Leading through tough times
How to survive an economic recession
A bend in the road is not the end of the road… unless you fail to make the turn.
By Linda Duke As published in: Franchise Times - March 2008
The traditional reaction is to cut spending on marketing communications during economic downturns and recessions. Corporate missions, all of which center on delivering value to shareholders, to create, sustain and grow value is impossible without sales growth, and the objective applies both during recession and prosperous times. Savvy brand marketers see this time as an opportunity. Because the landscape gets quieter, it presents a chance for brands to stand apart, be more visible, and then emerge stronger and with more awareness when things return to normal.
Leadership is never easy, but at least a buoyant economy and growing markets offer protection. Strangely, businesses that have been rocked by one economic downturn appear to be unprepared for the next.
Linda Duke of Duke Marketing advises clients to continue being creative during tough economic times. The tide always turns.
What is life like during a downturn? Companies hunker down, conserving resources for the fight ahead. New products are discarded. In these times leadership becomes really important. Leadership includes good communication, ability to teach, trust, strategic insight, readiness to commit, leading rather than managing.
What guidance can we draw to help successfully negotiate a downturn? Scan the world even more carefully, learn from your front line staff, question the continuing relevance of your strategy and resource base, see the world as it is, and talk about the future and how to get there, tell the truth, have courage to trust your people, reduce risk through coaching.
What do my customers want? When faced with penny-pinching consumers, it helps to shift your ad campaign from messages like luxury and status-enhancement to efficiency and value.
There is no more important time to be close to your customer and his/her attitudes and needs, and no better time to create trust and make your brand—even in the most image- and emotion-oriented categories—an easy, reasonable choice.
Below is a list of recommendations from various sources, including the American Marketing Association, the World Advertising Research Center and each with a similar message during economic change:
Stay in. As other brands cut back, your share of voice is going to increase. Your brand will be more visible for less money and you will come out of a recession with greater momentum.
Get more than your share. Share becomes more important in tough times, and benefits go to those with resources to outspend the competition: when everyone is losing, the strong become relatively stronger.
Provide better value. Businesses which provide better value for money in their customers' are more profitable during economic downturns and grow faster after recovery.
Strategic flexibility is crucial. Economic downturns give managers the opportunity to look harder at their organizations and reconnect with their markets. Bold strategies are required.
Spend more. Those who increase spending in economic downturns generally improve share, and therefore profit; those who increase spending significantly may have to absorb a short-term drop in ROI but can thereby gain share substantially and greatly improve their position, and profit, for the future.
Strike while the iron is cold. Those organizations which focus on driving awareness in downsized economies build momentum and come out of the trying times with more market share.
Good times always follow bad. Taking action during less than rosy economic times provides a foundation for coming out on top of competition when the economy rebalances.
No more, Mr. Nice Guy. In the real world brands fight for survival against competitors, with the task getting even tougher in tough times. Being Mr. Nice Guy in such a world is a big mistake. Hence it is essential to decide how tough you can be. An economic downturn can be seen as a wonderful time to take an unfair advantage.
Manage your message. Reflect the new customer mindset. Shift your advertising message, shift funds to product lines that are suited to an economic downturn, stress quality and value, and unveil new uses for old brands. First it reversed a long-term decline in sales by increasing spending for the message that its grain products are inexpensive sources of protein. Then it stressed value as actor Wilfred Brimley promised, "A bowl costs you one nickel and four pennies." That message worked so well that Quaker allotted half its budget to it. Result? Powerful sales.
Wendy's met the recession with a head-on message: "Look, I know you have less to spend these days, but that doesn't mean you have to eat less."
Do yourself a favor. Take steps to recession-proof your business and make 2008 your best productivity year ever. What steps have you already put into place to recession-proof your new year? If you were to add just one more step to the above list, what would it be?
Linda Duke started her company, Duke Marketing, in 1987 to help multi-unit and franchise organizations. She can be reached at duke@dukemarketing.com
