Contrary to conventional knowledge, cutting back on marketing in a recession may not help, but actually hurt an organization.
In a recession, marketing budgets are often the first to get slashed. According to a recent Marketing Magazine poll, nearly 60% of those surveyed said that due to the economic downturn, they plan to cut staff, reduce expenses or both in 2009.
But marketing in a recession isn’t about marketing less, it’s about marketing better and smarter. Some 60% of American Marketing Association member marketers say halting or reducing spending on key marketing programs is the biggest mistake marketers can make in an economic downturn, according to a recent AMA survey.
Recessions seem to be different from other threats to a firm’s viability, and marketing activities appear to help pull the firm through a macroeconomic downturn.
Though CMOs are facing tough challenges in the current economic climate, according to an Epsilon survey, 94% of those surveyed agreed with the statement, “A tough economic period is precisely the time when marketing plays a key role.” To offset budget cuts, CMOs are shifting to more targeted and measurable marketing strategies. Social computing (including word of mouth, social networking sites, viral advertising, etc.) was the most popular emerging channel with 42% of marketing executives expressing interest in adding it to their marketing mix. Blogs were the second-most-popular emerging channel, with 35% of marketers expressing desire to use them and 19% already using them.
According to Harvard Business School professor, John Quelch, who writes, Marketing Your Way Through a Recession, a downturn is no time to stop spending on marketing. The key, says professor John Quelch, is to understand how the needs of your customers and partners change, and adapt your strategies to the new reality.
In the scholarly article, Marketing strategies that make entrepreneurial firms recession-resistant,John A. Pearce and Steven C. Michael of Villanova University and George Mason University state, “A company’s marketing strategies preceding a recession strongly impact the extent of economic downturn on the firm, and influence its odds of a timely and complete recovery.”
They also go on to say, “Our specific prescriptions follow: First, maintain marketing activities in the core business as assurance against recession. Increasing sales and advertising, increasing breadth of production, and increasing geographic coverage improve performance during both the peak and the contraction of the business cycle.
Second, during the peak period, cautiously expand with an emphasis on marketing efficiency. Increasing the number of channels of distribution and cutting price have a negative effect unless accompanied by sales-force performance measurement. A simple emphasis on incentives and efficiency alone hurts a firm as a recession hits. All of these prescriptions run counter to existing views that suggest that recession simply requires cutbacks and retrenchment. Recessions seem to be different from other threats to a firm’s viability, and marketing activities appear to help pull the firm through a macroeconomic downturn.”
For more information, read the two part articles in Marketing Sherpa: Marketing During a Downturn Part 1 and Part 2.
Tell us what your company is doing in marketing to prosper during the economic downturn.
Posted by: Lianne Bridges
Lianne is a founding partner of Bridges Horizon, providing Marketing Transformation Consulting Services. Lianne has spent the past 20+ years managing and consulting across an array of sectors from B2B to Not-for-Profit, including such world-class organizations as: Aeroplan, Bombardier, Pfizer, Nabisco, Plan International, Southam News, United Technologies, the YMCA and Alcan, to name a few.
I couldn’t agree with you more Lianne. The natural tendency during rough economic times is for companies to slash and burn and crawl up into the fetal position. While this may give you a sense of empowerment, it could very well expedite your demise. No one wants to stand with their hand out asking for money during a recession, certainly not Marketers, however the old adage “you have to spend money to make money” holds true. While traditional marketing activities may no longer make sense in this economy, that does not mean that you should close up the Marketing shop! New and emerging ways to connect to consumers are popping up every day and smart Marketers will capitalize on these opportunities. There is no guarantee of success however if you do nothing, failure IS guaranteed.
So stop the urge to slash and burn. Spend the time reviewing your goals, customer needs and growth markets and let those guide you as you revisit your Marketing activities.
[...] We’re in a recession and things are changing, including how we get our products and services to market. Cutting marketing budgets during a recession may be the worst idea marketers can go through with when tough times hit. During a recession, learn how to market better instead of marketing less in this post from the Marketing Hive. [...]
[...] may include major cuts in expenses to deal with the short term situation, but this may put your business at risk, have serious side effects or make recover that much more difficult. Other solutions should be [...]
Yes, economic downturn greatly affects people’s minds and
the way they are looking into their life goals, hopes, threats, overall stability.
And also there are a lot of writers, analytics, sociologists
who publish their articles on mass media about speculation of the tough times. They predict that things will be worsen, harder and that many people will lost their jobs, fortune. They are right. Exactly these things happen right now. But all those people shouldn’t
speculate on hard times so much because it’s like a circle (deadend) which affect overall people’s spirit.
The companies began total layoffs, bankruptsy.
Instead, marketing managers and all smart people
should think about more smarter and finer solutions
to beat all these problems.
That’s why, companies should retain their people.
They need to focus on Crisis Management PR in order
to avoid all these overall panic. So, now Marketing plays
critical and strategic role in current recession and in the ways in can be solved.
[...] may include major cuts in expenses to deal with the short term situation, but this may put your business at risk, have serious side effects or make recover that much more difficult. Other solutions should be [...]