This is the type of article I should wait to write until The Creative Strategist has a much more active reader base because most of the business owners who need to read this won’t be searching for it. In fact at best, most of the business owners I speak with who are competing in a declining industry only slightly suspect it. Many of them have self diagnosed their pain as poor marketing. Before we can address how to market your business when consumer demand is down, you’ll need to know how to accurately diagnose the situation.
How to Tell When Demand is Decreasing
Identifying a decline in demand can be very difficult without easy access to the right information. That’s why my first stop is usually Google Trends. This tool can help you infer interest in your industry over time. It shows an index of search volume for topics, and allows you to compare search terms to each other.
Sometimes the information in Google Trends can be misleading so don’t jump to conclusions. Your industry may not be in decline. Instead, customers may have stopped searching for your categories, and moved on to brand searches. Consider the following search trends for video streaming:
Category Searches for Video Streaming
At first glance, it appears that interest in “video streaming” and “watching movies online” are on the decline. After evaluating similar search terms, some businesses may make the wrong move. Rather than disinterest in the category, what if consumer search habits had merely evolved? Maybe they found the video streaming service they like most already, and now they just search for the brand (or go directly to the site). Let’s add a couple of brands (Netflix and Hulu) as search terms to the graph. Here’s what we get:
Category Searches & Brand Searches
You can see that the interest in watching movies online has been replaced by an interest in Netflix. Let’s look really closely at just one year in this example. Near the end of 2009, Netflix had just as many searches for their brand as there were for the category. This is typically great news for any brand, unless you have a competitor (like Hulu) that’s beating you – even by just a little.
The Deciding Factor (Netflix vs. Hulu vs. Category Search)
Hulu and Netflix were neck and neck with the most popular category searches as well as each other until Neflix established market leadership. If you’re business is Hulu in this example, you’ll need to take on your industry’s Goliath to stay alive.
If you see nothing but decreases in brand searches as well, you can confidently infer that your market is in decline. Now you have three options: either (1) increase demand, (2) quickly acquire more market share, or (3) diversify your product offering. Each of these three options probably deserves its own article in the future, but I’ll address them briefly here.
How to Increase Demand
I realize that this isn’t nearly as easy as jump-starting a car, but that’s exactly what you have to do. You need to breath new life into your industry through push advertising. This practice seems to be dying for many SMBs (small to medium businesses). Pull marketing efforts have become addictive because you can track the entire process. There’s too much unknown in push advertising, and too many variables. Push advertising is what led John Wanamaker to say:
Half the money I spend in advertising is wasted; the trouble is I don’t know which half.
Don’t let the unknown scare you away from push advertising. Recent updates have been made to internet advertising platforms to improve the control you have over who sees your ads. Just remember that anything you do to increase demand for your industry as a whole will benefit your competition also. That’s why smart companies reach out to their competitors to pool resources when interest begins to wane .
The Got Milk ad campaign is a great example this. To this day, every time I see cookies, brownies, or even peanut butter, I start looking for a cold glass of milk.
It doesn’t need to be played at the Super Bowl for you to get the amount of exposure you need. You simply need to illustrate why your product or service is more important than ever now.
How to Capture Market Share Quickly
If you can’t revitalize the market, the next best thing is to quickly capture as much market share as you can. This can help you grow in the short run, but savvy businesses recognize that this only buys them time. They’ll still need to address the decline at some point. Most businesses capture market share in a declining industry by either buying out their competition or aggressively establishing their own brand leadership.
This is anything but straightforward, and probably demands it’s own future article. If you’ve noticed a decrease in business because of consumer disinterest, your competitors probably have too. This is a great time to buy them out. Most companies are more likely to sell at a discount when they believe the market won’t get any better.
Building Brand Leadership
The hard part about this strategy is that it typically takes a lot of time or a lot of luck. But remember that luck favors the prepared. Look for ways to quickly win the brand leadership war. In the case of Netflix and Hulu, the battle was won in about 6 months with the introduction of Netflix streaming apps on the Wii and other systems. Look for that slight difference that sets you on a course to rise above your competitors.
If there’s nothing you can do to revitalize demand in your core products/services, start looking for ways to diversify. One of the best ways to get started is to identify your byproducts. What products/services do you have that could bring in their own revenue stream? I’ve seen service businesses that had to develop their own software to manage their business. When they needed to diversify, it was fairly easy to monetize their software as a service.
Whether you choose to give your industry a jump start with great advertising or diversify your business, you should be able to establish a pattern of growth. If you choose a short-term solution, be quick about it and recognize that you are just buying yourself time to solve the bigger problem.
As always, if you think I’m off base on this, I’d love to “argue” with you in the comments below.