Effective marketing is more important than ever right now. There are two cirtical big questions to consider about your marketing efforts. How much should you spend? And, what should you spend it on?
Business Week as a good article that addresses the first question on how much to spend:
While there is no definitive answer as to how much any business should spend on marketing, there are general guidelines any company can use to develop a formula that works for them.
Your first step should be to try to find out what the advertising-to-sales ratio typically is in your field.
To answer the second question entrepreneurs needs to rethink their marketing plans to adjust to tighter cash flow and cautious consumers.
Now that the economy has slowed, consumers are thinking twice about spending money. This creates a much more competitive environment as even consumers with jobs are careful about spending.
Customers are postponing major purchases, opting instead for short-term repairs to keep what they already own functioning as long as possible. They are also cutting back on discretionary spending. For example, we are seeing that consumers are dining out less often and when they do go out to eat they are choosing less expensive restaurants.
With customers cutting back on their spending, small business owners must fight even more aggressively to maintain their revenues. That is why marketing and advertising becomes more important than ever.
Effective advertising starts with a simple rule – think like your customer.
Understand why a customer will choose your business over a competitor’s. There are usually very few criteria that lead to that decision. Know what is most important to the customer and build those criteria into the message of your advertising. If price and value are key factors, those should be the focus of your message. If it is quality, your ads should highlight why your product is superior to others.
Learn where your customers go to get information to help them make purchasing decisions. Marketing dollars are a precious resource, especially during tough economic times. We cannot afford to spend money on advertising that does not reach our target market or does not influence where customers choose to spend their dollars. If your customers go to the web, develop a strong website and an effective strategy to drive people to your site. If they are bargain hunters, direct mailing or e-mailing of coupons and sales promotions may be most effective. Remember that pricing is part of your marketin strategy. If brand awareness is important, consistent advertising in the newspaper, on television or radio, on billboards, and so forth will probably be most effective.
Advertising should be a process and not an event. Never get into the pattern of panic advertising – that is, only spending on ads when business slows down. Research clearly shows that consistent advertising is much more effective than one-shot or occasional ads. Develop an advertising budget for the year and stick to it as your cash flow allows. Be ready to make adjustments in your plans.
Also, be ready to experiment. Not everything you try will always work as planned, so listen to where your customers are hearing about you and why they are choosing to do business with you. Tie specific offers to each ad so you can track which seem to work best.
And more than ever it is time to creative and find ways to bootstrap your marketing efforts to ensure the biggest bang for your precious marketing bucks.
Marketing is critical during an economic recession. I can’t find it now, but there was a study that showed that companies who kept up their advertising during an economic recession fared substantially better when the recession ended than those who cut back their advertising during the hard times.
For entrepreneurs, advertising could be any low-cost ways to continually get their brand in front of existing and prospective customers. Blogging, weekly or monthly email newsletters, or even a phone call to check in with existing or prospective customers who you haven’t heard from in a while.