Tuesday, March 4, 2008

The economy is down. Here's your chance.

Call it economic uncertainty. Call it a pending recession.

I call it an opportunity. Especially for challenger brands.

Right about now, many of your competitors are hunkering down to ride it out, promising to kick that marketing program back in when times are better. That’s your cue to step in and snatch their customers. Slow and steady isn’t going to win this race. Neither is short-term thinking.

The best analogy for this I have seen was in a column by Alf Nucifora a few years ago and attributed to Jamie Turner of Turner Fernandez Turner: “Think of it this way. If you’re in a room with 20 people and they’re all talking, all you hear is noise. But if 19 stop talking, suddenly the one person who’s still talking can be heard loud and clear.”

However you care to define “advertising” ― print, broadcast, web, e-mail, whatever ― companies that maintain or increase their customer outreach during a recession typically do better than those who don’t. That’s a fact. And when those who don’t advertise get back into it, they have to spend more money over a longer period of time just to get even. I think this applies pretty much across the board -- condominiums, radio stations, hotel rooms, hamburgers, health food or machine screws. Whatever.

There’s a lot of evidence out there to support this. For example, a McGraw-Hill study of 600 companies showed that those who cut advertising during the recession of the early 80’s saw sales increase by 19 percent between 1980 and 1985. On the other hand, companies that maintained or increased their advertising during the recession had sales increases of 275 percent during the same period. That’s not a typo. Two hundred seventy-five percent. OK, this isn’t the 80’s, but if anything, there is more competition for your customer’s dollar now.

Although nobody uses these exact words, what people are saying, for all intents and purposes is: “Business is bad, so we’re going to cut back on our investment in attracting customers until it gets better all by itself.”

Think about it. When your competition decides to hide out for a while, it’s time for you to go for the throat. Because if you decide to hide out along with them, you’re going to bleed with them.

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