दुरिंग Economic Slowdown, consumers become value oriented, retailers are concerned about cash, and employees worry about their jobs. But a slowdown is no time to stop spending on marketing. In my opinion it's important to understand how the needs of your customers and partners change, and adapt your strategies to the new reality. Key concepts include:
The signs of an imminent economic slowdown in our country are all around us. Companies should bear eight factors in mind when making their marketing plans for 2009 and 2010:
Research the customer. Instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the slowdown. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, or buy less. Must-have features of yesterday are today's can-live-withouts. Trusted brands are especially valued and they can still launch new products successfully, but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent.
Focus on business family values. When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising to replace images of extreme sports, adventure, and rugged individualism. Zany humor and appeals on the basis of fear are out. Greeting card sales, telephone use, and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends. An opportune time to drop your weaker distributors and upgrade the sales force.
No short cuts in marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during an economic slowdown, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic good times. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions. Brands with deep pockets may be able to negotiate favorable advertising rates and lock them in for several years. If you have to cut marketing spending, try to maintain the frequency of advertisements by shifting from 30-second to 15-second advertisements, substituting radio for television advertising, or increasing the use of experiential marketing, which gives more immediate sales impact.
Review/discontinue product portfolios. Marketers must reforecast demand for each item in their product lines as consumer’s choices of models that stress good value, such as cars with fewer options. Tough times favor multi-purpose goods over specialized products, and weaker items in product lines should move completely out of production line. In grocery-products categories, good-quality private labels and regional brands gain at the expense of national brands. Stay away from gimmicks; reliability, durability, safety, and performance are in. New products, especially those that address the new consumer reality and thereby put pressure on competitors, should still be introduced, but advertising should stress superior price performance.
Extend Support to retailers. In uncertain times, no one wants to tie up working capital in excess inventories. Trade discounts, extended financing, and generous return policies motivate retailers to stock our full product line. This is particularly true with unproven new products. Be careful about expanding distribution to lower-priced channels; doing so can jeopardize existing relationships and your brand image. However, now may be the time to drop your weaker distributors and upgrade your sales force by recruiting those sacked by other companies.
Continuously review pricing tactics. Customers will be shopping around for the best deals. You do not necessarily have to cut MRPs, but you may need to explore offering more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers, and price smaller pack sizes more aggressively. In tough times, price cuts attract more consumer support than promotions such as sweepstakes and one on one offer.
Focus on market share. In all but a few technology categories where growth prospects are strong, companies are in a battle for market share and, in some cases, survival. Knowing your cost structure can ensure that any cuts or consolidation initiatives will save the most money with minimum customer impact. Companies with strong positions and the most productive cost structures in their categories can expect to gain market share. Other companies with healthy balance sheets can do so by acquiring weak competitors.
Reinforce core values. Although most companies are making employees redundant, chief executives can cement the loyalty of those who remain by assuring employees that the company has survived difficult times before, maintaining quality rather than cutting corners, and servicing existing customers rather than trying to be all things to all people. CEOs must spend more time with customers and employees. Economic slowdown can elevate the importance of the finance director's balance sheet over the marketing manager's income statement. Managing working capital can easily dominate managing customer relationships. CEOs must counter this. Successful companies do not abandon their marketing strategies in a slowdown; they adapt them
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