PDA

View Full Version : Marketing During Tough Times



KristineS
10-04-2008, 09:08 AM
The conventional wisdom, at least so far as I've read, has always been that marketing budgets should if not increase at least not decrease during tough economic times. Despite this, I've been hearing that a lot of companies are cutting back on their marketing.

What's your opinion? Do you think spending on marketing during tough economic times can help you better your position in the marketplace? Do you think it will also bring benefits when the economy is better? I can see the sense behind the recommendation not to slack off, but I can also see why people are nervous.

Patrysha
10-04-2008, 04:00 PM
I think tough times call for marketing smarter, not necessarily more (although if you have been relying on word of mouth then it might be time to invest in a simple marketing plan to ensure you cultivate existing relationships).

I also think if you've been following a guerrilla approach already, that the market fluctuations should have little effect on your plans.

If you don't have a clear marketing action plan - it's time to develop one...

If you do, well then all you have to do is follow it (assuming it was based on solid foundations) with an identifiable target market and an affordable stepped approach)

orion_joel
10-04-2008, 07:42 PM
I think that maybe where a lot of cutting back on marketing comes from is businesses that look at marketing as nothing more then a line item on their Profit and Loss Statement. As the economic times get tougher and tougher many businesses will see a range of line items. There are the items they cannot change, eg lease, power, ect. Then there are the items that may ahve already been cut back as far as possible, Staff, Training, Technology, ect. Finally there are the items like marketing that they have resisted cutting, but due to a wish to, i don't know keep eveything in line, or to improve profitability.

While i agree that cutting marketing spending can be a big hit especially in a poor economy, i can to some extent understand reasoning behind it. While i have not had the chance to see many business wide balance sheets, at a profit center level, everything often seems to be worked out in dollar figures and then as a percentage of revenue. Mostly they have a range that they are expected to operate in, for example depending on the business wages may need to fall within a range of 8-15% of revenue(usually a smaller range but they are the extreme's i have seen). I would expect they look at marketing in the same way.

Baseline
10-05-2008, 09:03 AM
Depends on your size. If almost all of your work is word of mouth and past service... you don't have a marketing budget, to speak of. Cards and a brochure.... but you need to track where your business comes from, and also where you want it to go. If it's word of mouth, a splashy ad in a trade journal doesn't make sense; unless you are trying to expand your visibility with the readers of that journal. So make the plan first- figure out the best use of resources next.

IMHO.......

KristineS
10-05-2008, 09:39 AM
I agree with all of you. I think what intrigues me is the tendency that a lot of businesses seem to have to hunker down during tough times and still assume that customers will be there and waiting when the company chooses to talk to them again. In today's market people have really short attention spans for a lot of things. You have to keep them engaged or you'll lose them.

SteveC
10-05-2008, 06:35 PM
It all depends on what you class as marketing... the most important thing with marketing is that just like everything else in business it is meassured and made to be accountable... if it delivers then fine, increase it... if not then you need to change your marketing to make it deliver better results.

Perhaps a better question is what exactly is marketing in a small business?

orion_joel
10-05-2008, 07:18 PM
As i said before to many businesses look at it from a numbers point of view. Just using some examples here, for a company with Revenue of $500,000,000, they may have a comfort zone of 3-4% on marketing or $15-20 million. So they set the budget in the middle at $18 million. If they had a really bad year and only had turnover of $300,000,000 and had managed to keep all other expenses in line without looking at marketing. when they look at marketing they are going to see it sitting at 6% of revenue a full 2% above their comfort zone. There would be a good chance in this case they would slash that budget, probably in half, because their is a good chance that most people in the position making that decision are basing it solely on financial data and nothing else.

vangogh
10-06-2008, 03:58 AM
I'm going to pretty much agree with everything that's already been said. I think you should continue marketing during down times. You just want to be smarter about it. I suspect some companies are concerned with cutting expenses and so cut any expense they can. Others though could be cutting marketing that thy haven't determined is working effectively.

When cash is plentiful some might experiment with marketing and may be more willing to leave certain things in place where they really haven't measured the effectiveness. When money gets tight they cut that marketing.

It should come down to ROI. If you make $150 for every $100 you spend, why would you stop?

Ad-Vice_Man
10-06-2008, 02:04 PM
If you're not turning your lights off and locking your doors, you shouldn't turn off your stream of customers.

BillR
10-09-2008, 03:25 AM
There's no such thing as marketing during tough times.

With the exception of vanity/luxury products there are only two things people sell - things people need and things that in one way or another save them time or money.

If you have a value proposition to prove you can save someone time or money - or give them a skill/service they need for a fair rate - then it's really a matter of how you distinguish yourself.

Paul Elliott
10-15-2008, 03:40 PM
I think tough times call for marketing smarter, not necessarily more (although if you have been relying on word of mouth then it might be time to invest in a simple marketing plan to ensure you cultivate existing relationships).

I also think if you've been following a guerrilla approach already, that the market fluctuations should have little effect on your plans.

If you don't have a clear marketing action plan - it's time to develop one...

