Marketing in a Downturn

Making Money in a Recession

In a downturn, marketing budgets

often

get cut first ...

It can often be a quick fix in times of crisis ...

A Forrester Research survey of social marketers in 2008 for example showed that display ads, online video, game marketing and

widgets are the first to go in a downturn.

Source: Forrester Research

Especially when you

don’t know how long it’s going to

last.

Source: WSJ Market Data Group; National Bureau of Economic Research (recessions)

Yet there is clear and incontrovertible evidence proving that

increased marketing spend can actually increase market share

In a 1979 survey

ABP/Meldrum & Fewsmith found that:

“Companies which did not cut marketing expenditures experienced higher sales and net income during those two years and in the two years following, than those companies which cut budgets in either or both recession years.”

In 1981 – 1982

McGraw-Hill Research analysed over 1,000 in 16 different industries.

The findings showed that firms which

increased or maintained their marketing spend averaged significantly higher sales growth, both during the recession and for the following 3-5 years.

During the 1990 – 1991

recession, Management Review asked AMA member firms about marketing spending.

“Fortune follows the brave”, it announced, noting that the data showed that most firms that raised their marketing budgets enjoyed significant gains in market share.

“Brands that increase {marketing} during a recession when competitors are cutting back can improve market share and return on investment at lower cost than during good economic times.”

3 March 2008

Harvard Business Publishing

If bigger retailers cut down on their marketing and visibility during a downturn, then smaller competitors can actually

gain market share because there is less competition.

During the Great Depression in the 1930s many successful companies cut their marketing and advertising budgets and

some dropped off the

radar completely.

As a result, customers felt abandoned by these companies and interpreted the cuts as meaning that the companies weren’t

good enough to survive.

Customers gave their

custom to more visible competitors, those who continued to market and advertise aggressively.

The companies who thrived were those who

continued to market themselves consistently and even increase their budgets.

These are just some of them

Even when there’s a downturn in the economy, there are always

opportunities out there

There are two things to look at:

(1) opportunities for

business growth

(2) marketing activities which give you ROI (Return on Investment)

Examine every aspect of your marketing budget with a critical eye

What marketing activity leads to the highest income ?

What high ROI activities do you need to increase ?

What does each qualified lead cost?

Source: http://blog.startwithalead.com

(Low Figure vs High Figure)

Marketing Campaign Cost

Marketing Campaign Cost

divided by divided by(Number of Leads) (Number of Sales)Cost Per Lead Cost Per Sale

The ROI of every Campaign is Cost per Lead vs Cost per Sale

Large Number of Leads

Large Number of Sales

The Most Important Key Indicator is the End Financial Performance

Small Number of Sales

Small Amount of Revenue

Large Amount of Revenue

Small Number of Sales

Relative Value of Marketing Mediums (importance ratings & results vs budget allocations)

Source: PoliteMail Survey of marketing and sales executives

E-mail marketing

Search keyword advertising

Direct Mail

Online non-search advertising

Tradeshow

Telemarketing

Print

Radio

TV

Business Growth

Flotation Local to National & National to International

Cash Flow

Private FundsProfits

LoansVenture CapitalLeasingEU Grants

InnovationCompetitive AdvantageMarketing

TakeoversMergersBuyouts

Management StructureOwnership Control Economies of ScaleChanging Roles

Business Growth Opportunities

InnovationCompetitive AdvantageMarketing

- New Market Development- New Product Development- Customer Share Expansion-Acquisitive or Joint Venture Growth- New Skills Development or Acquisition

Relationships with customers will strengthen during a recession because competitors will be hoping to capture them.

Improve your USP.

Revisit your customers’

“pain points” – find out what keeps them awake at night and then work out how you can help them

Sole traders and small businesses can take advantage of a downturn and grow because they can

charge less and are more flexible than multinationals

Many successful companies

started up or came about during recessions ...

Microsoft, the number one computer technology company, was created by Bill Gates and Paul Allen in 1975, just after the oil crisis in the Middle East hit global markets. Various strategies enabled Microsoft to achieve remarkable growth in the competition-laden computer industry including product innovation, brand extension, heavy advertising, competitive toughness, and product expansion.

