There is story about a successful business. It was a family owned business and each year it grew and returned above average profits to its owner. This continued for over 25 years. The business became so successful that
employees prospered and owners were able to send their eldest child to an Ivy school where he majored in business and received his MBA. Once son returned from college, his father was anxious to have him join business. His son, fresh with MBA in hand, began to review business. In short order he told his dad that there is an impending recession. All newspapers were predicting rocky economic times ahead. The son noted that Wall Street was preparing for a bearish market condition. However, son felt he knew what course of action to take.
For past 30 years his dad worried little about such matters. He made best product and provided unparalleled service to his customers and his business always flourished. But his son protested and strongly recommended to his dad that cut backs were prudent thing to do under these uncertain economical times. Further, son pointed to many of his father's competitors who already made cut backs in their business. The father never went to college, so he assumed that his MBA graduated son knew more about economy. As his son suggested, father began to cut back on his normal business practices and sure enough, as his son predicted, business softened. The softer business became, more son recommended that expenses be reduced and investment be eliminated. Although this was contrary to father's normal business practice, he complied with his son's suggestion and sure enough, before long father went out of business.
In a time of uncertainty (when is it not some form of uncertainty) it might be tempting to pull back. Under guise of ‘being prudent' senior managers begin to contract their thinking. The organizational focus zeros in on plans to cut back while finding logic in not investing. Advertisement, creative marketing programs and seeking new business takes a back seat to cost cutting. Putting off new product ideas or delaying product introductions becomes appropriate behavior.
This thinking begins to pervade organization. Soon everyone is looking for ways to lower costs. People find ways to rationalize cuts in customer service, or prudent (there is that word again) ways to lower quality standards. Increasing discounts, or lowering a bid to ‘get-the-job' becomes norm. Generally organization begins to over-commit and under-deliver.
Your organization may now be in a prudent mode, but missed an opportunity to grow by taking market share from timid competitors assuming same ‘prudent' position.
This brings us to Global Marketing's 2nd business axiom:
Never hibernate with bears Remember that economic black clouds also hold silver linings. Opportunities always exist, but you have to be looking. Companies that seek new business potential and muster courage to act gain a competitive advantage and normally increase their market share as economic turn-around occurs.
In funky financial times first cut is to advertising budget. Why? Because it appears to have no short-term business impact, while providing immediate cost reduction. Unless your company is in danger of going belly up, this is exactly wrong thing to do. This is dangerous short-term thinking!
Advertising during tough times holds tremendous value. It keeps alive connection between you and your customer. It let's them know you're doing fine and still in business. Don't under-estimate this point. Advertising at this time communicates a powerful message. It says you are strong, in it for long-term and re-enforces fact that they made a good choice.
Advertising during tough times also frightens competitors and this gains you new business. Customers look for better deals and don't seem fearful of moving to other companies that appear to be stronger during uncertain times. Give a potential customer visibility of your company through advertising. Usually, more individuals will see your ads because fewer people are advertising during these times. Besides periodicals are more than willing to reduce their rates during recessionary times -- some cutting them in half or more.
