Bowling for Business: Drown Out the Competition

Don't cut business essentials to save money.

(This column first appeared in The Press Enterprise and on January 12, 2012 and on ROTWNEWS.com on January 14, 2012.)

Resist the Urge to Cut Back on Advertising Despite the Economy

Planning a wedding is a little bit like drowning. As a future mother-of-the-bride, I often feel like I’m in over my head. And you know what they say about people who are drowning: Don’t get too close or they might pull you under. It isn’t that we want to kill prospective rescuers–we are just flailing about in a desperate attempt to survive.

During the past four years in a difficult economy, I’ve watched entrepreneurs thrash around and kill the very thing that could potentially ensure their small business survival: marketing.

The silver lining to a recession is that it focuses business owners’ attention on cost control. And keeping overhead low and profit margins should be a priority regardless of the financial environment. But, in many cases, there are much better ways to boost your bottom line and improve cash flow than blindly cutting costs. Like it or not, there is no getting around the fact that you have to spend money to make money. So, as important as knowing which costs to cut, you should make sure you understand which ones to protect.

If you own a restaurant, you probably wouldn’t consider reducing overhead by cancelling your wholesale order for food. Intuitively, you know that you can’t sell gourmet fare if you don’t have fresh ingredients. Advertising, on the other hand, is a less obvious necessity since it isn’t directly traceable to active income. But the best meals on the planet won’t sell unless potential patrons know where to find them.

I’m hardly alone in my belief that no matter how strapped you are for cash as a business owner, advertising is absolutely the last thing you should eliminate from your budget. The key is to look at your marketing dollars as an investment instead of an expense. The Harvard Business Review maintains that advertising during a recession contributed to profits:

“The rationale that a company can afford a cutback in advertising because everybody else is cutting back [is fallacious]. Rather than wait for business to return to normal, top executives should cash in on the opportunity that the rival companies are creating for them. The company courageous enough to stay in the fight when everyone else is playing safe can bring about a dramatic change in market position.”

A 1979 study done by ABP/Meldurm & Fewsmith revealed that:

“Companies which did not cut marketing expenditures experienced higher sales and net income during those two years and the two years following than those companies which cut in either or both recession years.”

In fact, some remarkable marketing success stories emerged during times of economic difficulties:

  • Procter & Gamble pushed Ivory Soap during the height of the Great Depression. It’s no coincidence that P&G has made progress during every major recession. While competitors cut ad budgets, this company increases spending.
  • FedEx started doing business in 1973 during the gas crisis-led recession. In spite of relying on gas-guzzling trucks and planes to ship packages around the country, they succeeded and grew not only because they could deliver packages overnight, but because they clearly communicated their ability to do so.
  • Kellogg’s and Post were tied for market share in the cereal category in the 1920s. Post cut their advertising budget while Kellogg’s increased theirs by one million dollars. After the recession, Kellogg’s profits improved from $4.3 million a year in the 1920s to $5.7 million in the early 1930s, leaving Post profits in the dust.

In tough times, resist the tightwad tendency to cut advertising. Instead, increase your budget and be thankful if your competition cuts theirs. When rivals cut back, your message will stand out all the more. And that way you’ll ensure at least your company stays afloat.

Until next time, I’ll be Bowling for Business.

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Posted on January 16, 2012, in Bowling for Business, Business Tips, Marketing Plan, Mountain Marketing Group, On a Limited Budget, Social Media and tagged , , , . Bookmark the permalink. Leave a comment.

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