Why advertise in a down economy?

As the economy continues to sputter, beleaguered retailers keep looking for places to make cuts. But most experts agree that advertising and marketing campaigns aren’t the right places. They point to studies through the years showing time and again that companies that continued advertising and marketing efforts in a recession maintained or even increased sales, and were in a better position to rebound once the market recovered.

“From studies dating back to 1916 up to 2010, the message is the same,” says Mark Rothman, chief marketing officer for New York-based American Business Media, an association for business-information companies. “You benefit in the short term, and you benefit in the long term, if you advertise.” (See “Research makes the case for advertising,” on the last page.)

Today’s business owners seem to trust the research. A 2010 report by American Business Media shows that despite the ongoing economic downturn, 39 percent of businesses plan to increase their advertising budget, 48 percent plan to maintain their budget at its current level and 13 percent plan to cut their budget.

“This is the ideal time to be advertising,” says Jim Hertel, managing partner of retail consulting firm Willard Bishop in Barrington, Ill. “But you have to have a lot of faith and a strong stomach.” And a clear plan about where and how those advertising dollars will have the biggest impact on sales. Here are the top strategies for natural products retailers looking for a boost in today’s economy.

Go deeper with promotions
Although experts agree that keeping existing customers is key, opinions vary on how to retain them and whether it’s a good time to go after new customers.

A case in point is weekly circulars. Hertel says doing away with them right now is “kind of dangerous” because loyal customers read the ads, and you want to hang on to those customers. However, he says a circular isn’t likely to pick up many new customers, and other experts say because fewer people are reading newspapers these days, weekly circulars aren’t as effective as they once were.

As an alternative, Jay Jacobowitz, president and founder of Retail Insights, a Brattleboro, Vt.-based consulting service for natural products retailers, says store owners should “go deeper with existing customers.” But this doesn’t mean venturing into mass-marketing vehicles, such as newspapers, magazines or radio, that you haven’t tried before, “unless you have deep pockets,” he says. Instead, Jacobowitz recommends relying on old standbys like word of mouth and direct incentives as inexpensive and effective ways to market your store to existing customers.

For instance, Jacobowitz suggests sending frequent shoppers postcards offering $5 off on their next trip to the store. “Do a campaign: ‘Who says there’s no free lunch?’ Offer a free cup of soup or half-sandwich to customers who bring in a coworker or neighbor. And then offer [the new customer] the same thing.”

Sheldon Baker, principal of Baker Dillon Group, a brand development and market research firm in Clovis, Calif., also recommends using old-fashioned promotions such as stamping a card every time the customer buys a particular product and, after a certain number of purchases, giving the next one free or at a discount.