How The Cycles Of The Economy Relate To Your Marketing Strategy

Being in close contact with the pulse the economy will help you greatly in preparing your business for a situation analysis

. Keep a close eye on and monitor the numbers on a regular basis of the leading published economic indicators. Look closely for all kinds of signs, for example is you notice a decline for more than two months and you see sales start to decline in your industry, be prepared to take immediately action.

When it comes to what's going on in the economy, avoid being caught into a false sense of security. Even though the US economy, and many other countries, grew at a fairly steady rate for most of the 1990s, most of the marketer's didn't keep a close eye on the economic weather. They got burned in late 2007 when the growth of the economy suddenly begins slow down. Because of this most of these marketers were having to deal with huge problems.

Don't however believe every major publication out there when they say a recession is coming. Your market will be too gun shy and conservative if you pull back on you marketing every single time an "expert" makes a forecast that the sky is falling. Some amount of risk is needed for your business to grow. Just keep an eye on the economic weather closely and you can either grow or scale back sooner than most marketers when you know it's obvious what trend is on the horizon.

Start cutting back quickly in your marketing campaigns by assuming the worse, if your sure that the economic future looks bleak. To do this I would suggest the following:

In down times it's dangerous to have large inventories, store rentals, and long-term or expensive contracts for advertising. Purchase only the amount of advertising that you need. Month-to-month advertising is a great alternative to a long term contract. The flexibility that you will get from not having to be locked in for years will more than out weigh the little extra money that is might cost you in the long run.

Keep you eye out on different cost: variable, fixed, and mixed

When a cost does not change with the sales volume, would be considered a fixed cost. A rental space or a warehouse with a long-term lease or contract would be an example of this. If sales increase or decrease you are still going to be paying the same amount on the property regardless of what happens. Variable costs are costs that can fluctuate and change depending on the commissions and the costs of goods sold. A marketing plan that emphasizes a lot on the variable costs can have some protection against a recession. This is because your costs will go up or down proportionately to the amount of sales you make. When economic indicators are making marketers nervous, they will avoid having payrolls that are large for obvious reasons. They will instead favor commission-based sales people for example or outside distributors over an in-house sales staff.

You will know when the economy is doing well and growing when all the leading economic indicators are favorable and have an upward trend for several months or more. And of course your sales figures will start improving to give you even more proof that there is major growth taking place. This would be the perfect time to ramp up your advertising as quickly as possible to take the most advantage of the marketplace and increase your sales. This is what separates great marketers from mediocre ones. They can easily gain an advantage over their competition that is less flexible by quickly reacting to the growth cycle that their competition isn't even aware of.

by: Robert D. Waltz

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