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Articles and White Papers
Meeting New Economic Challenges: Tips for Marketing in Lean Times
The slumping U.S. economy has caused consumers to reassess where and how they spend their money. To effectively reach these increasingly discerning consumers, successful marketers must likewise reevaluate and streamline marketing strategies. Here are nine reminders to help navigate the process:
Remain Calm and Realistic. While many marketers assume that consumers cut spending during an economic downturn, total spending rarely falls in overall terms - it simply grows more slowly. In fact, some market segments, including education and legal, generally perform well in a recession. So be encouraged - sales may be healthier than expected.
Reinforce Your Value Proposition. To prompt action from selective consumers, marketers must clearly communicate their value proposition. Why should a consumer choose your offering? And how is your offering relevant to consumer needs and desires? Marketing strategies should not focus exclusively on internal needs and objectives, but should integrate external consumer dynamics.
Consider Long-Term Effects of Marketing Cuts. Research indicates that advertising has a long-term impact on sales - even up to five years after ads are shown. Slicing ad budgets today can do irreversible damage tomorrow. An analysis by PIMS (Profit Impact of Marketing Strategy) reveals that firms that reduce advertising are slower to recover when economic growth returns.1
Cut the Correct Costs. If marketers must reduce costs, it's critical to cut the right ones. In an economic slump, firms that cut manufacturing and administrative costs tend to do well, as do those that reduce spare capacity. But firms that compromise product quality or cut marketing budgets generally underperform.
Reduce Brand Risk. The impact of marketing cuts extends beyond depressed sales and market share. Without advertising and marketing support, distribution becomes more difficult and the pressure to cut prices becomes harder to resist. With lower sales and slimmer margins, non-advertised brands often suffer falling profits and fatal consequences.
Seize the Competitive Opportunity. History has not been kind to marketers that make poorlytimed cuts to advertising. By contrast, an economic downturn can be a great opportunity to gaina decisive advantage over short-sighted competitors. While competition scales back marketingspend, strategic marketers find a unique opportunity to buy market share at a deep discount.
Beware of Promotions. As consumers search for bargains in tough economic times, product promotions may seem like the obvious solution. Marketers beware! Promotions can become ill conceived price cuts in disguise. The lift in sales is usually temporary, and the net effect on profits is often negative. Additionally, marketers that lean too heavily on promotions are in danger of eroding brand value.
Generate Consumer Buzz. An analysis of nearly 880 case studies published by the World Advertising Research Center shows that the most profitable ad campaigns are those that create conversation - both about a brand and its marketing.2 To get consumers talking, a campaign must be compelling. Advertising on cable television plays an important role here. Research indicates that TV remains one of the most prominent conversation topics - second only to discussions about family and friends.
Utilize the Power of Integration. While word-of-mouth advertising can help extend a budget,the most successful marketers leverage spend across multiple channels and marketing solutions. Highly effective campaigns integrate rich, publicly consumed media like television with innovative channels like online and mobile advertising. Managing the right mix can more than double the dividends.For more helpful tips on marketing in a new economy, please contact your local Cox Media representative on coxmedia.com.
1 Les Benet, "Marketing in a Recession: 10 Things to Remember," AdWeek, 2 February 2001.
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