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Business Class

December 21, 2008

Avoid the Three Biggest Marketing Mistakes Companies Make in a Downturn

Summary

What are the three biggest marketing mistakes small- and mid-sized business make in a downturn? Cutting your sales force or service le

What are the three biggest marketing mistakes small- and mid-sized business make in a downturn?

Cutting your sales force or service levels, dropping prices without a clear plan for making up the lost revenue, and not understanding how much you make on each product — so you know what to push and what to pull - are leading contenders.  Cash flow is the crucial gauge for monitoring all of this, and when it starts to flat-line it’s usually because of bad marketing decisions.

Learn how to avoid the three biggest marketing pitfalls in a downturn from Knowledge@Wharton, the Wharton School’s online business journal, in this conversation with Wharton marketing professor Eric Bradlow.

The biggest pitfall, he says, is a knee-jerk drop in price: “A lot of firms, shockingly, don’t know how much money they make on each product line. Let’s just remember that a bigger number multiplied by a negative number is a bigger negative number,” Professor Bradlow says. “So a lot of people drop price on product lines that are already not making money on a per unit basis.”