You know you’re meant to maintain your marketing spend in a recession. But where do you spend it for maximum effect? Danielle Veldre investigates
Everywhere you look in the Australian economy, it’s difficult to escape stories of rising unemployment, budget deficits and a looming recession. Not to mention the four-horsemen-of-the-apocalypse-style news coverage of the outbreak of swine flu.
Service industries such as hospitality are bound to suffer in these kinds of conditions, as tourist numbers dwindle and households cut their budgets. While business may suffer, and some may even go under, the great majority of businesses will survive and some may even do reasonably well.
But when business starts looking at its outgoings, the thing most often top of the list of cuts is marketing. It can be easily seen on a balance sheet as a cost centre, rather than a necessary investment.
There are many compelling reasons to maintain your marketing spend, especially in a recession, which will leave your business healthier as a result. After all, no-one is going to come into your café or restaurant if they don’t know about it. And if you’re not lucky enough to benefit from word-of-mouth, or passing trade, you have to spend money to tell people your business exists.
Email marketing firm Returnity recently published a paper on marketing during a recession, quoting research that found while many companies were looking to cut their marketing budgets during a recession, up to 20 per cent of smaller companies were looking to increase their marketing expenditure.
“Increasing marketing efforts during such a time can be a strong tactical move given the opportunity to gain a louder voice in the marketplace, whilst competitors reduce their marketing expenditure,” the report said.
“The research indicates that 30 per cent of survey respondents will be increasing direct marketing investments this year in response to the economic conditions. With heightened accountability and the need for tight cost controls, marketing investment will be directed into channels that show the best return on investment.”
Where is the money going?
Director of Sydney-based marketing firm Impact Communications, Allison Lee, agrees that in lean times, closely examining your expenditure on marketing is a must. But cutting it isn’t necessarily going to put your business in a better position.
“I would say that if you’re not already tracking the return on investment, then you need to be doing that very seriously,” Lee says. “I think it’s not about cutting your marketing budget, but looking at where you’re spending it.”
Lee says whatever marketing you’re undertaking needs to be measurable in order to gauge its effectiveness.
“It might be [when you put an] ad in the paper [it] might have a call-to-action or some way to measure who’s seen it.
“Restaurants need to understand how their marketing dollar is being spent and where it’s being spent and then have to assess if it’s a good return on investment.”
Another factor to consider is that markets and trends are changing. With tourism markets drying up thanks to the global credit crunch and swine flu fears, and with domestic households preparing for tough economic times, being in touch with what people want from a dining experience is key. And value is the name of the game.
Social researcher Liz Dangar has spent the past 30 years examining social trends particular in the area of food.
“In tough economic times, cost-conscious Australian families are looking for ‘in-tertainment’, choosing to stay in and cook at home rather than eat takeaway or go out to restaurants,” Dangar says.
As a result, many restaurants are offering deals such as two courses and a glass of wine for a set price, or a family meal just to keep people coming in.
“Someone said the other day there’s more meal deals than Macca’s at the moment in restaurants,” Sydney Morning Herald Good Food Guide co-editor and director of the Sydney International Food Festival Joanna Savill says.
According to Lee, it may be a strategy to increase volume, but specials and deals offer a chance for new customers, especially for higher end restaurants. “There’s actually an opportunity to snare some customers you might not have had in the past. Maybe the people are really loyal to one restaurant, maybe they’re prepared to look at the bottom line and say: ‘maybe I am ready to move away from that’,” she says.
Focus on your core strength
Certainly adjusting your menu to suit the times is one way of addressing this trend of “inter-tainment” and honing your product to suit the changing conditions. Lee says you’re advised to do this with a keen eye on knowing both your market and what you’re good at as a business.
“You just need to focus on your core business. These things happen, they are beyond our control, but we need to know who our target market is and stick to what we’re really good at… it might mean you have to do things differently, but in the long term it’s about focusing on what you can really do well.”
But a return to comfort food and focus on value comes with its own challenges,
according to Savill.
“The trap with this is that some people say ‘no-one wants fancy fine dining at the moment, everybody wants casual comfort food.’ I think that if everyone is doing lamb shanks and everybody is doing Moroccan tagines, we’re going to get bored,” Savill says.
“People go out to eat something that’s relatively inexpensive so they don’t have to cook, and they also go out to have things they wouldn’t cook at home. I think it’s important not to lose sight of that, because if every chef in town starts having a salmon-fillet-on mash kind of menu, there’s no point of difference.”
Savill suggests doing things such as an early special with diners out by 7.30 to get “two bites of the cherry” with two services, or encouraging the late patrons with a “beautiful dessert”—the kind most people wouldn’t make at home—for the 9.30, post-movie or show crowd.
Another effective strategy to make your marketing dollar work harder is to look to your suppliers, who may have marketing communications programs you can attach yourself to and reap the benefits of the much larger advertising and marketing budget at the disposal of big corporates.
Lee gives as an example a campaign run by boutique beer brand James Squire, which had her local pub create a menu specifically for the product, which was then matched with various beers.
“[The campaign] said this is the food leader’s beer. My local pub did a great meal. I hadn’t been to that pub for months and months and I went back. It was integrated with advertising and it was just a great, smart campaign.
“Coffee in particular is a market where there’s lots of co-branded activities; same with tea. It’s a nice way to do a small increase in marketing spend, potentially with some large payoffs,” Lee says.
Leaner times may simply call for better management of your marketing budget and the desire to make that money work harder with some creative strategies.