How to Deal with Declining Sales and Margin: Recession Marketing Checklist – What Should You Do?

By Virginia Watters

This is the question on everyone’s mind. How to react during a recession? Should we conserve resources and stop all marketing activities? Should we throw out our plans for next year and re-focus our efforts? Is it time to cut budgets and batten down the hatches?

Typically many CEOs look at any marketing or advertising budgets to be the first items to cut when times get tough. But is that the best approach?

The two most imminent criteria to think about when deciding what is best for your own company are:

• Initiate immediate damage control and provide for sufficient short-term revenues and profits to weather the bad times.
• Enhance the long-term outlook: preserve the brand reputation, minimize loss or maximize gain in market share, protect favorable product positioning and price status.

Analyze the strengths and weaknesses of your three most important resources: Financial, Human and Physical.

If you have definitive strengths in one of those areas, you can seize an opportunity to strengthen your brand… put advertising to work delivering messages about high quality and high service. Take advantage of the reduced clutter created by your competition’s absence from advertising. Your messages will have greater impact and you may also gain new customers who feel abandoned by competitors.

Marketing Checklist

• Look at marketing strategies that allow buyers to feel that they are minimizing risk. Consumers are looking for reassurance during recessions, especially this one. The feeling that risks are great may prevent more buying than does any actual hardship.
• Brand equity may be particularly valuable. Well-known brands reduce uncertainty for customers looking for security.
• If you are strong, look at the recession as an opportunity to clearly dominate — and possibly eliminate — some marginal players.
• What is your chance of market share growth and how will that affect sales and profits? Recessionary periods may offer a unique opportunity to build share and position your company advantageously for the market’s recovery.
• Companies that sell high-ticket discretionary items must understand the barriers to purchasing, and the buying motivations that are unique to this economic climate. These companies may be in for a harder time than the rest of us.
• If you play in the global market, keep in mind that while you may be cutting back, in this global economy, your international competitors may not be. And, if everyone pulls out, industry volume isn’t going to get any better.
• In a declining market, monitor market share, not just sales volume… While all competitors may lose some sales volume as the market shrinks, those who can maintain, or even increase, market share will emerge from the down market in a much stronger position.
• If you advertise to the consumer, consider maintaining or even increasing marketing communication:
  • There is less “clutter” in the marketplace as others cut back spending.
  • Media prices/values will be more attractive if you are a seasonal seller.
• Recessions are not a bad time to introduce new products. You have advantage of being first and of being heard, especially if your product has unique benefits and it is properly priced and ably marketed.
• Know the behavior of your competitors. Learn about what they did in earlier recessions so you can predict likely behavior. Be aware of their financial condition. Heavy debt can limit their strategic options.
• Think public relations. PR is very cost effective. And, take a look at your company’s place in your industry. Some companies can choose not to advertise, but they can’t ignore public relations, because the media are going to continue to write about them whatever they do.
• Manage the marketing. Re-think your strategies. Formulate a deliberate and systematic battle plan rather than
  a simple contingency plan. First, look at changes you are likely to see in the external marketing environment.

Don’t forget the long-term while you focus on your short-term.