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Marketing strategies to survive the
financial crisis

Marketing opportunities in an economic downturn

Strategic priorities for marketing in a downturn

Marketing in an Economic Downturn

How to Market During Economic Downturn

The challenges of an economic downturn or recession put enormous pressure on the marketing activities of most businesses. In many organizations marketing is the largest single area of "discretionary spending". The temptation to cut back on the marketing is enormous - but is it a wise course to follow?

Economic downturns are in fact the time when the best marketers can shine. When marketing folk look deep into their souls, most will admit that any fool can blow their way through a marketing budget when times are good. And we can get rewarded for doing so too.. Measures tend to focus on how efficient we have been in our marketing spend. Few people choose to focus on effectiveness.

Being effective is harder, and in good times the pressure to generate marketing activity often soaks up the time needed to refine a marketing strategy.

Marketing Strategies to Survive the Financial Crisis

Clearly marketing needs to be aligned to a company's cash management strategy. In this crisis 'cash is king', and marketing needs to help maximize the cash inflow to the business. Key priorities for marketing strategy to survive the global financial crisis include:

Assess the business opportunities and the competitive environment
Think about competing on price only after you have thought through your response to all the opportunities.
Develop, and articulate, strong value propositions
Target marketing spending on real opportunities, especially where you have differentiation and real competitive advantage
Think through the complete customer experience
Review your market positioning strategy
Avoid being a banker to your customers through over-generous commercial terms.

Marketing Opportunities in an Economic Downturn (Why Small is Beautiful)

All markets have ups and downs, but today's problems cannot be waived aside as being "cyclic". Whether we call it an "economic downturn", a global financial crisis", or a "recession", today's enviroment presents marketers with unusual challenges. But it is not all bad - there are also significant opportunities, particularly for small businesses.

Marketing Challenges in Economic Downturn		Marketing Opportunities in Economic Downturn
The economic downturn will last a long time: until at least mid-2012 by most estimates. Retail spending has dropped significantly in most markets, and not all retailers will survive. Many people are choosing to put their money into savings or to pay off their credit cards, rather than spend. The decline of most currencies against that of China - the world's factory - puts pressure on margins. Credit will continue to be in short supply (and expensive, at the consumer level) throughout 2011. High levels of consumer debt will choke demand for non-essentials: In developed markets such as the UK, USA and Australia, during the last few years much of the consumer spending on big ticket items (flat screen TVs, cars, expensive holidays etc) was funded by debt - either on credit cards (which are now full) or against the value of real-estate (which has now plummeted). Unemployment is a real fear for most consumers - and they are right to be scared. No one can tell what the future holds in 2012 especially for organizations in financial services, the automotive industry, retail, entertainment, cafes and restaurants, and in many many other industries. The fear of job losses is very real and personal in most western countries. Demand for luxury goods has evaporated, as previous high-income earners join the unemployment register (perhaps for the long term). There are large quantities of quality second-hand goods appearing on eBay and in other marketplaces. People are downsizing their cars and other high-ticket items in such volumes that the price gap between second-hand and new is growing. People are repairing and maintaining their possessions more, rather than buying new.		Markets still exist. A drop in demand of 20 or even 50 percent does NOT equal "no demand". Businesses can grow by winning market share or spotting new markets. Customer needs and priorities will change rapidly. Identifying these changes and responding to them will create business opportunities. New differences among segments or micro markets will emerge. Developing a granular view of patterns of demand will enable scarce sales and marketing resources to be focused on growth opportunities. Many of the competitive strengths of rival businesses no longer apply. By rethinking the basis of competition, businesses can become more relevant to customers and more profitable. Trust and confidence in suppliers will become even more important. No one wants to buy toxic goods, or to order things which never arrive. Being local is an advantage. Businesses with local relationships (and operating in local currencies) may be seen as more trustworthy. In a period of turmoil, global scale no longer means "dependable". Value for money (not just the cheapest) will be more important for many customers. These people need to feel confident that products will not need replacing or repairing. Energy efficiency will be more important, as this saves money. Cash is king. Avoid customers who demand long credit terms and focus on markets where payment is more immediate. Let your competitors go bust acting as bankers to their customers. Speed of taking customer orders will be increasingly important. Customers may have very short "buying windows", and the ability to complete a transaction in a short time frame (paying attention to credit and other customer risk factors!) will enable a business to take full advantage of all available sales opportunities. Focus on the Customer Experience. "Being easy to do business with" will become more important, as customers become more pressured and hassle-intolerant.

In other words, while this downturn is real and serious there are good opportunities, particularly for smaller, more agile businesses who are prepared to re-think their approach to markets.

The companies who are in most trouble are the businesses with dominant or near-monopoly market shares. They have no competitors to take business from. Their sales will decline with the market, forcing them to scale-down their infrastructure and fixed costs.

As is always the case, smaller businesses will become the growth engine of the economy.

Marketing Priorities in an Economic Downturn

Target a real need
Identify recession-resistant customer segments
Compete on value, not price
Eliminate uncertainty for your customers.
Be realistic
DO NOT blame it on the economy and do not give up.

In shrinking markets a business needs marketing to be more effective than ever before. Marketing can keep the cash coming in, which ultimately is more important than most other areas of a business. Contrary to conventional wisdom (among accountants), a recession is absolutely not the time to pull back from marketing. Less money might be spent on it, but marketing know-how and focus can mean the difference between success or calamity.

Targeting a real need (as opposed to a discretionary purchase) helps ensure you will be delivering value. There may be easier segments than others to do business in, since some customer segments will either not be so badly affected by the economic downturn or will have an increased need for your products and services. (eg home baking equipment sales seem to be going up, as people choose to make their own food, rather than buy-in).

Quite a lot of companies are experiencing strength in demand for good quality products (not the cheapest and not the luxury items). The psychology is that if people are going to spend money on something, it had better last. Disposable consumerism is on the way out.

Most customers, whether they be consumers or other businesses have two overwhelming priorities in their lives at the moment: cash flow, and avoiding risk about their cash flow in the future. (For consumers this equates to saving money, and staying in employment).

Thinking about the second of these, does your business have the potential to reduce uncertainty for customers? Warranties and guarantees do this. Structured service plans do this. Simplicity and reducing complexity does this. Removing dependency on products or other suppliers who can charge a premium can do this.

Think it through, and you may find lots of ways in which you can reduce uncertainty for your customers. Decide what these are and then use marketing to make sure your customers know about it!

Being realistic is important. Hoping for the best is not a strategy. Nor is embarking on a strategy which requires you to have the market presence and resources of a multinational when you are only a medium sized, local business.

One of the most important things to do in marketing in a recession is not to blame everything on the economy. If a market is shrinking it just means that you have to take market share from your competitors. The most certain way to loose is to give up. Don't - and don't let the other people in your company do so either. In fact, business history is full of corporate success stories who had "demoralizing the opposition" as part of their marketing strategy.

It's tough out there, but by taking an intelligent, well thought approach to your marketing strategy you can be one of the winners.

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