Marketing during a recession

Should you continue to promote your business during a recession? In most cases, it is wise to carry on with your marketing plan. History and research shows that businesses that cut back on their advertising during slumps tend to fall short in regaining their clientele.

Canadian Spending Habits

Canadians still spend money during economic downturns. In fact, many businesses manage to increase their sales, as well as their client-base.

Several factors determine whether sales increase or decrease, including:

• type of business
• characteristics of clientele (demographics)
• originality
• quality of service
• economic situation of a given community

Some consumers refrain from purchasing luxury items during a recession, but they continue to buy essential items such as clothes and food. Some consumers, whether through choice or necessity, stick to such basics throughout their lives, not just in economic downturns.

Economic stimulus packages and low interest rates may also encourage spending during a recession. So, while people who have lost their jobs or have seen their hours cut back may be spending less, other people who still have stable jobs may be spending just as much or more than they would have previously.

The bottom line is that you should think about your clientele and your client's recession psychology.

First of all, consumers classify their spending into prioritized groups:

• necessities
• reasonable comforts
• "nice to have" items
• luxuries

Secondly, each consumer reacts differently to a recession. Consumers may have plenty of disposable income or very little, they perceive the economic situation differently. Philosophies range as do behaviours:

• spending more - taking advantage of tax credits or low interest rates
• spending as much as before - live for today, see no need to cut back
• spending wisely - look for value, buy cheaper brands, compare stores
• spending little - buy some comfort items, but certainly hold off on big ticket items
• spending not - purchase pure essentials only

Focusing your marketing efforts

If you feel a need to cut back on marketing, think of focusing your efforts instead. Your efforts should support your strong brands, customer loyalty and competitive prices.

• Market one brand or model, the one that is already popular among your clients or the one you feel has the most appeal. For example, avoid promoting the grape, strawberry and kiwi fragrances, and every other scent of the week; it is more expensive to produce and costly to carry. Pick your top seller and keep it fresh in the public eye. Keep reminding the public of how useful your product is and how much they need it. Instead of being everything to everyone, focus on what you do best and make sure the public knows it.
• Treat your clients well and gain their trust. Worried and leery consumers seek out products and services they trust. They want to feel valued and they need to trust that they are getting value for their dollar. All consumers like to be treated well. If three, five or one hundred competitors offer pretty much the same service or goods for the same price, the consumer will opt to do business with the one that provides personal care and extras. Cutting down on staff when business slows down is an all too common mistake. If you neglect your service level, your clients will go elsewhere and may never come back.
• Offer lower thresholds for quantity discounts. Here's the math:

a) Compare:

3 adults x $80.00 per activity = $240.00

5 adults x $60.00 per activity = $300.00

b) Compare:

75 items x $1.25 profit = $93.75

100 items x $1.00 profit = $100.00

If you can appeal to customers with a discounted group rate, they'll do the marketing for you by getting others to come along for a given activity. If we are talking household items and food, let consumers pay the price of storage – they'd rather do that, if it comes with a lower price tag.

Marketing luxury items

There are times when luxury items sell best when advertised as such - the item is meant to impress, pamper and seduce. During economic downturns, though, it may be better to emphasize value for money, in other words to promote the item's benefit, value and use. For example, a fur coat that was portrayed as being unique and chic could instead be depicted as warm and even biodegradable. You may have already noticed that chocolate is selling at double and triple the price, because its health benefits are strongly touted – businesses have emphasized value for money. That fancy new washing machine may be more appealing because it uses less water and electricity; the stylish look is just an added bonus.

Spend time rather than money

Are you worried that business is slow? Take advantage of the situation! You can use your free time to market your products and yourself often without spending a dime. For example: Communicate with the public - your customers - at local events. Sponsor an event for your own community. Get yourself known and liked in your community. Now might be the perfect time to go online and show off as being better than your competitors.

Low-Cost Online Marketing Techniques

You can use marketing techniques and tools like social networking, e-mailing and blogging that do not involve a lot of direct costs. You will need to dedicate your time or your staff's time to them, but they don't need to use up a lot of cash. You can choose all of these forms of e-marketing, or choose the ones most useful and accessible to your clientele:

• Blogging: Create a weblog (an online journal) and share it with the world. Through your own blog, you can reach your clients to tell them of changes in products or services, you can get their feedback and gain ideas for better ways of doing business. Again, your client should be your main focus; tell them how they are getting value for their money, but also provide something useful like your expert advice. Provide a service through your blog that naturally gets shared and attracts traffic.

