Market through the cycle

    Many businesses are sorely tempted to drastically reduce marketing expenditure during a downturn, it is often the most visible, and usually the least understood item in the P&L.

    The evidence indicates that you should be keeping spending up.

    Time and time again we see businesses that keep their marketing expenditure going during a downturn are in a much better position when the cycle moves up again. A dollar spent in a tough environment (assuming it is intelligently spent) is of far more long term value than the same dollar spent in the flush.

    Now we appear to be in the recovery stage of the cycle, although anecdotally all bar mining appears to be pretty flat, opportunities will emerge to leverage the better circumstances,  but  discipline is needed to retain the focus that usually is heightened during a downturn. Below are three of rules of thumb:

  1. Have a “Sku spring-clean”. Now things are improving, it is tempting to keep that small volume Sku, the “homeless” small brand, the small subsidiary acquired by accident, better to manage out of them to free working capital and enable management focus, and now times are a bit better, the cost of exit will be reduced.
  2. Don’t just push growth for growths sake, because it seems possible to get some, use the freed up resources to strengthen existing business before you chase growth for the sake of it.
  3. Don’t take the pressure off the cost cutting initiatives, the next downturn is somewhere just ahead, and your competitors will keep reducing their costs. 
  4. The cycles of economic activity appear to be getting much quicker, and competitive activity more aggressive and reactionary, so it is becoming even more important to have a firm view of the long term positioning. Define the brand development program, set long term performance measures, and stick to them as it will now take several economic cycles to get any meaningful result. Rather than being able to invest and make the return in the one cycle as has been the case in the past, it will now take several cycles to generate any long term depth .

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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