How to survive in a downturn economy (part 1)
While your competitors are cutting down their marketing spending, you will do better if you keep your brand, product or service in front of your audience throughout the recession. Market share is won during downturns.
The first reaction of many companies to dwindling business due to an economic downturn—such as the one we are facing now—is to cut advertising and marketing spending. Or they may try to slash their prices to keep buyers active. Or they lay off employees to save fixed costs.
Although all of these methods may at first seem to improve profitability, they may seriously hurt your business and your market share. Let’s examine the threats a little more closely.
No visibility, no business
Because your customers are trying to save costs as much as you are, they need to be constantly reminded of your existence and the benefits you can provide them. If you reduce your marketing spending drastically, you will completely disappear from their sight. How will that make them buy from you?
Low prices will stay low
Companies who go the price-cutting way may at first have success in getting sales during the recession. But what will happen when things turn for the better? How do you persuade your customers that the product they bought for X dollars a couple of months ago is suddenly worth X + something today? Plus, if you slash your prices, there’s always a competitor who can slash them even more, leaving you stuck with both non-existing buyers and a low price.
Kick out your experts and you will have none
While trimming the fat is a good idea (although you should have thought about it in good times, not only in the face of an economic downturn), don’t resort to panic tactics. If you let your experts go to save money, you will have no experts available when business turns for the better. Hiring is a long and costly process and may significantly slow down your recovery.
Lost market share is difficult to get back
The most important thing to take care about is not letting your market share slip. If you lose market share during a downturn, it will be many times more difficult to win it back when business is starting to go better.
So, how can you avoid these pitfalls? We will be looking at that in part 2 of this article.
FOLLOW: Also read Why keep up marketing and PR in down times? in the Calgary Herald, June 22, 2009.