One of the peculiar, yet interesting, economic indicators over time (since 1926) has been to follow the change in the length of women’s hemlines … higher is good news for the economy, lowering is bad news.
I hear they are starting to get a little higher, but most people in business are still taking a “wait and see” approach. Most businesses are still feeling some effects of the economic conditions we have been living through for several years now – and some more so than others because of the type of consumers or business segments they rely on.
The economic conditions have put many companies into survival mode … doing what is necessary to see another year, quarter, or month. This takes the form of cutbacks in personnel and spending, price discounting to keep money coming in, extending more favorable selling terms so as to not lose out on sales, etc. Many decisions that come about in tough times are reactionary or short term in thinking … but many times these are still the best decisions to make.
But one thing has to be kept in mind … what the competition is doing, or not doing, now will have a large effect on how your company recovers once economic times are better.
Besides employees, one of the first things to get cut during tough times is marketing spend. This is an easy target as many marketing activities are for the long term health of your brand, and thus there is no pain today. However, this is akin to someone who thinks they can stop taking their medication for an extended period … they may find out that things are OK in the short term (and feel justified) but, if they are wrong to do so, the resulting issues will make it a tougher hill for them to climb later.
So, is it safe to scale back investing in marketing and research in a difficult economy?
There is no “answer”. Every company is different. But when it is time to cut marketing spend, consider focusing on the following:
• Key markets. You worked hard to get position, don’t give it back.
• Higher margin lines. A lower margin line should not get the attention unless it is of great strategic or timing importance. Even then, think twice.
• Key customers. Take a more personal approach with them … they understand times are tough. Work to strengthen the relationship … they may need help from you too.
These are all harder to replace once they are gone … and you don’t want your competitors to gain traction here and then have to spend three times as much to get it back!
Now … what about spending on marketing research?
Research companies will tell you that research spending is often the first to go when times get tough. It is a clear sign of when a company is starting to hunker down because the spending is seen as more “discretionary”. A research company doesn’t need to wait to see that hemlines are changing!
Let’s remember what marketing research “is” … it is:
• Understanding. For significant expenditures, knowing how a program or campaign may be received before executing (and spending $$$$) permits an opportunity to identify issues, confusion, relevance, etc. so they can be corrected for a better approach. A large expenditure campaign or program that falls flat is extra painful in hard times.
• Learning. What are my competitors doing? Are my competitors’ customers vulnerable? What is the economic state and mindset of my customers/consumers relative to their current relationship with my product/company and what might they be considering in the near future? What are customer/consumer views about what is going on that can be addressed to my benefit?
• Measuring. Knowing what is working and what isn’t working is key in determining where to focus, where to cut back, what to change mid-course, etc. And when marketing dollars are more restricted, it is very important to measure results so as to know what to do next.
When your marketing spend has to be so much more carefully planned and executed, excessively cutting research budgets could backfire in the long term. The understanding, learning, and measuring of any business must continue in some form. You can:
- Find less costly ways to get what you need
- Do market readings less frequently (i.e., spread them out)
- Limit the number of variables/topics studied
- Convert from more traditional research to doing it through online methods (which can not only save money but also time)
These are just some of the ways that you can protect the future of your brand/company while you have to cut back today. Research companies are very willing to offer suggestions to stretch your dollar based on what you want to know, what you need to know, your timing needs, and your budget.
“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” – Jack Welch