This is not the time for timid marketing
There is a lot of news on how consumers have quickly closed their wallets in response to the barrage of recent negative economic announcements. The 10-20-08 BusinessWeek cover story (right) on how U.S. consumers are tightening their spending is representative of most stories.
What we've been taught
It is accepted business practice to "get lean and mean" when revenues fall. It has not been uncommon for businesses to cut, or at least slow down, expenditures on variables such as new hiring, customer service, advertising, product improvements, sales promotions, sponsorships, and hours of operation.
A recent study of the 400 member Association of National Advertisers found that more than 1/2 anticipated decreased spending by their businesses for marketing and advertising over the next 6 months.
But what we've been taught is not always right
However, business history shows that economic downturns might be an inopportune time to cut marketing efforts. Businesses have found significant success by increasing their marketing campaigns (or at least keeping their marketing stable) while competitors shrink theirs.
In the midst of financial uncertainty, consumers tend to be more open to trying different brands, stores, restaurants, products and price points. While some competitors cut the very resources that allow them to communicate and retain their current customer base, other businesses increase marketing expenditures to reach out to these abandoned consumers. Such firms take advantage of the decreased advertising and promotional clutter that makes communication with customers more difficult and expensive.
Examples of successful marketing campaigns started during economic downturns since the 1950s include Crest toothpaste, BMW, Calvin Klein jeans, and IBM personal computers.
No one says it will be easy
Building a brand during an economic downturn is not for the faint of heart. Devoting dwindling financial resources to marketing efforts is not an easy decision to arrive at. But the payoff can be significant. Not only might the hard times be lessened by increased sales in the short-term, the firm can enjoy greater brand awareness, customer loyalty, as well as, increased sales long after the economy strengthens and consumers loosen their spending.
One final note: such marketing efforts must be wise and judicious. The changes in consumer behavior that result from financial hard times must be understood and reflected in how firms relate to customers. Marketing "the way you've always done it" will not be enough. Consumers have new concerns and desires that businesses must recognize and appeal to.