Okay, so the principle of investing during a recession having been established (see: PIMS Points the Way Past the Recession), what did my former company do as it came face-to-face with an imploding economy. In fact, the company was heading straight into a perfect storm: it serves the construction industry which was already well into the downturn (in some regions, the downturn looked awfully like a drain and the sucking sound we heard was usually caused by falling prices); the exchange rate was working against exports but opening the market to cheaper imports; the company is a heavy purchaser of oil-based raw materials which until recently were at historic highs; meanwhile, other commodities it purchases heavily were being gobbled up by the Chinese; new technologies were being introduced by well-heeled competitors…the list of threats was long and forbidding.

Time to yank out the PIMS database. The marketing budget was not going down without a fight. In fact, I had little trouble convincing my colleagues of the need to keep investing in marketing and product development. To my surprise, we had even less trouble convincing the Board. The issue arose with our attempt to determine the extent of this investment.

I came up with a plan to focus expenditures on winning technologies, products, markets and even specific customers. My Power of One presentation explained why we should put all our money on leadership products, first movers, consolidators and core markets. I was successful on the principles of the thing, but not the details. My colleagues were all for focusing, but to most that meant keeping the pressure up on those areas and pulling back elsewhere. Which translated not into the reallocation of funds and resources but into cutting what had now become ‘non-strategic’ investments. Hmph…here I was, hoisted on my own petard!

Seeing the Big Picture

It was useful, however, to take a broader view of things. Pulling back on the marketing spend (as I would normally define it) was offset by pushing ahead in R&D and operating efficiencies. What is Marketing in fact? Arguably, the additional investment in R&D and operations covered two of the four Ps…maybe even three. In fact, the company was about to embark on the biggest capital program in its history.

So now the marketing exercise was to get the biggest bang for the buck being spent on the ‘focus’ items and find a way to keep the rest sailing along in their slipstreams.

Remember the last post? “In down times, consumers and businesses alike look to safe havens, familiar brands and dependable suppliers that focus on delivering consistent value.” While we kept plugging away at our key focus items, all items were ceremoniously dumped in the safe haven / familiar brand / dependable supplier basket. Public relations, customer service, complaint handling, loyalty programs…all those things that make customers comfortable with a brand were tightly managed with the safe/familiar/dependable relationship in mind.

The jury is still out on how, ultimately, this strategy will work. But the company is sticking to the plan and, in fact, has returned to the black well ahead of schedule. The future looks bright…even if, right now, that future feels very far away.

Note: Our best wishes for a speedy recovery to David St Lawrence over at Making Ripples. The long-time blogger, author, artisan, community activist, gentleman and friend recently suffered a heart attack. This obviously strikes close to home, given my history. Take care of yourself, dear reader, and pay heed when your body sends you signals that something is wrong.