Entrepreneurship: A 12-step program for marketing in turbulent times

Adapted from an Entrepreneurial Excellence Week presentation

The following was printed in the Wall Street Journal. Can you guess the year?

“It was quite the Thursday on Wall Street. A weak president, under-regulated credit markets and investors’ greed finally began to take their full toll on share prices, and after years of unprecedented growth, the markets fell by more than 6 percent in a single day. As the U.S.’s economic woes began to affect the British market, the Labour government tried to take a leadership position in Europe, with little success. Shares continued to plummet, and the world stood on the edge of a massive recession.”

Sounds like sometime during the last year, but it was 1929, immediately prior to the Great Depression.

The bad news is that we’ve been here before. The good news is that we can learn a great deal from the past, particularly about surviving – and possibly even thriving — during a downturn. One of the most important messages about marketing is that recessions are times to adapt – but not abandon – marketing efforts.

Lots of folks have researched this phenomenon, and every one of them finds the same result: Companies that spend on marketing and product development during recessions do significantly better than those that make cuts.

History is full of examples:

• Kraft introduced Miracle Whip in 1933 and it became the best-selling dressing in just six months.
• Texas Instruments brought out the transistor radio in the 1954 recession.
• Apple gave us the iPod in 2001.
• Hyatt opened its first hotel’s doors in 1958.
• Burger King introduced the Whopper in 1957.
• The International House of Pancakes was another start-up during the so-called Eisenhower recession in the late 1950s.
• FedEx launched during the oil crisis of 1973.
• CNN and MTV both came online in the recession-plagued early 1980s.
• GE was established by Thomas Edison in the midst of the Panic of 1873.
• And Hewlett-Packard was launched at the end of the Great Depression in a Palo Alto garage.

The examples are there, but what do today’s small-business owners think about their need for a marketing strategy?

It turns out that 55 percent of small-business owners think their products and services will sell themselves, so marketing is not high on their list of priorities during a recession or any other time. They prize repeat customers because they are less expensive to retain than new ones are to acquire. Most business owners value informal customer feedback and their own observations more highly than they do formalized market research, and 74 percent report they simply rely on gut feelings when making marketing decisions.

The economic conditions we’ve recently experienced have also had an impact. For instance, 30 percent of small businesses have made cuts in their marketing expenditures in the past six months. Forty-three percent have reallocated their marketing dollars, primarily away from more traditional marketing vehicles such as advertising and direct mail, and toward online and social media. Most owners and managers believe they will cut marketing budgets in the coming year, and those same owners and managers believe companies that can make the best use of digital media will prevail over their competition.

Add to this the change that we are seeing in spending habits. Think about your own buying patterns. How many of you are becoming more frugal or have limited your buying to essentials? Are you postponing home improvements and telling yourself that clothing, furniture, appliances and equipment will need to last a bit longer? Are you shopping more sales than ever before? Are you trading down in your purchases, buying less expensive brands than you have historically? How many of you have noticed lower inventory in some of your favorite stores?

Higher-end retailers are struggling, while lower-priced retailers are holding their own. The current conditions are creating a new generation of cost-conscious consumers, and many experts predict these times will forever change the way we spend our money.

So what is a small business owner to do? You need to focus, better identify your customer, change how you spend your marketing funds and be creative in reaching your audience. Here are our Top 14 tactics for marketing in turbulent times:

• Review your business plan. If you don’t have one, take the time to create it. Re-evaluate your value proposition, re-assess your competition and examine your operations.
• Review your marketing plan. Focus your efforts on a tighter group of prospects, and forget the marginal areas for now.
• Don’t stop spending on marketing. You need to keep reaching your customers as consistently as you can.
• Negotiate your advertising. Media outlets facing tough times would rather have some advertising income than none at all. Consider smaller ads. Try not to cut frequency.
• Use the recession to your advantage. Look for opportunities. For example, notice how food companies are marketing easy and inexpensive stay-at-home meals. Can’t afford to see movies in the theater? Enter Netflix.
• Market safety and security. Do you sell something that will help customers feel more secure? Do you offer warranties or guarantees?
• Consumers believe companies that advertise on television are healthier. Therefore, consider cable and network advertising. It may not be as costly as you think, and cable allows you to segment your market more efficiently.
• Avoid creating awareness campaigns. This is a time for a call to action. Offer an incentive – a reason for the customer to act. Emphasize value.
• Build a strong emotional bond with consumers. Research indicates that marketing with an emotional pull does better than any logical message. During hard times, we tend to retreat and cocoon. What do you offer that enhances the comfort of home?
• Cross promote. Look for high-quality, strategic partnerships with other businesses. For instance, several local mortgage agencies are advertising together, each stressing its particular service. Recently, movie theaters have paired up with restaurants to offer “dinner and a movie” specials.
• Give back to the community. By showing you care, even in hard times, you will build loyalty and awareness while doing good.
• Become an expert. Generate news stories. Make personal appearances, and open your business for special events, stressing your role as an expert source. Make friends with the media, and give them good hard news and feature story ideas.
• Put your database in order. Collect information on your customers, and record it in an easily searchable form that allows you to determine who your customers are, where they come from, what they buy and how often, and how much they spend. When you receive new inventory, call those customers who may have an interest.
• Keep your customers happy. Do not cut back on service or quality. If anything, enhance your service to existing customers to keep them coming back. The best way to guarantee a happy customer is to have a happy staff. Consider them your greatest investment, and cultivate their value with training.

Changing times call for flexibility and adaptability. And change can be a good thing.

Mary Paulsell is the director of the University Center for Innovation and Entrepreneurship at the University of Missouri. Reach her at [email protected].