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Winners and losers in a troubled economy

Martyn Perks
Winners and losers in a troubled economy Martyn Perks
Hardly a day goes by without a story about how the digital sphere is transforming lives and business conduct. Take Facebook, the social networking phenomenon. Its massive growth and popularity has propelled its founder, 23-year-old Mark Zuckerberg, onto the exclusive Forbes' super-rich list. With a fortune of $1.5bn, Zuckerberg is probably the youngest ever self-made billionaire.
Amid all the talk and speculation about the economic downturn and consequent tightening of marketing budgets, digital emerges as the sphere where opportunities remain to promote your business, engage existing customers and attract new ones -- all with relatively low costs. One thing will be certain: winners and losers will emerge over the coming period, defined by how they chose to adapt to a tightening market and their increasingly demanding customers.
The web certainly offers expanding opportunities for marketers to communicate with wide and diverse audiences, but it also throws up a whole new set of new challenges as consumers' expectations and values shift. Success stories such as Facebook and YouTube demonstrate our fascination with social networking and self-expression online. These sites are variably lauded and derided for their social effects, but the fact that a multitude of companies try to emulate them demonstrates the significant mark they've made on the web.
Yet it is clear that emulation of hyped-up 'Web 2.0' tools is not enough. And neither can marketing in itself be the saving grace for a business. Many businesses still struggle to provide products and services that consumers really value and get excited by. Adding trendy online gadgets is no substitute for genuine innovation in products and services.
It is clear that consumers value the internet for providing choice, cutting out unnecessary middlemen and making brands more transparent, but businesses still have a long way to go in satisfying our needs and expectations, especially during a period of economic uncertainty. More and more retail is carried out online. A recent survey by Prospectiv showed that while 84 per cent of individuals polled tend to shop online, hunting out bargains in search of the best deal, 74 per cent still wanted more communication like newsletters and emails outlining promotions and special offers. And a recent poll of 1000 consumers carried out by InQuira showed that only 44 per cent believed information on company websites met their needs.
Realising that customer habits are changing is vital, especially in an economic downturn, when budgets are likely to tighten. The internet is now the frontline of business, but if the craving for convenience, utility and value on the part of the customer, isn't properly met, they are likely to lose patience and look elsewhere. While the internet provides new opportunities for marketing, it is also a more level playing field and so adds an extra element of competition. Mistakes and weaknesses are more apparent when comparing and contrasting businesses is easier than ever for consumers.
But those businesses that get it right will draw considerable gains from being able to market, target and engage customers online. Unlike for traditional outlets like television and newspapers, the efficacy of digital media is more straightforward to measure and so marketing spend becomes easier to quantify and justify against the bottom-line.
This is not to say that bigger brands should stop spending money on traditional marketing. Highly visible campaigns are useful in reminding the public of their presence. However, the competitive edge will be with those who successfully manage to integrate their offline and online marketing efforts.
Put simply, customers will increasingly want greater evidence of value before parting with their cash. but convincing them to do so can only partly be achieved through intelligent marketing. Businesses need to innovate and improve with new ideas, products and services -- especially during an economic downturn.
With a growing climate of economic pessimism ahead of us, it is all too easy to get bogged down in cutbacks and to focus marketing efforts on activities that have already proven popular. This may seem a safe approach, but in order to remain dynamic, businesses could do well to return to the drawing board and rethink their opportunities.
As a reminder, this is what Apple did during the IT-related recession in the late 1990s. They emerged stronger as a company after the groundbreaking innovation of the iPod. It sent shockwaves through the market and left the competition standing, unable to bounce back in the same way as Apple has. They stole the march on the competition when least expected.
Businesses that are unable to reinvent themselves through new product offerings should consider how to extend the value of their products by creating a service around it in order to extend their utility and lifespan.
Companies must also seize the potential of their online presence to simplify how customers understand their offering. Customers want more detail and transparency online, not pushy sales information. Also, providing online after-sales support, including offering downloadable warrantees, suppliers listings, product installation instructions and answers to frequently asked questions, helps reassure potential buyers.
Those who fail to provide clarity and detail will stand out because they do not understand what customers need to make informed choices. Such services complement any marketing activity in creating a well thought out online business strategy and are all valued by consumers. Businesses that get them right now, when competition is substandard, can use their online presences to make major inroads into customer engagement. At the very least, these businesses will have managed to continue a meaningful relationship with a customer base, ready to tap into when the economic climate turns more positive and growth picks up.
Martyn Perks is a consultant, cScape.

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