Marketing budgets are prime candidates for cost-cutting during times of economic hardship. It’s an expensive pastime, and unless marketing delivers specific and measurable results, it’s hard to justify its existence.
At the same time, some businesses significantly increase their marketing spend during downturn. Costly, yes, but it’s what brings in customers and bolsters the bottom-line.
Marketers can certainly cite evidence to justify their existence during downturn. Research conducted by business publisher McGraw-Hill during the 1980s recession found that companies increasing marketing spend saw up to 256 per cent sales growth over companies that curbed promotional activity. It is, after all, logical to think that as wallets shrink and consumer needs change, more must be done to drive sales.
Trigger-happy marketing seems to be getting popular as times get tough again. Recent research from the Open University’s Small Enterprise Research Team indicates that 49 per cent of the 700 businesses surveyed believe increasing marketing spend is key to beating the downturn. 42 per cent of businesses also planned to refocus their businesses to push into new markets.
But wait, one minute, before spending more on marketing… Just as economic downturn affects you and your marketing budget, it affects consumers too. It impacts their wallets and their minds. As a result, it’s important to re-evaluate your understanding of consumers, and re-think the way you speak to them. Important enough that you should do it now, before increasing marketing spend.
When consumers - of the domestic or corporate variety - decide whether to buy a product or service, they weigh up the costs against the value proposition that marketers’ put before them. Price and value may also be compared with competitor offerings. In doing so, consumers judge what value their purchase would deliver, and then decide whether and where to buy.
The customer value proposition represents the collection of benefits you offer in return for payment for your goods or services. It might laud your superior quality or highlight your unbeatable prices, or present specific benefits such as ‘our energy efficient kettle saves the environment and saves you money’.
During healthier economic times, focussing your values on superior quality or innovative design might have drawn customers through your doors. Today, those same customers might be feeling the pinch, and may intrinsically look for more financially orientated values. This doesn’t necessarily mean you should cut prices, just that your value proposition could more explicitly focus on the financial values of purchase. That innovative kettle might be expensive, but if it saves the earth and saves you a few pounds on energy bills, it might still appeal to even the cost-conscious consumer.
In essence, it’s about getting into the minds of today’s consumer, and re-evaluating your value proposition within that context. It’s about experiencing economic downturn through the eyes of your audience, and understanding how the current climate changes their needs and their perceptions of your brand.
Of course, none of this obliges you to change your value proposition. Your audience may not exhibit changing needs resulting from economic conditions. Or, you may decide that repositioning your values would devalue your brand; a dynamic which could be hard to reverse in the long-term. Nevertheless, an awareness of your value proposition and how it sits in today’s marketplace may help you understand and anticipate the economic and environmental influences affecting your sales and marketing.
Re-thinking your value proposition can also help you engage with new market segments or increase market share. A simple value proposition that assures superior quality but also focusses on financially-orientated values could, for example, allow you to better engage with market segments that previously dismissed your products or services as too costly. To emphasise again: it’s not about price, it’s about what values and benefits you focus on when you talk to consumers.
At the beginning of this article we talked about the virtues of spending more on marketing during economic slowdown, and uncovered that a sizeable percentage of businesses are planning to do just that as a key tactic in beating downturn. If re-thinking - and where necessary re-defining - your value proposition leads to more relevant marketing, the extra money you inject into the task will pay dividends. That alone could help you survive downturn, but also help you draw customers away from competitors, move into new market segments, or expand your market share.
One choice quote concludes this discussion nicely… Mary Beth West, Chief Marketing Officer at Kraft Foods, talking specifically about marketing tips during economic downturn, commented that: “Once you’ve figured out that value proposition, redefined… Spend into it. Because unless they hear about it, it’s not going to make a difference.”
Re-thinking your value proposition might seem like a challenge. But give it a minute, because it might be what makes your extra marketing efforts successful.
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