Secrets to Success in Recessions: Expand Marketing

Authoritative research and the five lessons I have learned about marketing and recessions in my 30+ years experience.

 

Authoritative research continues to show businesses are self-destructing when they cut back on marketing in downturns. If implemented and evaluated properly, marketing creates a return on investment in multiple ways.

More on that later. Meantime, suffice to say recession or not, a good marketing approach requires intensity and is based on thought leadership about every facet from social media to internal company communications. And marketing, of course, includes strong public relations.

If anything, maintain your marketing investment and expand your PR efforts.

Sports provide great metaphors for business. As in any sport, remember this basic principle: Write a great game plan and attack…attack…attack.

Actually, I was prompted to write about this topic again when I enjoyed reading a commentary by award-winning public relations expert Devon Blaine in the blog of a strategic financial consultant, Joey Tamer.

Ms. Blaine provided documentation on why it is unproductive to stop or trim marketing during a recession.

“Though this strategy might seem to make common sense, recessions are times that call for uncommon business wisdom,” wrote Ms. Blaine, president and CEO of the The Blaine Group, Inc. in Los Angeles. “Recessions reward the aggressive marketer and penalize the timid one.”

In other words, timorous businesses forego an opportunity for niche leadership and to expand their market share.

Authoritative Study

Ms. Blaine cited a noteworthy study, “Advertising & Marketing During An Economic Downturn,” by David Stanley of Industrial Equipment News. It analyzed the situations of more than 1,000 manufacturers in what’s called “Profit Impact of Market Strategy” (PIMS).

Far too often, studies appear to be self-serving for special interests. But this study, www.tinyurl.com/lokgyd, is objective and unique. It is from The Strategic Planning Institute in Cambridge, MA, which describes itself as a non-profit membership association that promotes “strategic business management.”

Actually, The Strategic Planning Institute, www.pimsonline.com, originated as an internal planning project at General Electric. Then, from 1972 to 1974, it evolved into a Harvard Business School project.  

The PIMS study concluded that bold marketing in a downturn resulted in strong performance while tepid marketing had undesirable consequences. In addition, the higher marketing investments did not hurt profits for the short-term.

1990′s Study

“Penton Research Services reports that shortly after the 1990-91 recession, Coopers & Lybrand, in conjunction with Business Science International, surveyed CEOs from growth companies about the effect the recession had on their profit growth and the actions they had taken in response,” cited Ms. Blaine.

So what were the conclusions from the second study?

“A strong marketing program enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery,” she concluded.

Incidentally, I am very familiar with the capabilities of Devon Blaine, www.blainegroupinc.com, and Joey Tamer, www.joeytamer.com/blog. You can take the bank anything they write or say. We are all members of Consultants West, www.consultantswest.com, a roundtable of veteran consultants that meet regularly in Los Angeles.

Again, I agree with Ms. Blaine. Having experienced five major economic downturns in my career, I know there is one inescapable fact about marketing and recessions. Companies that view marketing strictly as a percentage of their budgets miss opportunities for growth. Successful companies look at the short and long-term ramifications.

During downturns, good companies that cut marketing budgets soon learn they do not retain dominance in their marketplace, and they will learn they have lost market share once the upturn begins.

From the Coach’s Corner: Not to be redundant and to add to Ms. Blaine’s points, in my 30+ years experience, here are five salient lessons I have learned about marketing and recessions:

1. A quality company that maintains stellar marketing in a recession succeeds. But it is imperative to continually evaluate the company’s marketing return on investment.
2. If a company does not provide enough value or is a substandard company, marketing does not help them. This has been true in all industries – from the auto industry to law firms. So this means taking a sober look at the value of your company’s products and services.
3. A recession is a terrific opportunity to take a big picture snapshot of a company. It is important to look a client’s total situation – such as in human resources or pricing – and come up with solutions.
4. The best companies are proactive about planning and execution in good times and bad. Many companies show poor judgment about pricing and cost-cutting in marketing. It is unproductive in a downturn to slash prices in a knee-jerk fashion. A better approach for a company is to continually test marketing ideas – always be on the offensive. Automatically slashing prices without assessing the competitive landscape can undermine your brand’s value, and make it difficult to successfully raise prices later.
5. Companies that cut marketing investments fail to sustain their “Top-of-the Mind Awareness” and unnecessarily lose revenue in the recessions, and they endanger their profitability when economic conditions improve. Indeed, it takes more resources – time, energy and money – because they have to work too hard just to re-establish their brand.