Sinking the Boat or Missing the Boat?

Much has been written - and is being written (by marketers and economists alike) - on the subject of marketing during a recession.

Today's Small Market Radio Newsletter carried a fascinating New Yorker piece by James Surowiecki on the subject.

Surowieki contrasts the Depression-era responses of two ready-to-eat cereal makers, Post and Kellogg:

Post did the predictable thing: it reined in expenses and cut back on advertising. But Kellogg doubled its ad budget, moved aggressively into radio advertising (emphasis mine), and heavily pushed its new cereal, Rice Krispies. (Snap, Crackle, and Pop first appeared in the thirties.) By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty per cent and it had become what it remains today: the industry’s dominant player.

Chrysler took the same approach during the Great Depression and in 1933 passed Ford to become the #2 automaker in America, thanks to its aggressive marketing of the Plymouth brand. This gain was not as long-lived as some, but it demonstrates what can be done when a company goes after market share while others are trying merely to preserve what they have.

I was visiting with a new client earlier in the week. He's in the retail furniture business, a category not exactly thriving these days, given the overall economic climate and contraction in the housing market. But he's not hunkering down. He's planning for expansion and growth. He said to me, "We're in a kind of Ice Age now. And you know what an Ice Age is good for? It kills off the dinosaurs!"

Indeed.

Commenting on why many companies are so quick to cut their advertising during an economic slowdown, Surowiecki cites economist Frank Knight's distinction between risk and uncertainty.

Risk describes a situation where you have a sense of the range and likelihood of possible outcomes. Uncertainty describes a situation where it’s not even clear what might happen, let alone how likely the possible outcomes are. Uncertainty is always a part of business, but in a recession it dominates everything...

For businesses that choose to place their bets on minimizing risks and preserving assets in the short-term, cutting back makes sense.

For others, deep pockets or not, the opportunity to chase a bigger slice of the smaller pie, believing that they'll keep the larger share of their market when the economy rebounds (as inevitably it must), is a worthy challenge and a calculated risk.

Surowiecki concludes:

It’s true that the uncertainty of recessions creates an opportunity for serious profits, and the historical record is full of companies that made successful gambles in hard times: Kraft introduced Miracle Whip in 1933 and saw it become America’s best-selling dressing in six months; Texas Instruments brought out the transistor radio in the 1954 recession; Apple launched the iPod in 2001. Then again, the record is also full of forgotten companies that gambled and failed. The academics Peter Dickson and Joseph Giglierano have argued that companies have to worry about two kinds of failure: “sinking the boat” (wrecking the company by making a bad bet) or “missing the boat” (letting a great opportunity pass). Today, most companies are far more worried about sinking the boat than about missing it. That’s why the opportunity to do what Kellogg did exists. That’s also why it’s so nerve-racking to try it.

I am privileged to work with a number of clients who have the ambition, foresight, and fortitude to pursue relentlessly their goal to be the best they can at what they do.

Counterintuitive though it may seem, this is a great time for smart advertising on Radio!

Read the full article here.

Women in Sales, Selling to Women

This week's Small Market Radio Newsletter had a short piece by copywriting teacher David Garfinkel entitled, "Women, Business, and Advertising." In it he writes:

One problem is that the sales culture and sales training fields are dominated by men...and we often use war metaphors and battle strategies as the basis for success.

Women, generally speaking, don't think in these terms. (Those who do can be very scary.) The female approach tends to be more collaborative and nurturing.

Reading the piece reminded me of a funny and insightful video presentation by Wisconsin pastor and marriage counselor Mark Gungor on the differences between men's brains and women's brains. If you've not seen it before, enjoy it here.

Following the Wall Street Journal's Example

As I type these words, three dozen major newspapers have filed for bankruptcy protection.

Barely four months into 2009 and already several venerable newspapers have gone out of business or moved exclusively to a web-based format.

To drive home Old Smudgy's predicament, a recent Pew Research piece revealed that less than half (43%) of all Americans believe that the loss of their daily paper would have significant repercussions on their communities. Fewer than one-third would personally miss their newspaper greatly if it ceased publication.

Most Americans would simply shrug off the demise of their local newspaper.

But even as much of the newspaper industry is faced with precipitous declines in circulation and advertising revenue, one newspaper has actually been experiencing growth.

If you guessed The Wall St. Journal, advance to Go and collect $200.

According to WSJ Managing Editor Robert Thomson, quoted in parent News Corporation's The Australian , "One of the reasons our core circulations are rising so strongly is because papers around America are diminishing. And whether it's in San Francisco or Los Angeles or Detroit, it creates a tremendous opportunity for us to gain readers who are increasingly internationally aware and also aware of their need to be well informed about the world."

It's worth noting the WSJ's aggressive marketing mindset. They're mindful of the supreme importance of content and are leveraging their leadership and expertise in this area across their various platforms, creating a powerful global brand.

As with other marketers that recognize and seize the opportunities that inhere during a recessionary period, to gain market share at the expense of weaker competitors, the WSJ is exploiting their advantage and moving full speed ahead.

If they can do it, so can you! Assess your competitive strengths, focus your marketing accordingly, muster your troops and take that next hill!

What's stopping you?