Advertising Your Bar or Restaurant in an Economic Downturn
June 3, 2010 by Michael
Filed under Articles, Featured, Restaurant Promotion
Not sure which direction to take your advertising dollars? Stopping advertising to save money is like stopping your watch to save time! You have two choices: Dig in and live on your savings and hope things get better OR take a proactive approach; increase your market share to maintain profitability while your competitor tries to keep his doors open.
Market Share Of Four Businesses During “Normal” Times
In a robust market there are enough customers for all four businesses in the market.
* Businesses that maintained their marketing expenditures in the last recession achieved an average return on capital employed of 0.6%
(Harvard Business School / 1998 PIMS Study)
Here Are The Same Businesses After An Economic Downturn
As the market contracts, the pool of customers decreases. Each of the four businesses experience decreased cash flow.
* Businesses that decreased their marketing expenditures in the last recession achieved an average return on capital employed of -.8%
(Harvard Business School / 1998 PIMS Study)
Effect of Advertising Choices
Business A chooses to aggressively advertise to attract a larger market share. Business D chooses to make across-the-board-cuts, including advertising, losing market share. Businesses B & C make no changes in their marketing.
Business A’s expanded share provides the cash necessary to return profitability to pre-recession levels. Businesses B & C continue to struggle but manage to survive. Business D continues to lose share and to lose money.
* According to the 1998 PIMS study, businesses that increased their marketing expenditures in the last recession achieved an average return on capital employed of 43%
(Harvard Business School / 1998 PIMS Study)
The Economic Revival
When the economy revives, each business retains its market share.
Business A emerges from the downturn with a larger market share and in a stronger financial position. Businesses B & C managed to survive, but have lost share to Business A. Business D became a “victim” of the recession and was forced into bankruptcy by lack of customers.
Still not sure which direction to take with your marketing dollars and plan not to be a “victim” of this current economy. The shift in marketing dollars to online promotion has had a very impressive ROI. 88% of companies that have utilized a strong social media, mobile or online campaign, have found it not only useful but productive in gaining new customers and retaining current ones.
If you liked this article and would like to learn more on how online promotions can help your bottom line, contact me direct for a FREE online promotional review. You can contact me direct at mikej@myclubcrawler.com.
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