After a summer of rain, and economic doom and gloom, I thought it would be a good idea to think about the year ahead and some key things that business leaders and strategic marketers could be thinking about as we get into 2023.
The first point I will make is that we should be used to living in tough times by now! We have had three tough years, and this one will have new challenges. Personally I will always take a recession over two years of significant lockdowns any day of the week. It’s actually reassuring that we are now moving into a period of normal business problems; for these we have a much clearer playbook.
"A rising tide floats all boats….. only when the tide goes out do you discover who’s been swimming naked."
- Warren Buffett
Growth hides a lot of sins. So before we look at the playbook and what we should do, I think it’s important at the same time not to underestimate the downside of what might happen. While a shallow recession might sound OK, this will be felt differently throughout the economy. Just as some sectors did well and some got hammered when we were locked down, this year some sectors will do well and others won’t. Even within a sector that doesn’t do well, there will be some companies that do pretty well and others that get hammered. Recessions tend to kill off those marginal companies that don’t have the strength, resources, or strategy to be competitive. So there is a real competitive threat here if you are sitting back and being defensive. Right now is the time to be focused, rethinking everything and on the front foot playing with clarity and confidence.
The 2023 Playbook – what we should be focused on.
Think Strategically – now is the time to be very clear about your strategy. Key questions you need to consider are: what do you stand for/or against (purpose), who you want to serve (target market), who do you want to be (brand), what do you want to achieve (goals), how are you going to win (positioning). Having a clear strategy defining how you are going to win and getting strong alignment around this is critical to achieving momentum and action.
Focused Execution – with a clear plan, really reduce your focus to those things that are critical to achieving your plan. Most people tend to overestimate what they can do in the short term and underestimate what they can do in the long term. So reduce the big projects you are working on to have no more than 2-3 big projects each quarter and get those done. The danger is having a big list and not finishing the most important projects first.
Critical Perspective – have someone you know and trust give you some external perspective. This could be a board member, research agency, your advertising agency. But make sure you have externally pressure-tested your strategy. If you haven’t done any recent market or customer research, you might want to commission some external research to help you with your strategic process as well. Again this provides another external input into your strategy development. So many times I have seen clients question the cost of research and then be blown away by the value and clarity that external research can provide.
Increase Innovation – Have a hard look at your product/service and your full customer experience. There will be opportunities for innovation to either your core product/service or to your sales or after-sales service processes that will help you stand apart. Consider over-delivering on something – look to emphasise an aspect of your product that aligns to your beliefs and helps you stand apart and challenge your competitors.
Bold Emotional Ideas – You need to work hard to develop bold emotional ideas. Bold creative solutions to challenging problems is where you will make a significant difference. When you have a limited budget you need to make sure your communications stand out. We know highly creative and highly emotional ideas outperform safe expected ideas every time. Of course, these bold ideas need to align with your target market and brand, but they need to stand out, they need to feel fresh – they should make you a little nervous. And if they do, then they are probably going to work hard for you.
Committed Investment – There is a marketing rule that says if your share of media spend is greater than your share of the market then you are more likely to grow. Conversely if your share of media spend is less than your share of the market you are likely to shrink. Basically in order to grow, you need to have greater relative awareness amongst your target customers than you have market share. Now, in a recession it can be very tempting to reduce your media spend, particularly in long-term brand building. This will lead to a drop in awareness and a reduction in sales, and share – over time. It might not happen immediately, but it will happen. Conversely, if you increase your spend or even hold it, while others drop their spend, then you are much more likely to grow. Additionally, there may be better opportunities to buy media at better rates as overall demand falls, making this strategy work even harder.
Performance Focus – look to measure and test everything. Ensure each campaign has a realistic, measurable objective. For brand investment, make sure you have tracking in place and resist the urge to measure it with short-term impacts. Look at performance, but keep your brand and activation activity separate and resist the urge to increase price promotions (nothing will hurt your brand faster).
Brand/Activation Split – There is a strong argument to reduce brand and increase activation/ promotion spend – this is the opposite of what you should do. With fewer buyers in the market you will get a stronger recovery by keeping your brand spend high to prime your future buyers. Additionally an increased activation budget won’t help much as there are fewer buyers in the market right now. On top of that your brand activity will stand out more and be more effective at activating short term sales.
So, eight suggestions on things you can do right now to strengthen your competitive position in challenging times. Take the time to develop a plan and then get on the front foot. There are always opportunities in tough times. So make sure you are ready for them. No one wants to be caught out if the tide does go out!