The downturn is beginning to make its effect felt dramatically on business, with a huge leap in the number of company administrations and receiverships. There were 2,428 insolvencies in the last quarter of 2008, a rise of 220% on the same period a year before. As a consequence, many small companies are considering cutting their marketing budgets.
Business owners who have been through previous recessions will be aware that the companies that survive through these times are the ones that maintain or adjust their marketing spend, not the ones who simply cut the whole budget.
Moderating your approach, rather than slashing budgets, can be key to success in the changing environment. Take TV advertising, the death of which has been prematurely announced on many occasions. The key to success here is to change focus. Consider last year's Christmas campaigns, the most successful of which were those that emphasised ‘family values', rather than the acquisitive style of campaign that we've become familiar with in the past.
The famous business writer Peter Drucker believed that only two business functions create growth; marketing and innovation. If this is the case, then trying to weather the storm of the recession by reducing investment in innovation is another sure way to bring about the very situation you're trying to avoid. On the whole, companies that don't innovate can't stimulate interest in their products and services - which leads customers to drift away from their regular purchases, as well as new ones.
How can we prove that committing to marketing is the right move? One answer is for marketers to focus more on metrics. Proving the value of marketing by speaking the language of the boardroom and understanding how marketing fits in with the broader strategic aims of the organisation is vital if the usefulness and validity of marketing in a downturn is to be recognised.
This increased knowledge in terms of being familiar with statistics, metrics and balance sheets is complemented by the legal aspects of business that marketers now need to know about. The number of laws affecting marketers is increasing all the time, with the Olympics Act and the European Unfair Commercial Practices Directive being two major pieces of legislation that marketers need to have a working knowledge of, as it would be very easy to unwittingly break them.
Small business owners should see the recession as an opportunity to do something different. Rather than committing to less marketing, commit to different marketing - keep listening to what the customer is saying, and respond accordingly. Whilst it might seem logical to batten down the hatches the companies that will survive are those that robustly commit to the plan, retaining their customers by offering them products and services that they want, and making sure you keep communicating with them.
Many customers will be reducing spend; but if you don't let them know what you can offer then what they do spend will be going to your business rivals.
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