How to invest ad money wisely in slow economy
Jan. 10, 2002
By Betty J. Parker
Making good decisions about advertising and promotion vehicles and spending can be a difficult task for any business manager. Making those decisions in the midst of an economic recession can be even more complex and confusing. Whether it makes sense to spend money on advertising and promotion when "nobody is buying" is a question on many business people's minds today.
One school of thought would suggest that the belt-tightening stance most companies take during a recession-layoffs and budget cuts-should be applied to advertising and promotion spending as well. Advertising trade magazines bear out this long-standing tradition and report that, following record advertising expenditures in 2000, the average U.S. company cut back this year. There is no reason to doubt that many West Michigan businesses are following suit.
Recent conversations I had with leaders of local financial institutions reflect such concerns. One questioned whether he should be using the current marketing budget to hire a new loan officer. Another had plans to increase usage of a new service. The banks' plans included increasing emphasis on new products for non-traditional markets. How, I wondered, did they expect this to happen without developing greater awareness of the new products by very different target markets? Surely, advertising and promotion would be critical to implementation of their changing strategies.
Despite decades of research, advertising and promotion is not an exact science. Its effectiveness cannot be precisely calculated on a return-on-investment basis, despite a growing desire or demand on the part of business leaders to get a predictable, incremental bang for their promotional dollars. In such an environment of uncertainty it is no wonder that business managers often opt to do nothing, rather than invest in a promotional program that may or may not help their businesses during troubled economic times.
Right now may be a good time to analyze what you've been doing to determine whether it still makes sense. Here is a list of suggestions for companies hoping to make better decisions about their promotional spending.
Assess the target market (again). There is probably no more important decision than deciding which target market makes sense for your product or service. Determine whether your target market has changed or perhaps gone to the competition. Make sure you understand not only the target market's demographics, but also its psychographics: beliefs, attitudes and lifestyles. Too many marketers know the age, sex or income of their target market, but have little understanding of their market's internal indicators.
Use "you" messages and avoid "I" messages. Ask yourself whether your promotional messages focus on your customers' needs or whether you're making empty boasts about your superior product or service. Make your customer and his or her needs the centerpiece of your marketing strategy.
Positioning: Do you have a clear understanding of your product's position in the market? How does it stack up against the competition? Is the position clearly visible to the target market? What do you consider your product's competitive advantages? If there aren't any, you may want to adjust your product or service, so that its advantages are clearly visible.
Don't bet your company's future on traditional media advertising alone. Many marketers with small budgets find only marginal effectiveness in the use of mass media vehicles, such as daily newspapers and television, which often lend themselves to mass marketed products and services. If yours is a niche product with limited appeal to the masses, you may be better off using more measured and targeted media such as direct marketing or Internet advertising.
Don't blame advertising for a poorly defined strategy or product. If your product is not priced right or doesn't have competitive features or benefits, no amount of advertising and promotion will make it a success. Plan your promotional spending after you have developed a product or service that will sell. Conduct research and limited product rollout that bears out your marketing hunches before you launch. Seek out feedback from your employees and customers. Maybe they see something that you don't.
Try something different. If the competition is "zigging," it may be time for you to "zag." If you've been focusing on media advertising, maybe it's time to try out event marketing or sales promotion techniques.
Above all, try not to panic. When the economists finally determine that the economy is in recession, chances are good it's just about over.
Dr. Betty J. Parker is an associate professor of marketing in the Haworth College of Business at Western Michigan University. This column was originally published in the Dec. 19, 2001, issue of MiBizSouthwest and is reprinted in WMU News with their permission. The article is part of a monthly MiBiz series featuring professors from the WMU Haworth College of Business.
Media contact: Jessica English, 269 387-8400, firstname.lastname@example.org