Fortune, the world-famous global business magazine, was founded by Time co-founder Henry Booth Luce in February 1930, just four months after the Wall Street Crash of 1929 that marked the start of the Great Depression. It initially targetted wealthy tycoons, but later was marketed as an intellectual vehicle for visionary leaders in the business world.

A recession is a good time to acquire competitors at reduced rates ... or (put another way) go into partnership with competitors

Twentieth Century Fox was founded in the Great Depression of 1935, as the result of a merger of Fox Film Corporation (founded by William Fox in 1915), and Twentieth Century Pictures (founded in 1933 by Darryl F Zanuck, Joseph Schenk, Raymond Griffith and William Goetz) when Fox was about to be into receivership.

Unilever was created in 1930 from the merger of British soap maker Lever Brothers and the Dutch margarine producer Margarine Unie - a logical merger as palm oil was a major raw material for both margarines and soaps and could be imported in bulk more cheaply.

Then think of new and imaginative ways to market yourself or your products and services.

Have you fully considered what your potential

customers want? Is there a social trend which suggests a new

direction for your business?

Is there an unusual way of packaging your communications or proposal in a way that might

make it stand out?

Are there any aspects of your business that represent value

that could offer to bring in additional value?

Is there a market niche you are overlooking because you felt it was dominated

by bigger competitors?

If you were to be more aggressive about seeking

opportunities, who could you approach?

Is there a way you can help your potential customers to visualise the impact of your service?

Here are a few real life examples ...

The monks in the Benedictine monastery , Worth Abbey in Sussex, needed to find a way to support

themselves.

Abbot Christopher Jamison and Roger Steare, a London-based business consultant founded The

Soul Gym which offers a series of business ethics courses aimed at industry leaders.

An advertising agency was on the verge of going out of business in its first year, so the owner decided to spend his last few thousand dollars on a party for

clients, potential clients and journalists to say “goodbye” in style.

The party had an unexpected effect. Wanting to be part of such an obviously successful new venture,

several new clients signed up immediately and for the first time the firm started making a profit.

Sir Cameron Mackintosh wanted to transfer his musical “Five Guys Named Moe” from a small fringe

theatre to the more formal West End of London without it losing the fun atmosphere that made it

such a success.

He hired a “meeter and greeter” at the new theatre to joke with the audience as they came in and the

cast led a conga to the bar at the interval. The show had excellent word-of-mouth success, and ran for

four years.

In 1928, Ward Cosgrove, who worked for the Minnesota Valley Canning Company, wanted to

market a new and unusually large variety of pea called the "Green Giant" which he had found in

Europe.

His agency thought up the “Jolly Green Giant” character and by the 1950s, it had become so

popular that the company had changed its name to the “Green Giant Company”.

David Musselwhite, a 63 year old lawyer in Dallas, Texas wanted to turn the business of law into a “pleasurable experience” which wouldn’t scare

away any potential clients. So he set up the “Legal Grounds Cafe” as part of his office space so that he could help solve people's legal problems in a non-

threatening environment.

In 1994 Unilever launched the Everyman Project which sold very cheap soap powder to women

doing their washing in the Ganges. It then started to promote low cost powder and

shampoo in Brazil.

The project gave Unilever a presence in areas usually ignored by other multinational

companies and it has become a trusted name in those areas with huge potential growth in the

future.

Jim Kirchmeier, owner of the Classic Driving School in Texas, wanted to attract more

teenagers and students to his driving school.

He bought a fleet of Porsches to make his company stand out from the competition. It had

the desired effect. Within a year he had doubled his income.

An example of using product line extensions to evolve a brand was McDonald’s healthy choices

value menu created in 2004.  McDonalds reported a 14% growth in profit worldwide when

some businesses were struggling to preserve their market share.

Louis Cocozza, who worked for the Harty Press, wanted to find a way to reach five potential

customers who would never return his ‘phone calls. He bought a “message in a bottle” kit and wrote

each one a note saying: “I’ve been trying to reach you for such a long time, this is my very last hope”.

The next time he rang, four out of the five customers took his call. Three agreed to see him

and later became good customers.

Thank youMerciGraziaDankeGracias

Sara PaineVerona PR & Marketing

T: + 44(0)1474 361008E: sara@verona-pr.com www.verona-pr.com