Crash Course in ... Marketing in a recession

Times are hard, and all your budgets are under review. Marketing looks a tempting target; is it an indulgence in this time of austerity? Or should you just be thinking more clearly about where you focus your effort?

by Alexander Garrett
Last Updated: 31 Aug 2010

Keep spending if you can. 'This is not the time to cut advertising,' says Harvard professor and WPP non-exec director John Quelch. 'It's well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than in good economic times.'

Focus on your best customers. Now's the time to segment your market and find out who your most profitable customers are. 'Think about lifetime value - how valuable they will be to you over the full lifetime of your relationship with them,' says Julie Robson, associate dean of Bournemouth University Business School. Now is also the time to consider 'losing' unprofitable customers: after all, they're costing you money.

Follow consumer behaviour. Buying patterns have changed since the onset of the recession, says Robson. Consumers require more information and time to make big purchases, and many are trading down. Adds David Thorp, director of research at the Chartered Institute of Marketing: 'The key is to find out how your customers' behaviours are changing, and offer products and services that match changed expectations.'

Hit the right note. In hard times, people retreat to family values and nostalgia. Says Quelch: 'Look for hearth-and-home cosy family scenes in advertising to replace images of extreme sports, adventure and rugged individualism. Zany humour and appeals on the basis of fear are out.'

Communicate your value. Use econometrics and other techniques to demonstrate to the board the return on investment your marketing is achieving. Also, remind your customers what great value your products and services deliver to them.

Switch channels. 'Allocate your spend differently if needs be, but don't slash it,' says Thorp. Direct marketing can have a more immediate sales impact, while other channels such as the web also offer the chance to measure the effectiveness of your marketing. Adds Robson: 'If you have to cut budgets, focus on effectiveness, not efficiency.'

Be a comforting friend. Brand-building during the downturn should focus on reinforcing values such as trust and reassurance, says Robson. 'People have lost their faith in many big companies in the past few months. You need to give them a reassuring message about what you stand for and who you are.'

Do say: 'We are reviewing our marketing plan in order to provide offers and communication more effectively targeted at our best customers, and to take account of their changing needs at this difficult time.'

Don't say: 'We're gonna shoot this lavish, blockbuster commercial in the Caribbean - champagne, supermodels, fast boats, the lot - so everyone will get the message that we're still making tons of money.'

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