Prospering in a Down Economy, Part 1

Posted on March 6, 2009 | Permalink

By Lane Casteix

Part 2, Part 3, Part 4

One of my favorite web sites is Stealing Share, where you can find all manner of ideas and thoughts about marketing and growing your business. In a recent article called The Comprehensive Model For Persuasive Human Communication they do a marvelous job of modeling consumer behavior in a down economy as we are experiencing now. The article is well written and, even though the subject is a bit complicated, it is presented in an easy to understand format. At SPAR we are actively applying the marketing principles taught in the article.

It should come as no surprise that consumers behave differently in a bad economy. They still buy products and services, just not as much as during more prosperous times and they become more cautious with their dollars. It is important to understand the motivators behind consumer purchases and how they can be tapped into to drive sales even in tough economic times. If you can do this, there is a good chance you can sustain your business and even grow share.

Basically, consumers are looking for comfort, assurance and value while becoming risk averse. They tend to gravitate towards the familiar (and safe) and avoid the new (and risky). Understanding this, the savvy marketer or advertiser can tune messages to address these new drivers. I urge you to read the linked article and consider applying the techniques they suggest.

This article on selling retro packaging fits right into some or the principles mentioned in the Stealing Share study. And Tropicana dumping its new package may also be related to their consumer's need for safety and comfort in a bad economy.

After you have read the linked study go read Stealing Share's predictions of marketing winners and losers based on the principles mentioned in the study and see if you agree.

Prospering in a Down Economy, Part 2

Posted on March 6, 2009 | Permalink

BY Lane Casteix

Part 1, Part 3, Part 4

When the economy goes bad often the first thing that businesses do is reduce advertising and marketing budgets, which is about the worst move they can make. A down economy is a time of opportunity, a chance to steal business from your competitors who are reducing their marketing efforts. It is a chance for you to improve your position in the market.

Diageo, a world leader in beverage alcohol, is indeed downsizing and reducing waste, but they see this economy as a chance to build share of market. They are indicating that they do not intend to reduce marketing efforts for their brands but will seize the moment to build an even stronger market position. I suspect other savvy bev/alc producers will do the same.

Yes, I have heard the old saw that beverage alcohol is immune to a bad economy, but that is not really true. Consumers will reduce their consumption and shift to lower priced products as they tighten their own economic belts. That means beverage alcohol producers are at risk of losing business if their portfolios are too reliant on the very high end of the scale, or if they withdraw marketing efforts and allow competition to steal business.

This same principle applies to other businesses. Indeed, businesses need to carefully watch spends and reduce costs wherever possible, but withdrawing marketing efforts is a recipe for disaster.

Prospering in a Down Economy, Part 3

Posted on March 6, 2009 | Permalink

By Lane Casteix

Part 1, Part 2, Part 4

In Part 2 of this series posted below I charge that reducing marketing budgets during a bad economy can be exactly the wrong thing to do. A McGraw-Hill Research study on this subject came up with some interesting statistics to support that position.

In 1981-1982 recession business that maintained or increased their ad spend during this time averaged higher sales growth and in the following 3 years! By 1985 sales of the businesses that maintained or increased their ad spend during that recession, sales had risen 256% over those that had cut back on advertising. Same in 2001 - another study found that aggressive recession advertisers increased market share 2 ½ times the average for all businesses in the post-recession!

But in 2002 the Strategic Planning Institute illustrated that for 80% of businesses that waited and then increased their advertising spend following the recession during the economic expansion, there was NO improvement in market share. Waiting out the recession generally didn't help!

You may also find the information in Innovating Through Recession (Andrew Razeghi, Kellogg School of Management) very helpful in plotting success even in bad economies.

What is important is to understand there are opportunities even in recessionary times, but you must be prepared to take risk and continue to aggressively market your product. An important piece is understanding the "new motivators" that drive consumer behavior during a recession (which I described in the first post in this series below) and shift your message to address the needs and concerns of your customers.