Adjusting Your Marketing Strategy to a Flat or Shrinking Market
One thing you need to evaluate before launching your marketing campaign is whether the marketing is growing, flat, or shrinking. When faced with a flat or declining market, consider the following adjustments:
- Reduce retail stores and other major investments to avoid losses.
- Look for ways to move your sales online to expand your market reach beyond your current borders. This one step works quickly and powerfully if you’re willing to invest in an e‐commerce infrastructure. Be sure you find ways to efficiently fulfill and ship online orders before going this route to preserve your profit margins.
- Eliminate low‐margin products from your physical store sales and put those online only. This will help you cut waste from inventory not moving off your shelves while not disappointing customers with fewer options. You see Walmart and Target doing this quite effectively because it helps maximize revenue per foot and lowers overhead costs.
- Look for other places to sell your product by exploring new distributors, intermediaries, online channels, and collaborators. You can also look to renegotiate your terms with existing partners to help increase your margins. The win for them is that they don’t lose a client, end up with less to sell, or have to replace you with another account.
By keeping an eye on market growth rates and your focus on growth markets, you set yourself up to grow your sales and profit potential at the same time. Slow‐growth and no‐growth markets are brutally competitive. To win sales in either case, you often have to slash prices, ruining your profit margins. That’s why smart marketers make a strategic point of focusing on growth markets and pay close attention to growth rates in all their markets so they stay alert to slowdowns that may indicate a need to move on.
Learning to reinvent yourself before you have to is critical to staying profitable and alive. Never assume that you can glide on your successes. There is no rest for the successful business executive or enterprise that seeks sustainable growth.
Grow revenue by adding services to support your products. Look for services that appeal to all or specific segments. The goal is to add valuable new revenue streams in case your customer acquisition stagnates. Consider these examples:
- Utility companies now offer ancillary services such as home delivery of air filters for furnaces and air conditioners, surge protection for appliances and electronics in case of lightning strikes, and more. These subscription‐based services increase customer lifetime value and current revenue.
- Software companies engage in licensing, or SaaS (software as a service) models, which ensures revenue flow every month instead of one‐time big chunks of income by selling their systems for a high price one transaction at a time. In the long term, this typically adds up to much more than they could have charged outright.
Also, look at the geographic areas you target most to assess their economic health and strength. If your current market isn’t growing, look for nearby markets with stronger population growth and economic projections. Look also at a market’s workforce to ensure that it has the skills you need at affordable salaries. In recent years, Utah has become a hotbed for high‐tech and software companies because the workforce is highly educated and the cost of living still relatively low. As a result, companies can operate at lower costs than Silicon Valley and make more profits without compromising quality of operations or human capital.