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In Prosperous Periods Promote Tactically, In Down Times Promote Strategically
Marketing in Down Times, Good Times
By Miles Weston
Economists are unanimous that regardless of what governments do it will take time, a lot of time, to rebuild faith in financial institutions and rejuvenate the economy. The sudden realization that the emperor had no clothes and magnitude of the financial crisis is only now being fully addressed. In a knee jerk reaction management is moving to cut costs â?" circling the wagons â?" by reducing staff and marketing budgets.
On the surface it appears logical.
But if you look at downturns and recessions in the past it wasn't financial institutions or governments that led the economy back. Recovery was developed and carried out by Silicon Valley (which is somewhat symbolic of the complete PC/CE industry). And it will do it again as consumers and partners come to realize that the intellect, credibility and creativity reside in the technology areas; not in the world's financial centers and most assuredly not in our seats of governmental power.
So while paring overhead and "discretionary expenses" would seem to be relatively simple it has always had a greater or lesser degree of negative impact. Keep in mind that NPD recently reinforced the strength of the industry by pointing out that in downturns and upswings consumer and computer technology has consistently beat the overall market's averages.
Their June retail-tracking service showed a three percent dollar increase over June 2007. This was the second consecutive month of positive news, after May's jump of over seven percent. And this is after five straight months of flat or negative results, stretching back to December. Before you wade into your promotional budget with a massive red pencil, consider how much should you cut from the promotional (advertising, sales support and PR) budget?
To answer this, ask yourself:
- What does advertising/PR do for us? Can we accomplish this with a smaller investment? How much smaller?
- What will happen next year or a couple of years out if we cut our promotional budget, keep it the same, or increase it?
- If our competition is in the same position, is there a way to use the short-term problem to our advantage?
Long Term Investment
Advertising/public relations should be an investment in both immediate sales and long-term objectives. It helps retain your share of market/image among your customers and prospects. It reinforces customers' commitment to do business with you.
Some of the more successful (profitable) manufacturers and retailers in the PC/CE industry view communications not as an expense, but as an integral part of their total marketing mix. If at all possible, they maintain an aggressive promotional policy and program. They know their advertising and PR have a favorable effect on sales and income.
Today, there is a volume of data which indicates that during deep, long recessions or other "difficult" times, the firms that trim their communications budgets suffer--and suffer hardest.
Other research found that companies that accelerate advertising/PR spending during market slumps perform better in both the short- and long-term.
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Undercover author Miles Weston has spent more than 15 years in the optical storage, software and video industry, indulging in, among other things, marketing activities in promoting MO, CD, DVD technology and its applications. Contact Miles through his editor by clicking here.Related Sites: IBN - IT Business Net
Related Newsletters: IBN - IT Weekly Newsletter
