Sunday, October 26, 2008

Marketing Your Business During an Economic Slowdown

By: Aaron Wheeler, Guest Columnist and Principal of Apex 3 Group

How much does the most expensive roller-coaster on Earth cost? If you guessed in the trillions of dollars you might be close. The name of this wild ride is the American Economy, and the entire US population has been on board as it swept from boom to mega-boom to bust to bailout and finally to mega bust. Although the ride was nothing short of gripping and, in fact, seems to be far from over, most on board seemed extremely reluctant riders as they watched billions in assets evaporate as the vacillating markets rose and plunged.

These destructive movements have had the predictable effect of chilling credit markets and drying up venture capital. The money is no longer available to expand rapidly and companies of all types are left with only their operating budgets to support all business activities. Managers across the country are making hard budget cut decisions, often under tremendous pressure, trimming employee benefits packages, slashing bonuses and laying off large numbers of workers. Every non-essential function is downsized; every essential function is streamlined.

In this difficult economic environment what should be done with the marketing budget?

The reflexive action is to treat marketing as a non-essential function and drastically downsize or even eliminate spending in this area. The underlying reason for this common mistake is that the effects of marketing efforts are dispersed enough that they defy analysis and frustrate short-term attempts to correlate marketing budget expenditures to increases in bottom line health. The health of the bottom line is the factor that hires and fires managers and most of this group have business and accounting backgrounds, with only a rudimentary understanding of general marketing principles.

Slashing the marketing budget is one of the worst disservices that an embattled CEO can do a company. Cutting or eliminating marketing efforts only serves to isolate companies from their customers. This can lead to significant drop in revenue as customers remain uninformed about company improvements and new product introductions. In addition, any negative press that surfaces during a time devoid of marketing efforts, quickly becomes the only information available to customers and prospects.

How then can the essential function of marketing be streamlined?

Many marketing campaign suffer from a grave lack of focus. This sloppy marketing can be likened to setting up a television on every one of the 3,794,066 square miles of the United States, and paying to run ads on each one. Vast amounts of capital would be wasted advertising to polar bears in Alaska and prairie dogs on the plains. A far better plan would involve concentrating the televisions in areas of high population density. Even though fewer televisions could be used the information penetration is far greater since it actually reaches a buying audience. In a difficult economy this focusing is of paramount importance since money that is paid into failing, unfocused marketing campaigns is completely wasted.

Management training is an important first step in increasing marketing effectiveness. Managers need to become intimately familiar with the efforts of their sales teams and make sure that they have all the tools that they need. Management is the interface between the sales, analytical and marketing/branding departments. This requires an effort by management to understand the entire trail of sales, a path that is generated by marketing in the mind of the potential customer and ends with a signature on a sales order.

It is often a good idea to call in marketing consultants during times of economic distress, since outside help is often able to identify issues within company processes that might be overlooked or ignored by an internal audit. Of particular importance are efforts to eliminate conflict and encouraging cooperation between departments, especially marketing and sales departments. In addition, competent consultants can help to train management in assessing marketing plans.

Conclusion: Increase Efficiency

Economic downturns should not be seen as a reason to abandon marketing efforts, but merely as opportunities to increase efficiency and employee accountability. Any "marketing" work that does not result in increased customer awareness of the companies products and services must be immediately cut and supplanted with more focused efforts.