Increase your market by closely watching economic cycles
Getting ready for a situation analysis can be a simple as keeping in close contact with what's going on in the pulse of the economy. Use the leading published economic indicators to keep a close eye out and to monitor the numbers on a consistent basis. Be prepared to take action if you see sales slow down in your industry and noticed this decline for more than two months in a row and look closely for any other signs.
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. These same marketers were now faced with major 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.
If you're sure that the future economic forecast is going to be poor, I would assume the worst and start cutting back on your marketing aggressively. In order to accomplish this I would try the following:
Avoid too big of a commitment. In down times it's dangerous to have large inventories, store rentals, and long-term or expensive contracts for advertising. Don't purchase anymore advertising then you need to. A great alternative would be to buy month-to-month advertising. This may cost you more in the long run, but the flexibility you will have will be worth more than a lower discount you would've gotten with a long-term contract.
Look out for variable, mixed, and fixed costs
When a cost does not change with the sales volume, would be considered a fixed cost. An example of this would be a long-term lease with a warehouse or rental space. 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. You can have some protection against an economic downturn by focusing on a marketing plan that has variable costs. Because your costs are directly tied to the amount of sales you make or don't make. A wise marketer will avoid having big payrolls when they can see the economy isn't doing so well and indicators are making them nervous. 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. You also see major growth in your sales figures over time giving you more proof. As economic growth trends start to kick in this would be a great time to really ramp up your advertising at a fast rate so that you can increase your sales and aggressively take advantage of the marketplace. This is where the great marketer will shine. 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.
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. These same marketers were now faced with major 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.
If you're sure that the future economic forecast is going to be poor, I would assume the worst and start cutting back on your marketing aggressively. In order to accomplish this I would try the following:
Avoid too big of a commitment. In down times it's dangerous to have large inventories, store rentals, and long-term or expensive contracts for advertising. Don't purchase anymore advertising then you need to. A great alternative would be to buy month-to-month advertising. This may cost you more in the long run, but the flexibility you will have will be worth more than a lower discount you would've gotten with a long-term contract.
Look out for variable, mixed, and fixed costs
When a cost does not change with the sales volume, would be considered a fixed cost. An example of this would be a long-term lease with a warehouse or rental space. 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. You can have some protection against an economic downturn by focusing on a marketing plan that has variable costs. Because your costs are directly tied to the amount of sales you make or don't make. A wise marketer will avoid having big payrolls when they can see the economy isn't doing so well and indicators are making them nervous. 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. You also see major growth in your sales figures over time giving you more proof. As economic growth trends start to kick in this would be a great time to really ramp up your advertising at a fast rate so that you can increase your sales and aggressively take advantage of the marketplace. This is where the great marketer will shine. 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.
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