Marketing in a Recession
by Colin Bettin | Dec 12, 2012
There has never been a more important time in the last 70 years to look seriously at marketing. Even in good times, it is always a challenge to win sales, but today, in current trading condition it is harder and more important than ever.
So, perhaps we have arrived at a time when businesses need marketers more than ever before?
In theory, if a business makes an outstanding product or provides a great service, customers will come flocking, largely through word of mouth.
Unfortunately, in practice this is rarely the case. It is highly likely that a business will not be alone in their marketplace and therefore there is always a need to ensure that their message, their product and/or their service stands out from the competition. Under current worldwide recessionary conditions this has become doubly important because there is a fundamental requirement to increase market share in order to maintain sales levels and thus profitability.
Meanwhile the Internet has turned traditional marketing on its head. Over recent years the ways in which businesses need to communicate their message has also changed and will continue to do so increasingly fast. Many are finding that their tried and tested marketing methods are beginning to be less effective than previously, perhaps due to shrinking markets, perhaps due to newer marketing methods now employed by competitors, or perhaps by both.
Of course, every business today needs to view their performance in the light of the greater world economy. With limited growth in many worldwide economies and an on-going financial crisis within the Eurozone coming on the back of the 2008 Credit Crunch, many people are now comparing the current situation with that of the depression of the 1930s.
Where will the current economic crisis take us? Can it get worse and seriously affect worldwide trade with individual firms facing increasing difficulties as business confidence increasingly evaporates? Whatever the future holds, it is clear that currently leading economists do not have an exact answer to these questions.
Lessons from the 1930's
Businesses That Thrived During the Great Depression
Even without the Wall Street Crash in 1929 and the knock-on effect that it had upon other Bourses around the world, the 1930s would have seen difficult trading conditions. This period, often referred to as the Great Depression (or Great Slump), was an international disaster during which very few economists and businessmen truly understood its precise cause.
In hindsight it is now clear to see that at the time the old and traditional industries, like rail, steel and textiles had already reached their production zenith. They were unable to sustain further growth and they were beginning to falter:
Domestic railway construction in both Europe and North America had long since peaked. Although by this period car production had nowhere near reached its peak, in 1931 demand for new cars plummeted with three-quarters of a million fewer cars being built than the number that were scrapped or taken off the road because people could not afford to run them.
This helped to exasperate an over-production of oil that was glutting the market, and it helped to create an over-supply in the iron & steel industries. Additionally, agricultural, which has always been cyclical, collapsed into a period of overproduction and falling prices.
Old economic solutions failed to resolve the problems; capitalism and the business cycle seemed broken. Some argued that capitalism had reached its mature phase and further growth that had fuelled it during the previous one hundred years was no longer possible.
Many economists now see the 1930s as a period when capitalism had to readjust and prepare itself for its next phase - a transition from a manufacturing to a consumer based economy. The new areas of growth were to come from armaments, consumer products, electrical and domestic appliances, medical care, recreation and travel (especially air travel) but the irony is that whilst the consumer economy of the post Second World War period was being born, most people in the 1930s were too poor to notice or take advantage. This led to a temporary stagnant world economy that made life miserable for millions.
A further contributory factor to the Great Depression was the level of debt that many European countries had as a result of the First World War. This destabilized many European economies as they tried to rebuild. Britain had less debt than most because their war effort had largely been financed through the sales of foreign assets but this reduced British foreign exchange earnings leaving the economy increasingly dependent upon exports and thus more vulnerable to downturns in world markets.
But wartime disruption to trade and the loss of merchant shipping had also permanently eroded. Britain's international trade with exports falling to about 80% of their pre-war levels as overseas customers were lost for the traditional, old economy items that Britain depended upon selling like textiles, shipbuilding, steel and coal. Additionally, Coal contracts, for example from the South Wales coalfields, were also signed away in the Treaty of Versailles to German producers to help Germany pay for war reparations.
In fact, the situation in Britain was slightly different to many other parts of the world like, most notably, the USA. British economic output had already fallen by 25% between 1918 and 1921 and was not to recover to previous levels until near the start of the Second World War. Arguably, Britain was already in a slump which it was to suffer for twenty- one years beginning in 1918 so, relatively, UK economic output only declined mildly during the early years of the Great Depression.
New industries like the motor and electrical industries did start to emerge during this period but British products were not generally sufficiently advanced to compete in world markets so producers were inclined to concentrate on the home market. Media was the other new industry of the day, but a major part - Radio - was commercially suffocated in Britain as it was entirely restricted to a state-owned monopoly called the BBC.
The stock-market crash of 1929 never caused the Great Depression, it signalled its start and can be viewed in many respects like the collapse of Northern Rock and then, more importantly 12 months later, by the even more spectacular collapse of Lehman Brothers in 2008. None of them created the ensuing recession or depression that followed, but they did enhance the difficulties - a lack of liquidity and investor confidence which compounded and further frustrated the possibility of growth.
Other circumstances surrounding the Wall Street Crash also sound rather familiar to us today. Claims of economic and fiscal mismanagement by governments in the 1920s plus large quantities of debt combined to make it difficult for many European countries like Germany to trade their way out of debt. Initial actions by some central banks, notably the Federal Reserve, led to easy credit fuelling speculation while unregulated stock and securities practices undermined bank solvency as company valuations rose far higher than their real worth leading to the bursting of the bubble in the Wall Street Crash.
About Author Colin Bettin
Colin has help thousands of people worldwide get started in very successful online businesses. Get a copy of his free report on" How to start and profit from your own Internet business" at http://www.greyacademy.com
About Chia-Li Chien
|Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY!” Succession Strategies for Women Entrepreneurs. She is Chief Strategist of Value Growth Institute dedicated to helping private business owners increase the value of their firms. She is the award-winning author of Show Me The Money and faculty member of American Management Association. Her blog and newsletter was named a top small business resource by the New York Times “You’re the Boss” blog.|
|To book Chia-Li for a workshop, keynote, or strategy session click here or
||To book Chia-Li for consultation click here or||To ask Chia-Li a general business or personal financial question click here or|