Keating Magee - New Orleans Advertising Agency : Advertising : Interactive : Public Relations : Media

Clients tell us, “We can’t afford to build brand right now. We have to sell some product. We’ll build the brand later.”

For many marketers, “later” never comes. Particularly in an economic downturn, we advise our clients to build the brand and move the short-term needle at the same time. When you think about it, you really can’t afford to do anything else.

Resist the urge to shift to a short-term, survival mindset. Now is the critical time to consider your long-term strategy. If your business model still makes sense, then you should adjust your execution to the demands of the current business climate.

A recession cost a company we know almost half their business. They’d followed a successful business model for over 20 years and concluded it still made sense. They maintained product quality and did not slash prices. They invested in new business, looking at every opportunity in terms of profitability, not short-term sales.

Within six months, they replaced all the employees they had laid off. Within two years, they chalked up record levels of revenue and profits. Within six years, the company had more than tripled its size.

Most conventional research isn’t very helpful in coping with a recession. It will most likely validate your judgments. But it won’t help you win. Effective recession-centered research unearths insights that point the way forward.

For example, a recession changes the purchase decision process in many categories. Understanding this “recession mindset” tells us which kinds of information and messages consumers need and when those messages should be delivered.

Qualitative research using projective techniques can provide clues regarding how a brand sits in the consumer’s mind in a recession. Those clues suggest strategies to reinforce or reshape brand perceptions.

During a recession, price promotions make sense. The key question is: How often should you promote and how deeply should you discount to move products and services while maintaining a high level of perceived quality?

The following are some guidelines to consider as you manage your brand through a recession:

1. Either promote deeper discounts for a shorter time than your competition, or promote more often at a lower discount than your competition.
2. Use language that reinforces the quality side of the equation. Without that quality reinforcement, your “50% off” reads like “this product is only worth 50% of the exaggerated retail price.”
3. Announce promotions without citing the numbers. Both Lexus and Mercedes are running promotions during this recession but they do not advertise the deals. Emphasize exceptional value.

Brand awareness is critically important. Extensive research substantiates the economic wisdom of continuing to support the brand in a recession. For the most up-to-date white paper on the subject, go here.

What can you do when the temptation to cut marketing monies becomes just too strong to resist? Spend what you can to maintain visibility for the brand and to drive some business. Public Relations is a very effective and economical way to keep your brand and your company before the public.

Make online marketing a priority. It can drive traffic and build business. Properly managed, social media and Search Engine Optimization (SEO) can bring business to your brand at a very reasonable cost.

Market share is the most important business-building variable in a recession.

If, in normal times, you spend $100 in a category where the average expenditure is $1,000, you enjoy a 10% share of voice.

During a recession, if you spend $100 while competitors cut their spending to $600, you have increased your share of voice from 10% to 16%. That’s the equivalent of spending $160 in a normal market.

Consider allocating that $100 differently in a recession. Shift some to PR, interactive, and promotion. You will have increased your marketplace presence by 60%. Plus, your tactical spending shift will help drive more short-term business.

In athletics and in business, there is a management mantra that goes, “invest your time with your stars. They will provide the greatest return on your time and resources.” In a soft business cycle, this mantra is doubly true.

Our experience, in our own firm and in working with many companies across the country, is that the best talent performs best when the need is greatest. A corollary to that is you can demand more of your top performers and in most cases, they will more than fulfill your expectations.

Faced with the challenge of digging your firm out of a business hole with fewer people to share the workload, it’s smart to ask your best performers to stretch their talent to take on more responsibilities.

When you ask your stars for more, two good things happen:

First, you will most likely realize greater productivity and improved efficiency across your operations.

Second, your best people will intensify their efforts and extend their capabilities, creating a stronger core team to move the company forward after the recession.

Marketers can increase their efficiencies and their “bang for the buck” by thinking ahead. For example:

1. Media prices are soft in a recession. You can negotiate even better deals by committing for a quarter, six months, or even a year. Ask yourself what media you must run in order to support your business. The answer will tell you what media you can commit to for a year (or six months, etc.). This principle will not apply to all media but, typically, huge discounts reward those who plan ahead.
2. Produce as many selling materials as you can at one time. Take advantage of gang printing discounts. Consolidate photo shoots. Work exclusively with one photographer and get a volume discount. Develop concepts for all materials at one time so you use fewer photos in more pieces.
3. Create concepts for promotional ads at one time. Creative people get in a groove when creating several ideas against one theme. You can save a lot of time (and money) that way. It’s another way a smart marketer can get ahead by planning ahead in recession times.

Recessions represent significant danger for your business. Preparing your options in advance gives you a better chance to react more quickly, more strategically, and more successfully than your competitors.

When consumer demand goes soft, what optional responses should you be prepared to implement?

• Price reductions.
• More frequent promotions with lower discounts.
• Less frequent promotions offering more products at deeper discounts.
• Increased advertising to gain share of voice and share of market.
• Marketing mix adjustments to include more PR and interactive tactics.

When you look closely, you’ll find more than one way to deal with adversity. The important thing is to evaluate as many options as possible, look at the pros and cons of each option, make a firm decision, and act.