Marketing In a Global Recession

Some principles/guides/laws/rules and helpful clues to

marketing in a global recession:

Recognize that in a global recession nothing is more important than retaining consumer loyalty. This is almost, but not the quite, the same thing as retaining consumers. Most people stop buying because they have no money, not because they no longer want your products or services.

If a consumer can’t afford your products, you won’t have anybody to sell to. Emerging from this are several implications:

It is wise to do what you can in every market to keep as many people employed as possible. Jobs mean income and income means purchasing power and consumer confidence.

It is good to have a reputation for being loyal to your employees when other employers may seem to be heartless. When we feel we must fire or furlough people, as now, we should do as much as we possibly can to cushion the blow to former employees and their families. We should also bend over backwards to reassure the people we want to keep that they are important to us and that their jobs are secure. It is impossible to do great work when you are frightened.

We must make it easy to buy our products. That means get pricing to where people can buy our products more easily. That may mean lower prices, but we should not be afraid to lower prices in markets where doing so makes the difference between a consumer purchasing our products or passing them up.  There is nothing magical about our traditional markup.  Some profit versus no profit is not a tough choice.

We should trade high margins for higher value. If we think we can build enough loyalty, maintaining that volume when the economy turns around will be easier. People will always look for things to be loyal to: teams, political parties, bands, etc.

Hard times are great opportunities to build market share. Don’t stop promoting your product - just do it more effectively and efficiently. If you turn off the tap of information going out, you turn off the tap of business coming in.

Companies say they are always looking for new ideas, but the walls around companies are so thick, it’s almost impossible for fresh thoughts to enter from the outside. Open the gates. Make NIH, DOA.

Find a genuinely entrepreneurial manager or local partner for each of your depressed markets. Give him a bare-bones budget and challenge him to build that market. Make sure the incentive is big enough to make him rich if he pulls it off.  Make sure you give him lots of moral support from headquarters and keep him tuned in to what the company is doing elsewhere. Help him when he stumbles and celebrate him when he succeeds. “Nothing succeeds like success” was coined in 1858 and it’s still true.

Think hard about where the company spends its money. In good times we all churn consumers. It doesn’t always make much sense but in good times nobody notices and nobody complains. The average American company puts far too much of its budget into buying expensive new consumers only to lose a significant number of them within five years. Old friends are usually the best friends.

In hard times, we’ve got to do more with less. We must create new consumers for the right reasons, keep them, and spend more on keeping satisfied consumers happy.  The longer we keep them, the more loyal they become - and the more profitable. There’s enough research to prove that companies who concentrate on consumer loyalty have much higher rates of return than companies who just concentrate on establishing new consumers. New friends are more exciting than old ones, but never as loyal.

In hard times, knowing the true value of products and brands for each consumer segment, though always important, is even more critical. Who buys what and why is something we expend a lot of money on to determine. We spend a lot less on who doesn’t buy what and why, despite the fact that we can probably learn a lot more from our failures than our successes. Companies should do some imaginative thinking about how well we serve each consumer segment and what we can do for them but have not done.

Hard times are good times to review products and product lines to double check on product features and qualities, to ask if each product is carrying its weight, to ask if each product is a match for the competition, to ask if there is anything we can do to make each product better and to ask if we shouldn’t retire a product or a brand that may have outlived its usefulness. Each boxcar full of useless cargo slows the whole train down.

Hard times are also a good time to review advertising and packaging to see if they are working as hard as they might, to see if they are meeting consumers’ needs, to see if they make people feel good, and most importantly to see if they are reaching the people we most want to reach. Maybe we can cut spending by improving our focus.

There is a general belief that hard times are the worst times for new product introductions. I think that depends upon the product. A good product is a good product whenever it is introduced. Canned beer was introduced during the Great Depression.

I think whenever you have something genuinely new and different—something that is an unmistakable improvement over what has gone before – that is the right time to introduce it. Remember, our old products are new in markets we haven’t developed yet and we don’t hold them back just because times are bad.  Remember also that it is in our most developed markets that our old products are oldest - so, these markets are most likely to be hungry for something new. “New” was said to be the second most powerful word in advertising after “free.”  I think that is now reversed.

Social responsibility is no longer discretionary and is an essential part of doing business. There is ample research that consumer behavior is influenced by an enterprise’s involvement in the “community” and subsequent actions. An enterprise’s potential for economic gain depends, in part, upon its ability to make itself more relevant to the community it serves. In recessionary times of high unemployment and distrust, the need to build trust with its customers is a fundamental challenge for every enterprise. Consumers are good people.  Cause-marketing is a ringing success. They want to see “their products” doing good works.

We have witnessed how “trust” affects everything you do and how powerful the relationship between trust, speed, and costs, affects everything an enterprise does. The ability to restore trust with all stakeholders, customers, business partners, investors and co-workers is the key leadership competency today and every day after that.  Trust is like a vase - once it's broken, though you can fix it, the vase will never be same again.

Now is a great opportunity for you to once again, show that you have a clear fix on the company and that you have concrete strategies for getting through recessionary times. I also think that it’s a great opportunity for you to consult the considerable talent on the board for advice and counsel. Why not let the board review and at the same time help fine-tune your plans? Take them on a one or two day off-campus meeting where they can roll up their sleeves with you and your managers.  At the end of a session like that, your board is solidly behind you and solidly behind plans because they’ll have a sense of ownership. This can only make for a stronger company, as well as a stronger chairman.

Too many enterprises have run up a trust deficit. The ability to build or restore trust with all of its stakeholders is the number one task of leadership.

The board is looking for a disciplined, conscious, thoughtful and aggressive response to the global recession.  They want to know not just how you’re going to react to it, but how you’re going to turn it into an advantage.  They want to know that you are in control and that you are capable of exercising leadership.

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