Stay the Course and Increase Market Share
by Valerie Ferrari |
IN BOOM TIMES, most every business succeeds, and makes money. There is more to go around, and customers are not as discerning when they spend. We've enjoyed a few years of that, but now times call for some real belt tightening. This has led to some of our competitors pulling up stakes and leaving the world of business ownership behind. But for those of us left in the game; with dedication, hard work, and a little bit of astute planning, we can be the cream that rises to the top.
So, should you advertise in a down economy?
During slow times, every company has to contain costs. The big question is where? Some would argue that cuts in operations will reduce production efficiency or cause painful layoffs. The marketing budget becomes an easy target.
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Companies that increased advertising during an economic downturn increased market share an average of 1.5 percentage points according to the Profit Impact of Market Strategy (PIMS) study conducted by the Strategic Planning Institute. |
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| Why? Because we categorize advertising as an expense rather than an investment. But advertising is an investment in brand loyalty and future sales. We ask, “What are we getting from our promotions?” rather than asking “How can we get more from our promotions?” Remember, promotion doesn't mean just your ads; it could be direct-mail, trade shows, your website and more. Ask, “Where can I invest wisely?” All of your marketing should provide a measurable return. Factors other than advertising (sales, customer service, etc..) contribute to your overall brand image. Marketing aligns your brand internally as well as externally. Cutting your marketing budget can hurt immediate and long-term profits and brand awareness.
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Gain Market share during slow times
Maintain or increase your communications efforts during slow times and you'll emerge stronger and achieve more when things pick up. The PIMS study showed a direct link between market share and the amount of marketing businesses do. Companies that are more visible than the industry norm sell more during the years following a recession. Those that advertise below the norm sell less after a recession.
Advertising = Investment
Decide what to cut
Cutting investments that create demand and deliver customer service isn't a solution. In fact, there's greater need during tough economic times because customers pay even more attention to their spending.
Evaluate every business function - sales, operations, engineering, marketing, etc. - according to:
- Whether they contribute to and are consistent with your brand.
- Whether they contribute to a great customer experience, because delivering a superior customer experience is vital in any economy.
- Whether they bring long-term results or just quarterly ones.
Keep in mind that advertising is a tactic to achieve steady, calculated, long-term growth. When you view cost-cutting this way, decisions on which areas to cut become clearer.
Your communications program maintains the connection to your customers and consistency of your service. Avoid the urge to pull back and you make your brand more valuable, less forgettable. If you cut your advertising, it may be too difficult and too costly to rebuild your brand awareness later.
Stay the course and you will come out of slow times faster and healthier than your competition!
