CUSTOMatrix™ Insights Newsletter

Marketing Strategies for Recessionary Times

By Michael Sick, CMO, Principal, Marketing Services, CUSTOMatrix, Inc.

Much media coverage lately has used the word “recession”.  Typically, the economy has been in a recession for months by the time economists actually declare a start date for the recession since so much of the data is backwards looking and subject to revisions.

Most CUSTOMatrix consultants have a perspective that dates back to the Oil Embargos of the 70’s and the 15%+ mortgage rates in the early 80’s.   Having experienced first hand the impacts on a diverse set of businesses provides added insight into “Best Practices” related to managing businesses during recessionary times.

There is a perspective that the United States has been in a rolling recession for the past couple of decades as various industries were affected by changes in technology, global competition, resource scarcities or other factors.  To persons in construction or mortgage businesses, the fall out of the sub prime market and the decline in real estate prices may appear to be more of a depression than a recession.

The following is a short list of best practices to consider in developing marketing strategies during these changing times.

Keep the situation in perspective:              Don’t over react.  Staying cool and not making rash decisions is a key behavior which will enhance the likelihood of success.  Stay above the noise.  Don’t let the headlines or nightly news reports cause you to change your business strategy.  Make decisions based on the facts in your business or industry.  While high gas prices are going to impact consumer spending, the impact on every business is likely to be different.

Seek to expand market share:                     While this may seem counter intuitive, businesses may need to increase their marketing share if only to maintain flat revenues.  In a declining market, businesses need to capture a bigger piece of a smaller pie.  Even in good times, margins are under continual pressure and with energy costs increasing in a declining market, margins will be squeezed from every direction.

When markets are contracting, the more marginal competitors are likely to leave the market or go out of business.  Recessions are an excellent time to expand market share.

Maintain or increase your Marketing Budget:        While reducing marketing spending may be a quick way to offset short term margin erosion from increased costs or declining sales, reducing customer acquisition efforts is likely to accelerate the sales decline in the future making the longer term prospects more painful or potentially fatal.

Seek customers globally:              While this may not be an option for every business, the decline in the dollar has created enormous opportunities for businesses in the United States.  Given the strength in the Chinese currency, domestic opportunities may be increased as the benefits of outsourcing to China may be diminished and companies are increasingly bringing back production to the United States.

Reinvent your Product Lines and/or Processes:     While changing existing products is a decision that should be carefully considered, developing new products is always a way to create competitive advantages.  Focus on your core competencies and build flexibility into your system.  Be careful about adding permanent staff and seek ways to outsource non core functions.  Build capacity and scalability without increasing your fixed costs by partnering with other firms, using consultants, hiring contractors or adding part time employees.  Each of these strategies enables scale to be increased rapidly when the economy turns.

Whether you or “Hunkering down” or “Hankering for growth”, changes in the economy and recessionary times are likely to impact every business.  Having a plan and making fact based decisions will provide better results than failing to plan or shifting strategies after reading the morning’s headlines.

Written by Michael Sick, a nationally recognized, innovative management consultant specializing in strategic marketing, advertising and business development. He spent 25 years in corporate marketing and was a Marketing Vice President for Jack In The Box, Pearle Vision, Arby’s and others. Currently he serves as the part time Chief Marketing Officer (CMO) for a number of clients around the US.

For additional newsletter articles go to:

CUSTOMatrix™ Insights Newsletter