While the President-elect Barack Obama readies an economic stimulus plan to revive our failed economy, franchises can turn the current recession into positive and successful sales and marketing opportunities. There are a myriad of ways to help you ride the storm, one of them is to revise your marketing strategy.
John Quelch, a professor at Harvard Business School and known worldwide for his expertise in global marketing, branding and communications, discusses this issue in the Harvard Business Review. His original blog was posted in February 2008 and outlines some excellent ways to address marketing revisions.
Quelch was one of ten marketing experts profiled in Conversations with Marketing Masters, (Laura Mazur and Louella Miles). He also co-authored Greater Good: How Good Marketing Makes for Better Democracy (Quelch and Katherine Jocz). Additionally is a non-executive director of WPP Group plc, the world’s second largest marketing services company, and of Pepsi Bottling Group. He served previously as a director of Reebok International.
Please read the full article at the HBR, John Quelch, Marketing KnowHow: How to Market in a Recession.
The ripples of our nation’s recession have gotten wider and more far-reaching, touching everyone. Effects from the subprime mortgage crisis have stretched consumer confidence and spending (on credit) to its limit, both of which have been keeping our economy afloat.
Your 2008 marketing strategies are probably already updated this late in the year. We’ve distilled Quelch’s eight factors here. Give yourself some flexibility and consider these principles for your 2009 plans.
1. Know your target customer.
The economy has left consumers with less diposable income and everyone is now more frugal and savvy at finding the good deal. We will spend more time searching for goods and services, drive a harder bargain at the counter, or will trade off: put off purchases until a better deal comes along, settle for less, or buy less. We weigh: want vs. need more heavily. Although brand loyalty is high and those brands can pull off a new product launch, think about limiting new product lines and new brands – they may not be so successful in this market.
2. Home sweet home.
It’s human nature to retreat to the hearth-and-home in stressful times. Rethink and gear your advertising images from action-packed, extreme, and fear factors toward warm-and-fuzzy family images. We spend less by staying in, but still want to be connected, therefore, we will still spend on things that make our homes more comfortable (furnishing and entertainment), as well as greeting cards, telephone and internet use.
3. Maintain marketing spending.
As competitors cut their advertising budget, companies increasing their advertising during a recession experience a high level of success. They improve their market share and lower their return-on-investment. As more consumers stay in, television watching increases and lowers the rate of cost-per-thousand impressions. If you need to reduce your marketing, maintain your frequency of exposure by shifting to shorter advertisements; incorporate radio and direct marketing, possibly giving you more immediate impact on new sales.
4. Keep product line essentials.
Companies need to re-evaluate their product lines and trim the weaker products. Consumers look for good values now more than ever and opt for multi-purpose over specialized products; private label/store brands over more expensive national brands; goods and services a la carte rather than bundled. If you’re launching a new product that puts pressure on competitors by addressing current consumer needs, focus your advertising on a high level of price performance rather than trying to extend your corporate image.
5. Support distributors.
Give your distributors added incentive to stock your full product line by offering early-buy allowances, financing and flexible return policies. Acquiring some strong distribution channels that have been let go by other company and phasing out your own weaker ones may also be good way to beef up your sales force. Beware of damaging the strength of your existing distributors and brand image by expanding into lower-priced channels.
6. Make the price right.
Consumers are hungry for the best deal in tough times. Sweepstakes, mail-in rebates and other promotions requiring a customer’s time and effort are not very attractive. Offer temporary price reductions, lower quantities for bulk discounts, extended credit (trusted customers) and better pricing for smaller pack sizes.
7. Protect your market share.
In this present economy, market share can be a matter of survival, not just a battle for a share. Before implementing cuts or consolidations, make sure you know your cost structure to avoid adversely impacting your customers. Strong national companies with productive cost structures have the best chance at a possible gain in market share. Smaller, but still profitable companies can also vie for a bigger share by acquiring weaker competitors.
8. Put people first.
Companies have had to implement different cost saving strategies, including letting employees go, closing facilities and the like. Executives need to maintain employee and customer morale and confidence by focusing on quality products and services and continuing to provide these to their clients. In a recession when concerns are redirected toward profit and loss, it’s easy to concentrate on balance sheets and managing company capital instead of managing relationships with people – internal and external.
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