7 Myths About Marketing in Economic Downturns
In an ideal world, marketing activity would be self supporting, always pay back multi-fold what it costs to execute, and be effective in reaching every potential buyer in the appropriate sector all the time. But in the world where the sky is blue, marketing activities are driven by several factors, including perceptions of the company and the head marketer there, Economic forces that drive consumer behavior of all types and factors beyond your control.
As a result of these factors, marketing budgets are at the mercy of the reactions of the company to these perceptions. Many of these perceptions are flawed, skewed, marred by history, personal experiences of senior management, and most have no historical precedent or foundation.
Myth #1 – “Our brand is strong enough not to need support for the duration of the downturn.”
Fact: Few brands are strong enough to survive without advertising, product promotion and customer service support. Brands are like delicate houseplants – they need attention, support, bolstering, and polishing, (the marketing equivalent of nutrients, light and water) – or they will wither and shrivel to a shadow of their former self. This is not a position you want your corporate brand to be in when the growth engine for the economy revs back up.
Myth #2 – “If we cut back on marketing spending, we can use the money for other things internally, and increase the budget when things get better.”
Fact: Studies have shown that once that budget gets cut, it takes a herculean effort and a strong internal champion to boost it back to its former levels, and even if it does increase, there are much stronger conditions of ROI attached to its implementation. Once those funds are allocated elsewhere, they tend to stay there – after all, that other department doesn’t want to give them up either.
Myth #3 – “Nobody’s buying anything, advertising and promotions are a waste of money.”
Fact: Many studies conducted by prestigious business publications and university think tanks have come to the same conclusion based on the data they gathered on U.S. and in some cases global companies: Those that reduce their presence in their key service markets are in a far worse position in terms of profitability, market share and market competitive presence when the downturn eases and profitability growth returns than those that maintain their marketing activity levels.
Those companies that are so bold as to increase marketing activity stand a great chance of taking market share from their less aggressive competitors and can rule the category if the downturn lasts long enough.
Myth #4 – “We can cut back [on marketing] now, and then ramp up quickly when things get better.”
Fact: This strategy has proven disastrous time and again, especially for companies that have inefficiencies inherent in their design, or product delivery channel. That inefficiency won’t allow them to “ramp up quickly”, since by that very inefficiency they will effectively always be “late” when timing the market – they are not market leaders but laggards, and thus the ramp-up activity gets started late relative to the buying cycle, and their more nimble competitors have already beaten them to the punch.
Myth #5 – “We should examine what’s working for us, and cut out everything else.”
Fact: This is not really a myth, but a knee-jerk reaction to a short-term slump in sales gross. Good marketing departments should be doing exactly that on a perpetual basis, not just when times are tougher. Why would any marketer worth their pay continue programs that didn’t work, effectively dragging down performance across the board and wasting money.
In addition, there should be metrics built into any campaign so that there is a way to “take the pulse” of its success, and mid-course correction is possible to boost effectiveness and increase ROI on a continual basis. Further, in some channels, there is a cumulative effect that blurs perceptions of what’s working and what’s not – interdependencies exist between channels that are not planned or scheduled but that live in the customer’s mind and trigger sales inadvertently.
Cutting out what can’t be measured accurately hampers this effect, dragging down results with no apparent reason.
Myth #6 – “Marketing spends more money than any other department, they have the most room to cut budget.”
Fact: While spending may be a measure of power in some corporate structures, at least informally, return is really what counts when its budget review time. Marketing is one of the few departments that can actually point to contributions they make directly to the bottom line. There is a proven cause-and-effect relationship between sales gross and marketing expenditure for larger and enterprise-size firms.
Increased spending in the IT department might yield long-term benefits, but better servers don’t often move more product, unless the product is server space. Cutting the marketing budget only reduces the opportunities available to build market share, boost product awareness and memorability in the mind of the consumer, and dampens profitability in the long run.
Myth #7 – “All of our competitors are pulling back advertising and media expenditures to save money, so we should, too.”
Fact: This kind of lemming-like sheep thinking can destroy your company! Your Mom knew better than this when you used the excuse “All the other kids are going, why can’t I?” and her response was likely something along the lines of “If the other kids jump off the bridge, are you going to jump, too?” Despite being competitors, their financials likely look a bit different from yours, and it’s foolish to think that you can mirror their moves and be successful – at best you will be equal!
