When is it appropriate to save money on advertising?
To answer this question, let’s review the different phases of business and see how promotions/marketing play a role in each step.
First, the most effective way business managers make decisions is through the use of statistics. It may be as simple as collecting daily, weekly, or monthly sales figures, but these numbers are vital to making informed decisions. Because many people are visual, it works best to graph the numbers so as to easily see trends over time. Observing trends leads to informed decisions rather than making decisions based on gut feelings.
Early in business, sales data is usually quite sparse. Logically, this is an excellent time to be promoting your business, making conversations with future customers, educating the public about what you do and what makes you special.
Once your audience learns about your business and sales start to pick up, the graph should show an upward trend toward the right. How do you maintain that upward trend? Continue promotions exactly as you have been. If promotions created the growth, then continuing the promotions will continue the growth.
Sometimes things happen, changes in the marketplace, pet food recalls, other health-related news stories, such as diet-related DCM in Golden Retrievers, that may impact sales creating a short-lived downward trend. In this emergency situation, it’s important to promote and maintain conversations with the public so they understand how your product continues to meet their needs.
Once business is built back up and going along great, and you are growing at the annual rate of 30 to 60% typical of a real food, small pet food manufacturer, the way to maintain these trends is to continue promotions.
Emotionally, it’s understandable that when one’s business is contracting, for whatever reason, be it a recall, pressure from government agencies, or stories in the press, it’s logical to want to save money (as there is less available), and decrease promotions. However, promotions are how growth happened in the first place, therefore it is statistically illogical to decrease promotions when sales trends are down.
The only time to stop promoting? When you are ready to retire. One caveat – if you want to sell your business to another so that the customer continues to be serviced, it’s essential to continue promotions for your best sales price.
When is it appropriate to save money on advertising? When you don’t want your business to make any money.
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