The stock market plunges 700 points. The next day you and I, Joe and Josephine Small Business owner freak out, sell off some of our stocks. We can't stand it any more.
The economy slows; the "R" word is becoming a reality. The media is saturated with the woes of Maine Street. Joe and Josephine begin to hunker down, cut spending and settle in for the storm. The first thing to go? Marketing.
Just as in the stock marketing when selling was the wrong thing to do, cutting the marketing budget is the wrong thing to do.
Fundamental value in the markets had not gone away, in fact the p/e value (price to earnings) of many companies was cheaper than it has been in over 20 years. Now I'm not an investment expert, but I know enough that emotions can take over the markets on the short term and equilibrium eventually returns. Two trading-days after the 700+ point plunge we saw a near 1000 point gain. Given the proper research, I would argue the 700 point plunge would have actually been a good time to invest.
Taking this same strategy, I (and Harvard Business School – they agree with me…) I would say today is absolutely the wrong time to cut your marketing budget. You may want to realign the investment, but not cut. According to the HBS:
elasticity curves are changing. Consumers take more time searching for
durable goods and negotiate harder at the point of sale. They are more
willing to postpone purchases, trade down, or buy less. Must-have
features of yesterday are today's can-live-with-outs. Trusted brands are
especially valued and they can still launch new products successfully,
but interest in new brands and new categories fades. Conspicuous
consumption becomes less prevalent." (Harvard Business School)
The article describes eight factors companies should keep in mind when making their marketing plans for 2008 and 2009:
- Research the Customer (described above)
- Focus on Family Values
- Maintain Marketing Spending
- Adjust Product Portfolios
- Support Distributors
- Adjust Pricing Tactics
- Stress Market Share
- Emphasize Core Values
Just as it probably seemed counter intuitive to invest in stocks last Friday, 10/10, it may seem so to invest in marketing now. But it is absolutely the right time.
If you would like a sounding board to discuss your marketing strategies going into year-end and on to 2009 please give me a call.