The smart money here is being used to take market share from your more timid competitors, by increasing presence and exposure, and cutting other less-than-mission-critical expenditures for a short period to accomplish it.
Bonus!
Myth #8 – “We should downgrade the quality of our marketing materials, use a cheaper creative agency, and mail out less frequently to save money.”
Fact: This set of moves will actually cost you both in the short- and long-term. You might save a very small incremental amount on cheaper paper, shorter, smaller brochures, cheaper handouts, smaller tradeshow giveaways – but the damage you’re doing to your brand and the resulting poor reflection on the company as a whole does far more damage than can ever be repaired by spending those few dollars later to try and fix it.
Not to mention shaking the confidence of your customers by giving them a visual representation of how poorly your company is performing! “Gee, they must be in trouble, this looks like cheap junk. Maybe I’d better take my business to the other company that’s likely to be around to support their products down the line,” is the thought you’re promoting by reducing quality in your publicly released materials.
Good design often costs less than bad design, due to fewer creative iterations, fewer miscues, greater effectiveness and higher return.
Jumping ship from the agency you’re with if they are delivering on dollars spent just to save a little money is fool-hardy. The ramp-up time for a new agency to learn your needs, your products, your style and your brand will just about be exhausted by the time the average recession is over, and it will have cost you more to get the same level of productivity in that time, just in time to reposition for the new Economic conditions.
When times get tough, the tough get going in the marketing department, providing the market with visual evidence of your corporate strength, your leadership role in the sector, your expertise in the market, and the supportive strength you offer for your products and services.
Don’t believe the nay-sayers who want to slash your marketing budget, reduce your headcount and reduce the quality of your materials. Everything you do here reflects on the health of your company, and cutting here shows the most and helps the least.
7 Myths About Marketing in Economic Downturns
In an excellent world, advertising and marketing exercise could be self supporting, at all times pay again multi-fold what it prices to execute, and be efficient in reaching each potential purchaser within the applicable sector on a regular basis. However on this planet the place the sky is blue, advertising and marketing actions are pushed by a number of elements, together with perceptions of the corporate and the pinnacle marketer there, Economic forces that drive shopper habits of every kind and elements past your management.
On account of these elements, advertising and marketing budgets are on the mercy of the reactions of the corporate to those perceptions. Many of those perceptions are flawed, skewed, marred by historical past, private experiences of senior administration, and most don’t have any historic precedent or basis.
Fantasy #1 – “Our model is robust sufficient to not want help in the course of the downturn.”
Reality: Few manufacturers are robust sufficient to outlive with out promoting, product promotion and customer support help. Manufacturers are like delicate houseplants – they want consideration, help, bolstering, and sharpening, (the advertising and marketing equal of vitamins, gentle and water) – or they may wither and shrivel to a shadow of their former self. This isn’t a place you need your company model to be in when the expansion engine for the financial system revs again up.
Fantasy #2 – “If we in the reduction of on advertising and marketing spending, we will use the cash for different issues internally, and improve the finances when issues get higher.”
Reality: Research have proven that after that finances will get reduce, it takes a herculean effort and a robust inner champion to spice up it again to its former ranges, and even when it does improve, there are a lot stronger circumstances of ROI hooked up to its implementation. As soon as these funds are allotted elsewhere, they have an inclination to remain there – in spite of everything, that different division does not wish to give them up both.
Fantasy #3 – “No one‘s shopping for something, promoting and promotions are a waste of cash.”
Reality: Many research carried out by prestigious enterprise publications and college suppose tanks have come to the identical conclusion primarily based on the info they gathered on U.S. and in some instances international corporations: Those who cut back their presence of their key service markets are in a far worse place when it comes to profitability, market share and market aggressive presence when the downturn eases and profitability development returns than those who keep their advertising and marketing exercise ranges.
These corporations which are so daring as to extend advertising and marketing exercise stand a terrific probability of taking market share from their much less aggressive rivals and may rule the class if the downturn lasts lengthy sufficient.
Fantasy #4 – “We are able to in the reduction of [on marketing] now, after which ramp up shortly when issues get higher.”
Reality: This technique has confirmed disastrous repeatedly, particularly for corporations which have inefficiencies inherent of their design, or product supply channel. That inefficiency will not enable them to “ramp up shortly“, since by that very inefficiency they may successfully at all times be “late” when timing the market – they aren’t market leaders however laggards, and thus the ramp-up exercise will get began late relative to the shopping for cycle, and their extra nimble rivals have already crushed them to the punch.
