Picture an ostrich, struthio camelus if you will.
Its coveted feathers are hunkered low. Its head is thrust sharply into the sand with its primitive eyes shut tight. Now ask yourself, “Is this my marketing plan for 2009?”
If the answer is yes, you’re basically plucking yourself.
Don’t take it simply from me, or any other member of Thomas Carlyle’s crusty “Fourth Estate.” Listen to what is being said on the subject by a little outfit called Harvard.
In the February 2009 issue of the Harvard Business Review, a well-writ article entitled “Seize Advantage in a Downturn” tackles real-world issues facing business owners in today’s economy.
Its authors are David Rhodes and Daniel Stelter, two senior partners and managing directors with The Boston Consulting Group. BCG is a global management consultancy and a leading adviser in business strategy, according to its Web site.
Bottom line: they’re not an outlet for marketing dollars.
“Companies that injudiciously slash marketing spending often find that they later must spend far more than they saved in order to recover,” Rhodes and Stelter wrote.
A colleague from Crain’s Chicago Business put it another way at a recent conference. “At some point,” he said, “you’ve got to play some offense.”
It is important to note that the HBR article is not marketing centric, but an effort to treat the whole patient. Like many other objective and relevant resources that offer the very same advice, HBR isn’t telling businesses to be spendthrifts in any environment.
Rather, “seizing advantage in a downturn” means rethinking product mix and pricing strategies. Rhodes and Stelter say we should reduce materials and supply chain costs and pursue a comprehensive review of suppliers and procurement practices. It’s time to reevaluate credit policies and aging receivables.
And yes, it might even be prudent to reallocate some marketing dollars to mediums that are more strategic in nature. It’s all about protecting your existing client base and gaining long-term advantage. Particularly for firms that find themselves second or third in the market, there’s a real opportunity here.
“The best companies do more than survive in a downturn,” HBR says, “They position themselves to thrive during the subsequent upturn…”
McKinsey Quarterly, an online journal of business strategy management, did an 18-year study of 1,000 mainly industrial U.S. companies from 1982-99. The time includes the U.S. recession from 1990-91.
Among the things McKinsey found were that “companies that invested wisely during a recession in those things that would help them over the long-run, rather than reacting to a slow-down in the short-run, came out ahead in the end and were worth at least 25 percent more than their unsuccessful challengers who simply hunkered down.”
The study found that successful firms spent more on “selling, communications, branding, training and other activities that [would] increase business opportunities, employee capabilities and eventual long-term market share.”
All of that said, cash flow is king.
It’s one thing to draw up perfect business plays on the board, and entirely another to have the means — or confidence — to execute them. So be smart. Prioritize cost cuts on those expenses that don’t build sales opportunities.
Chose advisors you trust. Ask your marketing agency if they’re placing you in formats that best enable you to reach your customers or their ability to generate higher billings.
Or, if you handle marketing decisions internally, review whether your efforts are being truly targeted toward your strategic customer base or thrown at cheap deals. Does your media buyer think like or even understand your most coveted customer?
Remember that while you’re tightening the purse strings, you have to fashion a couple of them into lassos for new business. When the leader in your market becomes the frightened ostrich, that’s the time to strike.
So if you’re holding your breath to be saved by the federal megabailout, you’re going to turn blue faster than you see green. It’s going to be up to you, and in the end, the sports clich√? that “defense wins championships” is true.
But playing killer offense is what gets you in the game.
Jeffrey Wood is publisher of Northwest Arkansas Business Journal.