A New Mind-Set to Market Aggressively
When marketing in a down economy, we strongly encourage credit unions and CUSOs to resist the urge to react by putting the brakes on their marketing budget. In a recession, marketing tends to be the first victim of budget cuts when, in reality, it is the most important tool a business has to aggressively thwart lost market share.
Currently, the economic tea leaves indicate we are beginning to rebound, but the question on how to rebalance your marketing budget for near term and future success remains. The answer – as you plan your 2010 budgets it will take a new mind-set that marketing represents a strategic asset for your credit union, not a drain on assets. One of the keys to succeeding during a recession is to look at your marketing dollars as an investment rather than an expense.
Be Patient & Gain a Competitive Advantage
Since World War II, the U.S. economy survived no less than 11 recessions. As the rebound signs indicate, the U.S. economy will survive this one, too, but the hard part will be to hold on to and improve marketing budgets while we wait for a full recovery.
When a recession hits, management usually circles the wagons and asks, "Where can we cut costs?" That's an important question designed to protect the bottom line. Survival instincts switch on and fear is a big motivator when economic news is bad. Typically, organizations will reduce expenses through lay-offs or salary cuts, curtailing projects and training programs, and cutting their marketing budget first. It's a logical and natural response to reduce financial concerns. However, the key is to market while competitors are afraid to risk it financially.
Be patient instead; let your competitors cut their marketing activity while you proactively plan and strategically determine your best marketing opportunities and solutions. The best decision is to spend your marketing dollars frugally and resist the urge to decrease your marketing budget. You can gain a competitive advantage and capture market share over competitive financial institutions that reduce their marketing budgets in an effort to weather the storm.
Timidity is Not the Route to Success
Consider the 1979 Meldrum & Fewsmith series of studies, conducted to analyze the way companies marketed themselves during the recession from 1974 to 1975. According to the results of the study, "Companies which did not cut advertising expenditures during the recession years (1974-1975) experienced higher sales and net income during those two years and the two years following than companies which cut ad budgets in either or both recession years."
Meldrum & Fewsmith‘s senior vice-president stated, "I have yet to see any study that proves timidity is the route to success. Studies consistently have proven that companies that have the intelligence and guts to maintain or increase their overall marketing and advertising efforts in times of business downturns will get the edge on their timid competitors." 1
Here’s how The Coca-Cola Company has approached their marketing expenditures. "At Coke, we had a policy that we would spend to sell. The only time that we cut spending was if something didn't work and the brand didn't return on the investment. And when it did work, we poured on more," Sergio Zyman, former CMO of Coca-Cola said. Effective marketing communication has consistency, frequency and repetition. That takes a willingness to maintain marketing budgets and marketing activities.
An Environment Offering ‘More Bang for the Buck'
A recession produces a special environment making an aggressive marketing stance and implementation more successful than usual. When a majority of businesses are decreasing their spending, the media companies react to falling ad sales by offering discounted ad rates. Even with the economic rebound, media prices are staying low. When media prices fall, the ROI from advertising often increases during both the recession and recovery period. This allows marketers who maintain or increase their budgets the ability to gain greater share-of-voice to influence their target audience.
This is true of traditional and non-traditional media providers. The combination of lower media prices while you compete against competitors that curtailed their marketing budgets gives you a unique opportunity to gain market share for less. Plus, potential new members are now easier to reach, due to less competitive promotional clutter.
Public relations also represent a smart tactical choice. It's generally a less expensive marketing communications tool that helps maintain relationships and keeps your credit union’s name in front of your target audiences. Using a multi-media approach that includes public relations will engage multiple mediums to broaden your reach while increasing awareness and retention among your target audience.
Traditional forms of media like radio, television, billboards and direct mail are good, but non-traditional and unique advertising methods like bus boards, coffee sleeves, movie screen ads, sponsoring community events, and social networking vehicles will help you gain extra attention and enhance your promotional efforts.
Use ROI to Support Your Marketing Budget
Credit unions must weigh every penny against results, so fight for every penny in your marketing budget by showing how the ROI will pay off on sensible marketing expenses. Prepare to set, defend and actively reach ROI goals. Maintaining or increasing your marketing budget followed by prudent implementation demonstrates to your members and target audiences that your credit union remains vibrant, stable, and strong during difficult times.
Aggressively protect your credit union's or CUSO's reputation, top-of-mind awareness, and market share. Be smart and strategic. Outthink your competition with a new mind-set to at least maintain your marketing budget investment, with a goal to acquire new market share. As the economy rebounds, embrace this marketing budget paradigm shift and succeed. Fully investing in your marketing efforts now will help your credit union or CUSO emerge ahead of competition that didn't.
1. Source: American Business Press, Inc./Meldrum & Fewsmith study, 1979
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