Fantasy #5 – “We must always look at what’s working for us, and reduce out the whole lot else.”
Reality: This isn’t actually a fantasy, however a knee-jerk response to a short-term stoop in gross sales gross. Good advertising and marketing departments must be doing precisely that on a perpetual foundation, not simply when instances are more durable. Why would any marketer value their pay proceed packages that did not work, successfully dragging down efficiency throughout the board and losing cash.
As well as, there must be metrics constructed into any marketing campaign so that there’s a solution to “take the heartbeat” of its success, and mid-course correction is feasible to spice up effectiveness and improve ROI on a continuing foundation. Additional, in some channels, there’s a cumulative impact that blurs perceptions of what is working and what’s not – interdependencies exist between channels that aren’t deliberate or scheduled however that reside within the buyer‘s thoughts and set off gross sales inadvertently.
Slicing out what cannot be measured precisely hampers this impact, dragging down outcomes with no obvious cause.
Fantasy #6 – “Advertising and marketing spends extra money than another division, they’ve probably the most room to chop finances.”
Reality: Whereas spending could also be a measure of energy in some company constructions, a minimum of informally, return is actually what counts when its finances evaluate time. Advertising and marketing is without doubt one of the few departments that may really level to contributions they make on to the underside line. There’s a confirmed cause-and-effect relationship between gross sales gross and advertising and marketing expenditure for bigger and enterprise-size corporations.
Elevated spending within the IT division would possibly yield long-term advantages, however higher servers do not typically transfer extra product, except the product is server house. Slicing the advertising and marketing finances solely reduces the alternatives obtainable to construct market share, enhance product consciousness and memorability within the thoughts of the patron, and dampens profitability in the long term.
Fantasy #7 – “All of our rivals are pulling again promoting and media expenditures to save cash, so we must always, too.”
Reality: This type of lemming-like sheep pondering can destroy your organization! Your Mother knew higher than this once you used the excuse “All the opposite youngsters are going, why cannot I?” and her response was doubtless one thing alongside the traces of “If the opposite youngsters soar off the bridge, are you going to leap, too?” Regardless of being rivals, their financials doubtless look a bit completely different from yours, and it is silly to suppose you can mirror their strikes and achieve success – at finest you may be equal!
The sensible cash right here is getting used to take market share out of your extra timid rivals, by rising presence and publicity, and slicing different less-than-mission-critical expenditures for a brief interval to perform it.
Bonus!
Fantasy #8 – “We must always downgrade the standard of our advertising and marketing supplies, use a less expensive inventive company, and mail out much less often to save cash.”
Reality: This set of strikes will really price you each within the short- and long-term. You would possibly save a really small incremental quantity on cheaper paper, shorter, smaller brochures, cheaper handouts, smaller tradeshow giveaways – however the injury you are doing to your model and the ensuing poor reflection on the corporate as an entire does way more injury than can ever be repaired by spending these few {dollars} later to attempt to repair it.
To not point out shaking the arrogance of your prospects by giving them a visible illustration of how poorly your organization is performing! “Gee, they have to be in bother, this seems like low cost junk. Perhaps I might higher take my enterprise to the opposite firm that is more likely to be round to help their merchandise down the road,” is the thought you are selling by decreasing high quality in your publicly launched supplies.
Good design typically prices lower than dangerous design, attributable to fewer inventive iterations, fewer miscues, larger effectiveness and better return.
Leaping ship from the company you are with if they’re delivering on {dollars} spent simply to save lots of a bit cash is fool-hardy. The ramp-up time for a brand new company to study your wants, your merchandise, your type and your model will nearly be exhausted by the point the common recession is over, and it’ll have price you extra to get the identical stage of productiveness in that point, simply in time to reposition for the brand new Economic circumstances.
When instances get robust, the robust get going within the advertising and marketing division, offering the market with visible proof of your company power, your management position within the sector, your experience out there, and the supportive power you provide to your services.
Do not imagine the nay-sayers who wish to slash your advertising and marketing finances, cut back your headcount and cut back the standard of your supplies. All the things you do right here displays on the well being of your organization, and slicing right here reveals probably the most and helps the least.