Marketing in a Slow Economy
by Nick Denroche

In our slowing economy many businesses are having trouble attracting new customers. The building industry in particular has been hit hard
by a combination of higher interest rates and in some areas a decrease in home owner equity. As home prices fall, or remain stagnant, spending on remodeling and improvements has taken a downward turn. Recent reports indicate home owners are expected to spend around 5 percent less on home improvements through the end of 2008. With consumers spending less, and competition for their dollar more heated than ever before, many companies are looking to cut costs where ever they can.

The first thing to get cut is usually a company’s marketing budget.
When you are not able to verify any positive results from your
advertising, and new sales aren’t coming in, reducing or eliminating
your marketing budget is very tempting. Unfortunately slashing the
marketing budget and becoming invisible is probably the worst thing a
company can do when the going gets tough. If sales are slowing to a
trickle, wouldn't you want to try and increase the flow of new
prospects instead of shutting off the tap all together?

Businesses and consumers alike are shopping around more than ever to make their dollar go further. If you're company isn't marketing to
potential customers you're not even a choice in the selection process.
As an over simplified rule when it comes to advertising; if you’re not
doing it, and your competition is, you are falling behind the curve
instead of jumping ahead.

Contrary to the practice of many businesses, most marketing experts
actually view a recessionary environment as an opportunity to gain
market share with aggressive marketing. The best time to focus your
attention on marketing your business is when sales are slow to come
in.

A well documented study of 600 businesses from 1980 to 1985 found that companies who cut their advertising during the 1981-82 recession only increased sales by 19 percent during the five year period following the
recession. In contrast, companies who increased spending during the
recession saw their sales jump by 275 percent in the post-recession
period. Another study of a similar nature conducted in 1982, found
that companies who aggressively spent money on their marketing budget during a recessionary period outperformed companies who did not by nearly 250 percent.

No matter how bleak things look now it’s important to keep in mind
that it won’t last forever. Even though things may be bad now, the
economy always runs in cycles and spending will at some point will be
on the rise again. When it is the companies who managed to sustain
their marketing efforts, and stay in front of their prospects, during
the recession will come out on top. People will see that even though
times were hard your business was still there going strong. This will
do a lot to lend credibility to your company. As other companies lose
momentum, or disappear altogether, increasing consumer awareness of your product or service will give you a competitive edge on the
market.

The building and remodeling markets are slow and competition for sales is high. Home repairs still need to get done and people still need new homes, they are just being much more conservative with their spending. When things do pick up the companies who have been advertising all along, and putting their brand name where prospects can see, are going to be the ones who reap the benefits when the market turns.

There is, however, more to the puzzle then just continuing on with
your traditional marketing practices. In a weakening economy being
cost effective in every aspect of your business is absolutely crucial
to growth and survival. Today more than ever it's necessary to derive
the maximum value out of your marketing dollar.

A successful marketing campaign must have three key components:

1. Intelligence - your marketing must be smart. It's not simply
sufficient to advertise your product or service. You must determine
who needs it, why they need it, what they will gain by using it and
why they should get it from you and not your competition. A prospect
may be aware of your product or service but they may not know why they should be using it. Your marketing campaign should seek to educate the consumer to this end.

2. Cumulative - generalized one time marketing campaigns simply won't cut it when times are tough. Your advertising efforts must be
sustained for a prolonged period of time. Even if you manage to reach
the right person with your advertising the first go around, it doesn't
mean they are going to need your services at that time. An ongoing
marketing effort maximizes the chances of product and need coinciding.

3. Measurable - what exactly are you getting out of your marketing
dollars? Being able to track the results of your marketing will enable
you to cut spending on underperforming or unaccountable marketing
processes.

Many savvy business owners are increasingly turning their attention
towards the internet for their marketing needs. Especially prevalent
in the building industry is the use of the Internet to research a
company’s products or services and often to make the initial contact.
Having an effective internet strategy allows you to reach a large
number of prospects in a cost effective manner.

eNewsletters offer a cost effective and dynamic way to maintain
constant contact with past and current customers. Building customer
loyalty and retention is all the more important in a sluggish economy.
Though people are spending less they are still spending, and when they do open their wallets they are going to go with a company whose
products and services they are familiar with.

If expanding your marketing duties seems like an impossible task to
handle in house, you’re not alone. Many companies, like Microsoft,
Kraft, GM and Pizza Hut for example, have elected to outsource
portions of their marketing duties. Why? Because it’s cheaper, faster
and the results are often better. Most companies simply don’t have the
capability to effectively build and maintain a database of prospects
and customers in house. Outsourcing your marketing drastically reduces expenses and usually produces superior results.

As Internet use among consumers and businesses continues to rise,
understanding how to successfully market your company online is a
vital asset. There are typically three ways a company can go about
handling this task: relegating your online marketing duties to a
current employee, hiring a full-time in house expert or outsourcing
the job to a company that specializes in Internet marketing.


Article by,
Nick Denroche
VP of Marketing
Contractor Power
nick@contractorpower.com

Contractor Power offers an outsourced marketing option for companies
in the construction industry. For additional information 609-693-9778.