Dr. Rick Franza, Dean of the Hull College of Business, discusses a different, timely business topic each Monday in this column. This week, he talks about the importance of maintaining a marketing presence even during hard economic times. The interview has been edited for clarity and impact.
ABD: Some economists still think we’ll be heading into a recession this year, and we’re going to talk about the importance of maintaining your marketing during that. But first, explain what is meant by the term marketing.
Rick: A lot of people think marketing equals advertising, but marketing is anything you do to sell your service or product. Advertising is a vehicle of marketing but sometimes, just the name of your company is your marketing. Marketing creates a value proposition for your customer. So if your name, for example, is Speedy Cleaners, then you’d better be fast because your name has made a value proposition to your customer.
Marketing has to give someone a compelling reason to buy from your company. Everybody has to distinguish themselves in different ways.
You don’t just spend money willy-nilly on marketing, but there’s a strong correlation between marketing and sales, no matter what the economic state is.
ABD: How does a business distinguish itself through marketing?
Rick: You want to identify what part of the market you can get, and in order to do that, you have to determine what you’re good at or what you could be good at. Determine what it is that your target market values, then in your marketing message, say “We provide this.” And you need to set up your operations to deliver in a way that your marketing promised.
For example, everything about Walmart is low prices because the heart of their market is low-cost buyers. You’ve got to let people know why they should come to you.
ABD: You mentioned earlier that advertising is a part of marketing. What kind of advertising should a company use?
Rick: Traditionally, advertising spends have tended to be in print media, radio media, and TV media. But a more labor-intensive but less expensive form is social media. People are finding it important to be on Facebook, Instagram, TikTok, and even LinkedIn. But it’s important to understand the demographics to know who is listening/watching/reading when and where.
ABD: Companies often look at marketing only as an expense but you consider it an investment. Please explain that.
Rick: It is an investment – the reason you’re marketing is that you want to get a return on it. As a business person, most of your expenses are things you hope to get something from. Marketing is a short-term, mid-term, and long-term investment. It’s something that potentially has enduring returns on your investment.
If you look at any recession or financial crisis, the companies that can invest in marketing, operations, and processes, and in people, come out the other side way ahead of everyone else. You’ve got to have enough cash to do that, but if you can, the results are staggering. When things pick up again, you have a big advantage – no one has to discover you, you’ve worked to reduce costs, so your margins are higher and if you’ve retained your people, you don’t have to go out and hire people. When times are good is the time to start doing it.
ABD: How does marketing change when a recession hits?
Rick: During a recession, you have the opportunity to acquire new customers when everyone else is cutting back. But one of the most important things you can do is to hold on to your current customers. It’s a lot cheaper to hold on to customers than to find new ones. When hard times hit, it may be even more important to stay front and center with your customers.
In a recession, you also have to realize that every individual customer’s buying algorithm has changed in how much they value something. They start to value cost more, so you have to pay attention to that.
When the demand for marketing is less, the cost may also be less, because the people who do the marketing are charging less. You can get more bang for your buck.
You can do more things that are free, like social media. If you can, find ways to get talked about in the media rather than having to pay for it. It’s another reason to get involved in the community. People like to support people when they like what they’re doing – although that shouldn’t be the only reason you do good things.
ABD: So you would encourage businesses to keep marketing, even if the economy slips into a recession?
Rick: Absolutely! You need to be more judicious about it, but don’t give up. Just be more selective and make sure you’re hitting the sweet spot of your market.