How to Penetrate New Markets in Hard Times

Recessions are tough times for all businesses, big and small. This doesn’t mean, however,

that there isn’t room for growth.

Here are three marketing tactics that John Quelch, a professor at Harvard Business

School, suggests for companies facing a challenging business environment:

Instead of cutting the market research budget, you need to know more than ever how

consumers are redefining value and responding to the recession. Price elasticity curves

are changing. Consumers take more time searching for durable goods and negotiate

harder at the point of sale. They are more willing to postpone purchases, trade down, or

buy less. Must-have features of yesterday are today’s can-live-withouts. Trusted brands

are especially valued and they can still launch new products successfully but interest in

new brands and new categories fades. Conspicuous consumption becomes less prevalent.

This is not the time to cut advertising. It is well documented that brands that increase

advertising during a recession, when competitors are cutting back, can improve

market share and return on investment at lower cost than during good economic times.

Uncertain consumers need the reassurance of known brands–and more consumers at

home watching television can deliver higher than expected audiences at lower cost-per-

thousand impressions. Brands with deep pockets may be able to negotiate favourable

advertising rates and lock them in for several years. If you have to cut marketing

spending, try to maintain the frequency of advertisements by shifting from 30-to-15

second advertisements, substituting radio for television advertising, or increasing the use

of direct marketing, which gives more immediate sales impact.

Although most companies are making employees redundant, chief executives can

cement the loyalty of those who remain by assuring employees that the company has

survived difficult times before, maintaining quality rather than cutting corners and

servicing existing customers rather than trying to be all things to all people. CEOs

must spend more time with customers and employees. Economic recession can elevate

the importance of the finance director’s balance sheet over the marketing manager’s

income statement. Managing working capital can easily dominate managing customer

relationships. CEOs must counter this. Successful companies do not abandon their

marketing strategies in a recession; they adapt them.