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Keeping Your Small Business Afloat in Stormy Seas: how to market in a downturn economy

By Anne-Marie Watson
Published May 19, 2009

If the pessimists can be believed, we look like we will be facing the downturn economy for a while yet. But not everyone is suffering. Some companies continue to grow and some even say business is brisk! The secret behind why these businesses remain buoyant in a difficult market is that they tend to have their basic strategy right and have a proactive approach to business.

 These are some of the basics that make a difference in tight times.

  1. The business's target market is well defined & understood

Knowing your target market well is a key step to business success. It means you can focus your efforts on providing their exact requirements. Understanding your customer's needs and hopes makes it easier to match your products and services to satisfy these.

 

  1. The business's chosen market is not susceptible to changes in the economy

Some businesses currently are suffering a decrease in sales as customers tighten their spending on what are perceived as non-essential items or services. However, businesses that market products or services that are considered essential can continue to count on market growth.

It may be that the market is a niche market whose customer base have higher incomes and are still content to pay higher prices for something ‘special'.

 

  1. Service levels are maintained or improved for their chosen market

Instead of lowering service levels because costs need to be tightened, some businesses re-order their financial spending to ensure service is maintained or even improved.

Just like share market traders who buy shares when the market is low as a longer-term investment, some companies improve their service offer while in a recession. This is because they want to take advantage of their competitors' weak position and steal customers away while they can. When customer spending eventually returns to prior levels, these businesses will be well placed to benefit from their proactive investment during the recession.

 

  1. Businesses innovate in times of change

If necessity is the mother of invention then economic downturns definitely seem to inspire innovation. Financial crises seem to remove conceptual barriers because the playing field changes. Fortunately for some it stimulates creative and entrepreneurial thinking.

A business may decide to re-invigorate itself or even get into acquisition mode. Revitalisation can sometimes ride on very low cost marketing such as use of social media or PR. A review of what was previously labelled as a ‘'problem' can sometimes uncover ‘opportunities' that can be realised through different strategies.

Acquisition is a much bolder step. However, during a financial crisis, there are companies who will be looking to exit and may offer a sound investment at an attractive price. Purchasing your competitor can be a fast way to increase your critical mass as long as your balance sheet allows you the leverage to do it soundly.

Other options include vertical integration. A good example is where a retailer buys out the supplier to control a greater proportion of the value chain. This is certainly one of Woolworth's greatest strengths as a retailer.

Sometimes suppliers also become manufacturers through acquisition.

 

  1. Businesses deliver great value through clever organisational strategy

Some businesses are able to streamline their value chain so effectively that they add value at almost every point along the way from sourcing raw materials to delivering the finished product or service to the end user. This is only achieved through well-designed processes that eliminate any ‘non-value' adding steps and maintaining or enhancing value- in the remaining steps. Big retailers do this through comprehensive logistics and procurement organisation, and through clever leverage of primary and support activities in their organisations.

The key is to eliminate those unnecessary processes that cost but add nothing. Revising these to achieve a streamlined approach saves costs, time and often adds extra value to the end product.

 

  1. Businesses get the biggest bang for their marketing investment

Some companies choose to focus all or most of their marketing funds on one big idea.

While seen as risky by some, a single minded approach often means better ROI and less complexity for implementation of promotional programs.

The less complex things are, naturally the easier it is to implement successfully.

One idea also helps improve the impact of messaging and recall, as you see the same messages over and over, rather than seeing different bits and pieces of communication which are usually less easy to recall.

All said and done, financial crises are not always a good reason to give yourself a nervous breakdown. While often stretching, these times can sometimes uncover ‘diamonds' we might never have seen otherwise.

© 2011 Southside Marketing Solutions 

 

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