How to Avoid Brand Erosion in a Turbulent Economy
By Angie Patrick, Director of Corporate Sales and Business Development
Scrip Companies / Massage Warehouse
You have worked hard to build your business. You have spent long hours worried over your brand and nurturing it to grow to a place of wide recognition. You wear that brand like a badge of courage, as it has been your child, your progeny and your namesake. It is a direct reflection of your core values, competencies and commitments.
So, with all this importance, hard work, commitment and determination to build your brand, why then do many business owners believe in times of economic turbulence cutting your marketing budget is the best place to start?
Many companies find the marketing department all too important during boon times, utilizing the talent, resources and funding to further the brand, build equity in the brand, and make the brand a household name. However, when consumer spending begins to decline a bit, rather than take a close look at the overall scheme of business, process improvements, streamlining slow moving product and boosting new product innovations to stimulate business, many companies have a quick fix scenario up their sleeve to cut marketing dollars. After all, ROI rules, right? We want money for money. We want quantifiable evidence that marketing is working .... And declining global sales must be a sign our marketing strategies are not up to par. Cut the budget, cut the headcount, cut the ad dollars, cut ...cut...cut....
And then what happens?
For a minute, overall company numbers once again look solid, everyone breathes a sigh of relief as they believe they have dodged a small bullet. Over-reactive and under-thought, cutting in all the obvious places has netted a "save" for this month and for now there are a whole lot of questions not having to be answered, just hoping the cuts were enough to stave off revenue starvation. But to everyone's horror, this complete over-reaction and poorly planned response has only provided a bandage to an unstoppable bleed causing you to begin to watch your market share erode. Soon, more cuts, more cutbacks, more fear driven decisions are made and before you know it, your once household name is now, "Hey, what was the name of those guys that used to......?"
This is a loss of revenue, and that is measurable....but you lose far more than that. When you cut your marketing dollars you still expect revenue to grow -- or at a minimum stay static, you are hoping against all rational thought that by cutting back on your market visibility you can somehow magically increase sales. In what parallel universe does this make sense? How can anyone think being seen less can create more sales? As counter-intuitive as this may sound, it is done by small, medium and large business repeatedly; and often with not so savory results.
Not only does this type of reaction often cause a loss of measurable revenue, but it can cost you something equally as important but almost impossible to track. Thought share. What is thought share anyways? I am not one to love the "buzz words" that float in the marketing circles that are the latest and most snazzy descriptors of something far more easily conveyed in regular language but thought share is a clear description of what it represents.
How many people look to you first as the leader in your industry as a result of repeated marketing efforts driving home your message, even if it does not immediately make them pick up a phone and dial? Your marketing efforts have placed you squarely top of mind, and as a result, when they are ready to spend, you are the first they think of. This is the truest importance of marketing, yet it is the hardest to quantify. However, that being said, lose it, and it feels like a magnitude 9.5 earthquake to your bottom line.
If you take a peek at well known brands, you can see the opportunity to push ahead, market aggressively and innovate during a receding market create a large and widely recognizable decline for the "thought leader" in this recognizable space.
A couple of years ago, I might have shuddered had I considered drinking a coffee from McDonalds. The thought of it sitting in the pot all day reducing into some black sludge by afternoon curdled my stomach. I would, however go any time of day to Starbucks or Caribou Coffee, as they were the ones who owned the coffee marketplace. You expect greatness, as this is what both of these coffee giants had positioned themselves to represent. They were the coffee kings. And people were okay paying the prices, because they were the top of mind go-to for coffee.
Times have changed, and nothing truly exciting and new has come from either of the two once goliath coffee companies. You see fewer ads, see fewer promotions, rarely see a sale, and moreover, many people now have a hard time justifying a $5 coffee when McDonalds has gourmet "coffee house" equivalents at half the price.
McCafe saw an opportunity to jump in on a good idea -- serving the coffee drinking caffeine junkies when the economy was beginning to recede. Recognizing the addiction many of us had to our macchiatos and lattes, but also knowing the dollars were fewer and farther between for many of us, they found a place to not only innovate, but in many cases, improve and automate processes without adding headcount, and make our widespread consumer driven addictions more affordable.
So now, thanks to a huge marketing push during a recession, and thanks to smart business innovators and processes put into place at a time when some "thought leaders" were closing doors, cutting overhead, cutting manpower and cutting marketing in an effort to survive, you now see McDonald's coffee as a plus rather than a minus. They have frappacinos, cappuccinos, lattes and more. Add into this mix the Wi-Fi hotspot access, and you have a strong alternative to the one time thought leader, which now is not as glamorous or exclusive as it once was. It suddenly makes you feel a bit silly to order a Skinny Venti Triple Chocolate Mocha with Extra Whip. Now it just feels rather pretentious.
And while I am singing the praises to the McDonald's marketing gods, think about this -- when was the last time you ever saw a McDonald's close? Me personally, I am going to go with never. I honestly do not recall ever seeing a McDonald's fail. Now ask yourself this -- when was the last time you turned on your radio or your TV and did not see a McDonald's, "I'm Loving It" commercial? Through recession, through plague, through apocalypse, I believe McDonald's will always succeed because they recognize two simple things: Marketing is never the place to cut and innovation is the key to remaining relevant. They now offer "healthy" breakfasts like oatmeal because they saw the universal decline in public desire for an 800 calorie breakfast. They changed the Happy Meal to contain milk and apples when the market demanded it. Simply put...they get it.
So making a secondary game plan ahead of a market decline is the best scenario, but now that we are in the thick of it, making smarter decisions from where to yank dollars is something we can all do now. Consider taking a look at your processes. Can you streamline data flow, can you streamline logistics, is there a way to automate billing, can you renegotiate rent, or perhaps sublease unused space? Smart business keeps its name in circulation and its brand on the tips of those consumer tongues. Let marketing be your last place to look for fat to cut, and avoid becoming one of the stories on the "Where are they Now?" documentaries.
About the Author:
Angie is the creator of The Massage School Makeover, a partner in the American Massage Conference, and also a columnist for Business Building Blocks in Massage Today. She is also the facilitator of the philanthropic project, Sanctuary. She can be reached at Apatrick@scripco.com.
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