Kevin Lane Keller, E.B. Osborn Professor of Marketing at Tuck, offers guidelines that can help marketers survive—even thrive—in a recession.
Tough times present opportunities as well as challenges, and the difficult economic times now are no different. Although many marketers are facing reduced funding and intense pressure to justify marketing programs as costeffective, there are tactics that can help marketers survive—even thrive—in a recession, both in the short run and over the long haul. Here are five guidelines to improve the odds for success during this time.
Explore the upside of actually increasing investment.
Does it pay to invest during a recession? Although the severity of the current economic downturn may involve some uncharted territory, 40 years of evidence from prior recessions suggest that firms willing to invest in marketing during a recession have, on average, improved their fortunes, compared with firms that chose to cut back. It's not just the amount of investment that matters: firms that received the most benefit from investment were often those best able to exploit a marketplace advantage such as an appealing new product, a weakened rival, or development of a neglected target market. With such strong evidence, marketers should consider the potential upside and positive payback of an increased investment that seizes market opportunities.
Now, more than ever, get closer to your consumer.
In tough times, consumers may change what they want and can afford, where and how they shop, even what they want to see and hear from a firm. A downturn is an opportunity for marketers to learn even more about what consumers are thinking, feeling, and doing, especially the loyal customer base that is the source of so much of a brand's profitability. Any changes must be identified and characterized as temporary adjustments versus permanent shifts. The potential value and profitability of some target consumers may change, requiring a different set of marketing appeals. Marketers can use this evaluation to fine-tune their marketing program and capitalize on new insights.
Rethink how you spend your money.
Budget allocations can be sticky and not change enough to reflect a fluid marketing environment. For example, the vast penetration of the Internet, improved functionality of the cell phone, and the realization that events, experiences, and emotions are increasingly important marketing opportunities have made today's marketing-communications environment dramatically different from that of even five years ago. A recession provides an opportunity for marketers to closely review how much money they are spending and in what ways they are spending it. Budget reallocations can allow marketers to try new, promising options and eliminate sacred-cow approaches that no longer provide sufficient revenue benefits.
Put forth the most compelling value proposition.
In a recession, it's a mistake to be overly focused on price reductions and discounts, which can harm long-term brand equity and price integrity. Marketers should focus on increasing—and clearly communicating—the value that their brands offer consumers, making sure consumers appreciate all the financial, logistical, and psychological benefits involved in their offerings, compared with those of the competition.
Fine-tune your brand and product offerings.
Marketers must make sure that they have the right products to sell to the right consumers in the right places and at the right times. Product portfolios and brand architecture must be carefully reviewed to ensure that brands and sub-brands are clearly differentiated and targeted and that they are optimally supported on the basis of their prospects. Because certain brands or sub-brands appeal to different economic segments, those that target the lower end of the socioeconomic spectrum may be particularly important during a recession. Bad times are also an opportunity to prune brands or products that have diminished prospects.
As a blend of art and science, marketing always requires both creativity and discipline. This is even more true during economic downturns, especially one as pronounced as the current one. Thoughtful, imaginative applications of these five guidelines, however, should increase the likelihood that smart firms grow or even prosper in these tough times.