Marketing in a Down Economy
I recently sat down with Mike Van de Kamp of Van de Kamp Consulting LLC (LinkedIn profile)to ask him about his thoughts regarding what companies and organizations should be doing when it comes to marketing themselves in the current economy.
Jim: Hi Mike. I appreciate you taking the time to talk with me and share your insights.
Mike: Hi Jim, good to be with you today.
Jim: We've both been around awhile and this is not our first rodeo, so to speak, when it comes to experiencing a poor economy. Is there any common theme relating to how companies approach their marketing efforts when business conditions deteriorate and sales begin to slow or take a serious hit?
Mike: There is. And it's interesting that whether it's a mild recession like in the early 90's, a more severe downturn of eight years ago and even what we are seeing with today's economy, companies always seem to react the same. To illustrate how they react and what their mindset is when it comes to their marketing efforts, let me share with you a story I remember hearing in a marketing class at the University of Wisconsin sometime on the north side of the last century. Luigi, whose son was away attending college, ran a small but ridiculously successful hot dog stand that had grown its reputation on pricey Vienna Beef/Chicago style hot dogs.
Jim: I think I've been at this establishment.
Mike: No doubt, I think we all know of a place like this. Over the past years, many people had been laid off of work in the small community, many businesses had closed their doors permanently, and most other restaurants were singing the blues. Then Luigi's son returned home for the holidays after completing this advanced economics class during the first semester. His friend drove him through town to drop him off at the hot dog stand around closing time so he could go home with his dad. Going through the center of town he saw the pricey billboard his dad had used for years to call out his "Dog Delights".He made a mental note. Riding home with his dad after a very busy day at the Hotdog Boutique, he told him about his economics class, the terrible economy and the need to reduce all avoidable expenses. After much debate, Luigi (sixth grade education) bowed to the wisdom of his college educated son. After his son returned to school he cancelled the billboard and set about drastically cutting costs.
Jim: What happened at that point?
Mike: Well, his son returned home for spring break just 45 days later and met his dad at the hot dog stand during the lunch hour. As he walked in, there was but a handful of the customers who normally frequented the place. His dad walked out of the kitchen and embraced his son. "My son, thank goodness I listened to you. I laid off the waitresses and went self-service, I discontinued the pricey Vienna Beef hot dogs, I switched to paper napkins, eliminated table cloths and cut my costs further by eliminating the billboard. I did it just in time before my business crashed like the others. I'm lucky it didn't catch up with me a year earlier like everyone else."
Jim: So what lesson should a president, CEO or business owner take away from the story?
Mike: The first lesson is to be able to answer a simple question? How do you market in a down economy? Very, very, very carefully.
Jim: You said that's the first lesson. I'm hearing that there are others, is that right?
Mike: That's right. The hot dog stand is a simple little story. However, it's full of lessons that apply to most businesses in time of recession.
Jim: Can you share a few of them?
Mike: Sure. First, if you have been successful in business to date, if the underlying values of the owners (if closely held) and (or, if widely held) the leadership group of an organization compose the seamless fabric of the organization's products and services delivering what the customer truly needs, be careful about changing anything. At the very least, seek input directly from your customers and base any change upon their candid opinions. Do not take the word of any intermediary, speak with them directly.
Jim: So if a business owner or president is going to listen to anyone about making changes, that first "voice" should be the customer's.
Mike: Exactly. And what I just described is the best case scenario. If the deep seated pains of your customers and the financial budgets available to overcome those pains do not line up perfectly with the products or services you offer, analysis and change are critical. Work from the customer in and values out to make sure everything you do is something they are willing to pay for. How do you do this? Again, like I mentioned earlier very, very carefully and very, very quickly.
Jim: Are companies capable of doing the analysis and change piece themselves? Or are they too close to the issues to effectively go through the process to see what changes need to take place?
Mike: It varies of course. However, as a business owner if you are unsure of how to do the evaluation and re-alignment, seek help from outside experts who do that type of work every single day. Don't cut out the very reasons the customer came to the hot dog stand in the first place. Find out what they really think and why. Then muster the troops, deliver it and prosper.
Jim: Mike, great insights. Thanks again for your time.
Mike: My pleasure, Jim. Good to be with you.