  You can also post your messages on other blogs that focus on specific topics. If you sell organic produce, use the Internet to find consumers who are interested in organic produce. You can answer people's questions, while allowing them to contact you or your business for more information. Note that you can create your own blog without having a website.

• E-mailing: Sending e-mails to clients and others who agree to receive information from you is a useful way to keep them abreast of new developments in your business, all the while reminding them of your existence. They'll appreciate that you take the time to reach out to them. Remember, people are busy and it's up to you to be proactive. Always check your inbox; most clients expect some form of response within 24 hours. Also, be sure to give your clients an option to unsubscribe from your e-mails, if they don't want to receive them.
• PodCasting: This involves sharing audio and video files on the Internet. You can use podcasts to promote new products, provide tutorials, share interviews, and more. Listeners can tune in when they want and how they want. As long as they have Internet access and a podcatcher (free software such as iTunes, Doppler and Juice), listeners can tune in with a computer, an iPod, an MP3 Player and before long, with a BlackBerry or cell phone.
• Search Engine Optimization: If you have an online presence, make sure people can find you. Learn how to use the right keywords, in the right place, so that interested consumers can find you on the Web. Use incoming links (get other Web sites to link to yours) in order to rank higher in search results.
• Social Networking: The second generation of chat rooms is called social networking sites and range from general topic sites like FaceBook, Twitter and MySpace. Other sites focus on specific topics or segments, like LinkedIn which focuses on business.
• Viral Marketing: This is an electronic, online form of word-of-mouth. If your message is interesting enough, it will be transmitted from one person to another, or shared through e-mail, social networks, blogs, and so forth. Your message can be in the form of a video, an ad, a website, an image or information. Think of how shocking or humorous TV ads get shared online. A coffee shop once had its online ad spread like wildfire by offering one free new beverage on a given day.

Although your point may be to get known and increase your customer-base and sales, ask yourself what the public wants. Generally, your clients want to be taken care of and appreciated. Your potential clients may want something more, like free samples and free tools or advice.

More information on the topic of online social networking:

• Top 20 Most Popular Social Networking Websites
  
  http://www.ebizmba.com/articles/social-networking
  Thinking about using social networking? Find out which websites are most popular.
• SME Direct: Social Networking
  
  http://www.ic.gc.ca/eic/site/dir-ect.nsf/eng/h_uw01028.html
  Find out how your business can benefit from social networking and other online lead generation tools, like media sharing, blogs and wikis.
• Explore the Benefits of Marketing Online
  
  http://marketing.about.com/od/internetmarketingstrategy/a/marketingonline.htm
  When marketing your business online, you can make changes on the fly and track real-time results. Find out about other benefits of online marketing.
• Social media marketing: Put it to work for you
  
  http://marketing.about.com/od/internetmarketingstrategy/a/socialmediamrkt.htm
  Find out how to start using social media in your marketing strategy and discover how to leverage Facebook, Twitter and YouTube.
• SME Direct: Online Marketing Resources
  
  http://www.ic.gc.ca/eic/site/dir-ect.nsf/eng/h_uw00729.html
  Find out about basic and advanced marketing techniques, what to do to ensure people find your information on the Web, and how to target clients with e-mails.

Involve your staff

Get to know your staff; happy workers are proud to promote the business they work for. Furthermore, you may have an employee who'd be thrilled to participate in promotional activities. You may have a talented blogger on hand or a very clever social networker who'd love to spend an hour a day in chat rooms and on blogs, promoting your products and checking out the competition. Perhaps there are people that would love to go out to local events to drum up business. Just be sure to discuss the messages you want to circulate – guide your staff closely and set boundaries, if need be.

Measure your success

The most important thing in a recession is to ensure that your marketing efforts are focused on the things that will bring you the highest return on your investment. Make sure you monitor how much time or money you are spending on various techniques and see which ones are bringing you the most revenue.