Business Insights

Business Insights

What happens post COVID19 ?

When you stop your marketing efforts...

A bicycle clearly illustrates Newton’s law of motion or inertia, the idea that an object in motion tends to say in motion and of course any object at rest will stay at rest.  If you stop peddling, the bicycle will continue to move forward for a while, but, eventually, it will come to a complete stop.Now, I would like you to think about your marketing activities just like your bicycle...

You hop on, and as long as you continue to peddle, putting active energy into propelling it forward, you’ll continue to move in the direction that you want. Of course, you could go faster or slower, just by changing the amount of energy you’re putting in, but the key is to keep progressing forward.

Remember, if you’re not reviewing and renewing your marketing activities, techniques and the return on marketing investment (ROMI) and consistently communicating with your customer base including your suppliers, your bicycle will inevitably slow down, or worse, it’ll stop completely.

On a bicycle, you know what stopping looks like, you just come to a complete standstill. But what about your marketing? What does “stopping” look like when you completely stop putting any energy into your marketing activity? Well, let’s unpack and examine what “stopping” could mean for your business, brand and service offering.

You Could be Forgotten!

Unfortunately, without putting time, energy, and resources into your marketing efforts, you run the risk that your current customers will forget about you. The one thing that good marketing does do for your business is to keep you “top of mind” with your customers. For example, let’s just consider that you’ve been running a successful campaign across various media platforms, but because of the current circumstances, you feel that you should completely stop. Well, the customers and potential future customers who used to see and hear about you won’t be able to recall your brand or service offering as easily. Hermann Ebbinghaus who was a German psychologist pioneered the experimental study of memory, and is known for his discovery of the “forgetting curve”, once did a study where he found that a person forgets 75% of what they’ve learned after a week, and after three weeks, that number jumps to 90%! Without consistent marketing, your business could end up being yesterday’s news.

You, Will, be Replaced!

Because of the current situation, it perfectly understandable that companies would react by cutting the investment into their marketing activities, however, that doesn’t guarantee that your competitors are doing the same. In fact, they might use the situation to create a marketing message that provides useful information to their target markets about the Covid 19 situation, that also helps in building their brand awareness. Consequently, you’ll be losing brand recognition with every minute that they continue to do so. Marketing isn’t an optional extra part of your business, it’s critical to your future and continued success. Henry Ford once said, “A man who stops marketing to save costs is like a man who stops a clock to save time.”It doesn’t make a ton of sense and will ultimately prove futile in the long term.

You, Will, be Ignored!

We have already discussed the fact that you might be forgotten, and then, of course, you will be replaced. However, the worst thing which can happen to any company in terms of brand awareness is yet to come, it all starts by being ignored, even if you realise that stopping your marketing activity wasn’t perhaps the right business decision, you’ll have a major job to do in convincing potential customers to switch back from the product or service which they’ve replaced you with. Sure, you can re-start your marketing activities again, but it going to take you time to regain the lost market share you had before you decided to stop your marketing completely, and given that companies operate on margins, the margin erosion could be catastrophic for any business.

All Doom and No Boom!

Unfortunately, in recent weeks, there has been a lot of talk about a global economic recession caused by the pandemic Covid 19, will it happen is still anybody’s guess, but another business slowdown is inevitable, and of course, it would be the first since the “great recession” which ended a little more than ten years ago.

More often than not, when a recession happens, businesses, fearful of declining revenue, begin to cut back in various areas, including their marketing activities, it's a normal reaction to cut back on marketing, however, the solution, though, isn’t to end your marketing strategies, it’s to adjust and optimise them.

During the last recession in 2008, marketing investment in the U.S. dropped overall by 14.6%. Broken down by medium the results were as follows: (Forbes Magazine)

  • Newspaper advertising revenue decreased by 27%
  • Radio ad revenue dropped by 22%, which was followed by
  • Magazines which decline by 18%
  • Out-of-home advertising declined by 11%
  • Television ad revenue dropped by 5% and
  • Online ad revenue was down by 5%.

What’s really interesting is that there has been a number of studies going back nearly one hundred years that point out the advantages of maintaining or even increasing marketing spending during a weaker economy. Those marketers that invested and maintained their spending increased sales and their market share during the recessionary period and into the future.

Here’s a few reasons why you should consider investing in your marketing during a slowdown!

  1. The “noise level” in a brand’s product category can drop when competitors cut back on their marketing spend. It also allows for marketers to re-position a brand or introduce a new product.
  2. Brands can communicate to consumers the image of corporate stability during these challenging times. This could not be more true in this current environment.
  3. The cost of marketing drops during recessions. Due in part to the lower ad rates which creates a “buyer’s market” for brands. Studies have shown that online marketing, can provide the greatest short-term sales growth increases, during a recession. (and more so with the requirements of “social distancing”)
  4. As previously mentioned, when companies cut back on their marketing, the brand loses its “share of mind” with consumers and, with the potential of losing current – and possibly future – sales. An increase in “share of voice” typically leads to an increase in “share of the market.” An increase in market share results, with an increase in profits. (remember, it costs as much as five times, to attract a new customer than to keep an existing one?)

There are a number of examples of brands that have benefitted by maintaining their marketing activities during economic downturns. (Information below from Forbes Magazine)

Dry Cereal: In the 1920s, Post was the category leader in the ready-to-eat cereal category. During the Great Depression, Post cut back significantly its marketing activities and rival Kellogg’s doubled its marketing activity, investing heavily in radio and introducing a new cereal called Rice Krispies, featuring “Snap,” “Crackle” and “Pop.” Kellogg’s profits grew by 30% and the company became the category leader, a position it has maintained for decades.

Imported Vehicles: The 17-month recession of 1973-75 was triggered by the energy crisis. In late 1973, the U.S. government issued its first miles-per-gallon report in which Toyota Corolla was second to Honda Civic in fuel efficiency. Since Toyota was experiencing strong sales, when the economic downturn hit, the temptation was to cut its marketing activity, which they resisted. By adhering to its long-term strategy, Toyota surpassed Volkswagen as the top imported carmaker in the U.S. by 1976.

Quick Service Restaurants: In the 1990-91 recession, Pizza Hut and Taco Bell took advantage of McDonald’s decision to drop its marketing and promotion budget. As a result, Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28%.

Technology: Amazon sales grew by 28% in 2009 during the “great recession.” The tech company continued to innovate with new products during the slumping economy, most notably with new Kindle products which helped to grow market share. In a first, on Christmas Day 2009, Amazon customers bought more e-books than printed books. As a result, in the minds of consumers, Amazon became an innovative company by introducing a lower-cost alternative to cash-strapped consumers.

Finally...

Although the natural inclination for businesses is to cut back on marketing during a recession, those brands that maintain their marketing budget and/or change their messaging can get a long-lasting boost in sales and market share.

Perhaps the best quote about marketing in a recession came from Sam Walton, the founder of Wal-Mart. When asked, “What do you think about a recession?”he responded, “I thought about it and decided not to participate.” (Forbes Magazine)

My Parting Note.

There’s no way your bicycle can move forward unless someone is actively peddling it, putting the energy into making it go, and it’s the same with marketing if you do it well, you’ll get the return on the time, energy, and resources you put in.

 

Acknowledgement: Information for this article sourced from:

  • Forbes Magazine - Brad Adgate an Independent Media Consultant - Sep 5, 2019,
  • Article: After the Campaign written by Carla Leible on September 16, 2016
  • Harvard Business Review. How to Market in a Downturn by John Quelch and Katherine E. Jocz April 2009 issue


 

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