Editor's Note: Harvard Business School professor John Quelch writes a blog on marketing issues, called Marketing Know: How, for Harvard Business Online. It is reprinted on HBS Working Knowledge.
Congratulations. Your business is surviving the recession. You made the necessary adjustments, weeded out under-performing distributors, shed unprofitable or unreliable customers, deleted poor-selling products from your portfolio, and concentrated your marketing dollars on media and channels that you could prove delivered a strong return on investment. You may have downsized, voluntarily or involuntarily, since the recession began; but at least you're still in business.
“Consumers are looking at your products and services through new lenses.”
Now, you are waiting for the recovery, the chance to again have some fun and make some money. Here are my seven top recommendations for marketers looking to plan ahead:
- Focus on high-potential customers. Make sure you focus on building relationships with ambitious customers in growth industries where pent-up demand is going to be unleashed once the economy turns the corner. If you're running a B2C business, focus on cash-rich or long-term-oriented consumers to lead you into recovery. But don't forget to stock up to take advantage of the pent-up demand that will be unleashed once other consumers get their confidence back.
- Don't assume a return to normal. The longer and deeper the recession, the more likely consumers will adjust their attitudes and behaviors permanently. Their coping mechanisms may become ingrained and define a new normal. In addition, the competitive landscape will have changed. A competitive shakeout along with new product launches may mean consumers are looking at your products and services through new lenses. Listen closely to your customers and revise your market segmentation assumptions.
- Assess your target customers' trust in your brand. Clearly, trust in financial services brands has taken a beating. Many well-known brands like Merrill Lynch will simply never win back consumer confidence; if you are working for such a brand, dust off your CV and move on. But bad behavior in the financial services sector has bruised trust in all corporate brands. Confirm that your target customers still trust you but plan to add service support and hold their hand more firmly in the short term, even though your service quality, measured objectively, has remained constant.
- Stay focused on costs. Many manufacturing industries (as opposed to services industries) are plagued by global overcapacity, relative even to pre-recession demand. Combined with excess inventories in the supply chain, especially in consumer durables, the result will be continuing downward pressure on prices. Economic recovery will not allow producers to let up on tightening cost controls and improving productivity.
- Know your lead indicators. Every good marketer knows the specific indicators, macro or micro, that predict demand for his or her product in the next period. Use common sense. If the Wal-Mart parking lot looks less crowded, some consumers are probably migrating back to Target and vice versa.
- Develop scenarios. How long the current recession will last is widely debated. And whether the eventual economic recovery will be gradual or dramatic is equally unknown. Marketers planning for 2009 and 2010 should bear in mind Peter Drucker's wise advice: "A strategy is a sense of direction around which to improvise." Know how you can source supplies and expand distribution in a hurry if demand suddenly spikes.
- Don't wait for permission. Most companies will not begin reinvesting until the Wall Street Journal or Ben Bernanke officially declare the recovery underway. Get ahead of the crowd. Craft your recovery plan now, and pull the trigger when your lead indicators say go.
- Smart hedging has outweighed smart marketing. The current recession has not been kind to marketers. In many multinationals, the positive financial impacts of recession-busting marketing plans have been obliterated by commodity price volatility and weaker-than-expected overseas earnings due to the unexpected strengthening of the dollar. Economic recovery will bring greater commodity price and exchange rate predictability. Marketing will again come to the fore as a differentiator between successful businesses and also-rans.
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