturns, which means you can place more ads with the same advertising budget.
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Change the message. Do not get into a discounting war with your competitors; highlight the value of your product instead. Discounting can erode margins and destroy a brand's value. Offer entry-level products (i.e., "no-name" store brands) at lower price points or offer alternative payment options. Consider affordable referral programs and word-of-mouth marketing on social media to build and sustain awareness of your brands.
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Concentrate on recession-proof customers and products. The AMA suggests that you "focus on who not to target." In other words, some customers may not be worth keeping during a downturn. Consider increasing the marketing spend on products that suit all budgets because customers tend to buy only the essentials when money is tight. A branding strategy that appeals to the high-end of the income scale can also provide some high-profit-margin insurance during tough times. Apple has been reasonably successful in selling products that even students can afford (e.g., iPod Nano) while continuing to sell its high-end graphics workstations that cater to a niche market.
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Focus on maximizing the return from existing customers. Change your strategy by implementing or enhancing loyalty programs that reward customers for repeat business; differentiate the value of your product from your competitors; train sales staff on selling add-on features or related products (e.g., enhanced product warranties); and stay in regular contact with your customers through emails and letters.
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References
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