(Note: This is an entry we wrote in 2008, but it's still relevant today.)
Often when communications firms are asked by clients and media, “what should businesses do when the economy takes a bad turn?,” the standard answer is, “don’t cut back your marketing and advertising.” Unfortunately, this answer is not only biased, but may not be good advice at all. A far better reply is “get back to basics.” And nothing is more basic than evaluating those 4 Ps of marketing: Product, Price, Place, Promotion.
Product: Are you providing the right benefit?
Is your product affected positively or negatively when your customers are feeling a financial pinch? If your product is a luxury item, the answer might not be a comfortable one. However, if you have a product that people tend to buy less of during difficult times, you need to look at the product, and more specifically its benefits to your consumer. Consider how you might position your product to make it a more advantageous one during a rough economy: Does it provide more benefits than simply luxury? You may want to adjust your positioning to reflect those benefits that, prior to a negative economy, may have been secondary.
Price: Is it right?
Okay, here comes a tough one. If you are sitting in a warehouse full of products that are no longer moving, you may want to consider adjusting your price, changing the framework of the purchase, or reducing your production costs. This may be a simple proposition – lower the price. Or maybe you can find a way to enable people to purchase your product over time or with additional incentives. Another thought: Is there a way to lower your production costs without compromising quality? Break out your old supply-demand curve and make sure you know where your price needs to be. You may have to narrow your profit/sale in the short term, but keep on top of it and you can weather the storm with a solid price strategy.
Place: Are people finding you in the right spaces?
If you have a traditional product distribution model, now might be the time to change where consumers can access your product. As an example, many businesses continue to rely on pushing their products through traditional placement with retailers, while more and more people go to the Internet to find deals and value in their purchases. If you haven’t fully flushed out this distribution model, now is the time to ramp it up. But whether you’re changing where people find your products/services or getting away from “tradition,” make sure you think about how and when people will be happy to find and purchase your product. Then work to put your product in their way.
Promotion: Which tactics are working hardest?
Finally, we come to the questions we hear most often as an advertising agency. Should ad (promotions) spending be cut? The answer is, “it depends.” When sales are going well, we tend to keep adding to our mix of promotional tactics (direct sales, print, radio, interactive, etc.) without always scrutinizing the value they are providing. There is no better time to review our tactics. The kicker is that it is difficult to measure the value each tactic is providing. Most promotional efforts do not provide specific, measurable returns in the short run, and they all work hand-in-hand together. (The reason ad budgets usually get cut first is that it is difficult to provide crystal-clear ROI, which makes it easy for an accountant to break out the red marker.) We suggest making a list of all your efforts and putting them in the order you feel they are working. You’ll want to consider how the tactics complement each other as well as bang for the buck (cost) in this list. Which tactics could be dropped in order to save short-term expense, without compromising your sales, market share and top-of-mind awareness? If you need to save some expense in order to keep people employed, pay the rent, etc., by all means cut back on the tactics that are at the bottom of your list.
Sometimes a little pressure provides the best reason to make sure your marketing, and your 4 Ps, are lining up with your vision and adding to your overall business. Refining the basics can keep you heading forward in an economy that’s moving backward.