Yea! Patrysha gets it!

At the onset of a business' operation--an integral part of a written business plan--a carefully crafted marketing plan, not simply a plan to pay for a lot of advertising.

If anything, the marketing plan should be designed to function counter-cyclically--better times, less marketing, worse times more marketing.

Paul

Paul Elliott
10-15-2008, 03:46 PM
I'm going to pretty much agree with everything that's already been said. I think you should continue marketing during down times. You just want to be smarter about it. I suspect some companies are concerned with cutting expenses and so cut any expense they can. Others though could be cutting marketing that thy haven't determined is working effectively.

When cash is plentiful some might experiment with marketing and may be more willing to leave certain things in place where they really haven't measured the effectiveness. When money gets tight they cut that marketing.

It should come down to ROI. If you make $150 for every $100 you spend, why would you stop?

Steve, most often businesses fail to design or deploy their marketing plans with any particular thought beyond selecting which newspapers, radio/TV station, etc., to use, and when and what to spend on their ads.

Since so few of them even bother to ask where new customers come from, they have no way to quantify their advertising. Therefore, they think of marketing--primarily simply advertising--as an expendable cost (if you'll pardon the pun).

Paul

KristineS
10-15-2008, 03:52 PM
Paul, I think this is a problem for a lot of small business owners. They don't know how to track results, and they don't know the techniques that will allow them to track results. I also think there are people who simply following the latest marketing trend without really examining the technique and determining whether or not it will work for their business. Of course, those people end up being frustrated a couple months later when they've spent a lot of money and have nothing to show for it.

Paul Elliott
10-15-2008, 09:35 PM
Paul, I think this is a problem for a lot of small business owners. They don't know how to track results, and they don't know the techniques that will allow them to track results.

You're right. However, the best way is simply to ask new callers or new visitors the simple question, "Where did you learn of our business?" They must then log the results and relate them to the money spent to deliver those new customers.

Of course, they also need to tabulate how much each customer spends over time. This requires a little more attention to the process than simply asking the question, but not much.


I also think there are people who simply following the latest marketing trend without really examining the technique and determining whether or not it will work for their business.

Yes, and they simply wind up burning money. It may be unfortunate that there is no law against inadequacy; however, that lack merely leaves the rest of us more opportunity. :)


Of course, those people end up being frustrated a couple months later when they've spent a lot of money and have nothing to show for it.

Certainly, and with good reason.

Paul

vangogh
10-16-2008, 02:16 AM
most often businesses fail to design or deploy their marketing plans with any particular thought beyond selecting which newspapers, radio/TV station, etc., to use, and when and what to spend on their ads.

Great point Paul. And when you put it in those terms it's easy to see why some people solely see marketing as an expense. Your marketing should be more of a coordinated plan and measured in terms of ROI rather than expenses.


the best way is simply to ask new callers or new visitors the simple question, "Where did you learn of our business?"

I admit I forget at times, but it's one of the most important questions I ask. I'm very mindful of where my clients come from and what channels of marketing have proven to be more profitable for my business.

KristineS
10-16-2008, 10:15 AM
I have to remind our guys to ask that question at trade shows. We implemented a system of phone calls before the last two shows we did just to see if it made a difference in our booth traffic. We had free passes so we called people, asked them if they were going to the show, offered free passes and reminded them to stop by our booth.

Our traffic was up by 25% at least and when the guys did remember to ask, a lot of people said they got a phone call and they remembered it.

If we hadn't asked, we never would have known what caused the increase. We could have guessed, but we wouldn't have known.

Paul Elliott
11-09-2008, 12:39 AM
I have to remind our guys to ask that question at trade shows. We implemented a system of phone calls before the last two shows we did just to see if it made a difference in our booth traffic. We had free passes so we called people, asked them if they were going to the show, offered free passes and reminded them to stop by our booth.

Our traffic was up by 25% at least and when the guys did remember to ask, a lot of people said they got a phone call and they remembered it.

If we hadn't asked, we never would have known what caused the increase. We could have guessed, but we wouldn't have known.

Great report, Kristine. Testing and tracking! It works, doesn't it?

I'll bet you do it again for the next trade show.

Are you collecting contact information from everyone at the booth . . . yet? :cool:

Paul

KristineS
11-10-2008, 12:53 PM
Yeah, Paul. We do get lead information from everyone who visits the booth. They have badges which can be scanned and so we do that. Then we do a follow-up e-mail a week after the show and then follow-up phone calls after that.

We spend too much time and effort on our trade show attendance to let these leads go to waste.

Paul Elliott
11-10-2008, 02:15 PM
Yeah, Paul. We do get lead information from everyone who visits the booth. They have badges which can be scanned and so we do that. Then we do a follow-up e-mail a week after the show and then follow-up phone calls after that.

We spend too much time and effort on our trade show attendance to let these leads go to waste.

Great that your company recognizes that, Kristine. I've seen far more examples of a lot of money being spent time and again with NO follow-up. I suspect with the economic situation nowadays that that will decrease!

Paul