MARKETING in difficult economic environments can be draining, but business has to continue to survive despite the challenges.
Management may be quick to implement cost-cutting initiatives in a bid to survive. While this may be good on the one hand, it may be just as damaging on the other hand.
Usually when cost cutting measures are initiated, the big axe is normally directed at the marketing department — the “big spenders” of the company. It is not wise to completely abandon marketing strategies and to cut back on marketing efforts.
Budget cuts should be done, but only by going back into the boardroom to revisit the strategy as set out for the business and to determine what costs can be eliminated.
Research has shown that when times are tough and the economy is under siege, marketing efforts should be maintained at current levels at the very least.
In fact, when the economy is facing a downturn, savvy marketers will in fact increase their level of marketing to increase market share. Reactionary cuts in costs almost always affect the performance of products and services.
Cutting the wrong part of the budget may accelerate the negative impact of a slow economy on the company. Cutting costs must never affect the customer value and similarly cost increases should be less than the resulting customer value.
Difficult economic times do not affect all products/services and customers in the same way or to the same extent, nor does it affect all customers.
A marketer needs to evaluate all customers against their contribution vis-a-vis the company’s offering and from there determine what to cut and what not to cut.
Obviously the company has to be knowledgeable about their customers as some may add more value to the business and some may not necessarily add value to the business.
A marketer should concentrate more of his efforts on the customers that contribute to the most value.
Current and future profitability of each customer has to be studied and understood well. Sometimes it may be necessary to nurture those customers whose profitability is promising in the future and sometimes it may be necessary to sever ties with those customers who are not as active in their contributions.
A company may also ensure that they increase customer usage of their products during economic downturn. An example of a company that seems (at least in my view) to be using this strategy is NetOne, a mobile phone service provider in Zimbabwe.
NetOne came up the $1 Mahala promotion. When a subscriber purchases a $1 worth of airtime, they get one hour free calls from NetOne to NetOne during peak times and then some more free calls off peak.
With this promotion they have definitely increased the market share, I know of people who have gone and bought NetOne lines so as to enjoy this promotion. So where is the catch? Are there any freebies in this world? I am not sure, but in NetOne’s case if there are 500 000 subscribers buying $1 airtime then it means they are making $500 000 every day.
Calculate what that translates to in a month and the figures can blow any marketers’ mind.
After taking away their expenses they are guaranteed of profits and all this is happening in an economic downturn.
The result of this promotion is that subscribers are happily chatting away with their friends, loved ones and business associates even and NetOne is earning revenue every single day and has certainly increased their market share.
The mobile network provider I use has not been performing very well this past week and it has been very difficult to finish a conversation on the phone as the network has been dropping, pretty much the same for their broadband services and yet these are services that I rely heavily upon. Almost stranded the other day, I borrowed my cousin’s phone to finish off this one important conversation.
I was amazed at the clarity of the reception and the cost was safely taken care of by the Mahala promotion.
Now how is that for operating in an economic downturn . . .quite savvy if you ask me!
In future I will discuss more strategies of surviving in an economic downturn so keep reading the Red Publication and remain Brand Savvy!