You may remember hearing this ancient story. The Pharaoh, King of Egypt, had a dream one night. He saw seven fat cows emerge from the Nile River and feed among the reeds on the banks of the river. After them came seven gaunt and sickly cows out of the Nile. The seven sickly cows ate the seven fat cows. That same night, the Pharaoh had a second dream. This time seven heads of grain appeared on a stalk. The grain heads were full and healthy. After them sprouted seven small, sun-scorched grain heads. The small heads then swallowed the healthy heads. Then Pharaoh woke up. He knew his dreams had meaning, but he did not understand them. He searched for someone who could tell him the true meaning of these visions. He found a Hebrew prisoner named Joseph who had been known to interpret dreams. Joseph explained that the seven fat cows and the seven good grain heads were seven years of bountiful harvests. They would be followed by seven years of famine (the sickly cows and scorched grain heads). The dream, Joseph claimed, was to help Pharaoh plan for the seven bad years. During the good years, grain should be stored to have reserves for the famine. Pharaoh made Joseph the Prime Minister of Egypt and put him in charge of the grain storage and distribution plans.*

In 2001, the U.S. economy went through a recession. It lasted about 8 months Interestingly enough, we had seven years of record-setting growth until the recession of 2008. From there, the bottom fell out of the economy. The sub-prime loan crisis had banks on the brink of failure. The sluggish economy saw unemployment reach levels that had not been seen since the 1930s. The real estate market tanked. Then there was one government bailout after the other. There was a Wall Street bailout for those who had dabbled in the sub-prime market. There was a sweeping banking bailout. The Big Three auto manufacturers were in trouble. GM and Chrysler received money in exchange for governmental control of their boardrooms. Jobs were lost. Houses were foreclosed. The stock market tanked. The federal government ran up debt, and began devaluing the U.S. Dollar by putting more money into circulation to prop up the stock market. They made sweeping restrictions on the health care system and required employers to make huge changes in benefits packages paid to employees. If you are counting, this is the sixth year since the sickly cows ate up their fat predecessors.

But alas, there are signs that the worst of the years of economic famine may be behind us. So how do you market your products and services in this type of emerging economy? For the next few weeks I will be examining steps you can take to effectively market your way into better times. We will also look at what has changed from the good years to the bad and what it will take to get us back to good again.

Today I want to focus on risk in business. When times are unstable, businesses hunker down and don’t take chances. Businesses who do not risk do not grow. That is behind the no-growth economy the past six years. From one month to the next, business leaders were unsure of what was coming next. (For instance, how long has it taken to define and implement Obamacare?) It is hard to plan ahead when the restrictions on business and the true cost of doing business are constantly changing. But there is a change in perspective and businesses are beginning to try new things once again. How does marketing play into this? Marketing is where risk is tested. Let’s say you have an idea for a new service at your business. You develop a plan, train your salespeople to sell the new service and are ready to put it into the market. The risky part of the equation is this: will your customers buy it? That is where marketing comes into play. How the new service is marketed and the measurement of the success of that marketing will tell you a lot about the risks you are taking in launching this new service.

Here are some ways to measure the risks of launching something new. First, test the market. As we emerge from a bad economy, marketing has to be able to clearly define a need for new products and services. That is developed by testing out the products or services with a small group before launching to all your customers. If you design a pre-emptive test group, they will tell you a lot about how all your customers will respond to your new product or service. Does it meet needs? If so, that has to be communicated to your target through your marketing efforts. If not, you have to make a decision: do I still launch the product or do I revamp my marketing message to get around the objections. Maybe the message is just not clear enough to communicate with your target. You have to be able to adjust your message to get past these kinds of hurdles. Your effectiveness in getting past the objections will determine how successful you will be in selling your new products or services.

Second, where is your price point? We all want to get top dollar for what we do. However, we have had six years where price cuts have been a necessity to keep businesses alive. When is it safe to raise your prices? Again, it goes back to the value the customer places on your products and services. Here is where a competitive analysis will help you. What is the competition doing with their prices? Are they offering apples to apples with what you are offering? In launching a new product or service, we are trying to beat the competition and be able to justify bumping the price upwards. There are typically four reasons a customer will choose to come back to you or leave you. Price is one of those reasons. But the other three are just as important. They are quality of your product or service, the timeliness of delivering what you offer, and customer service – do they have a relationship with your employees where they feel valued and taken care of when there is a problem. If you raise your quality quotient you should be able to raise your prices. However, if your quality is good, but your delivery time is delayed and you have poor customer service, no relationship whatsoever with the client, raising your prices will be the action that ushers your customers out your door and into the waiting arms of your competition. There has to be a balance of the three other quotients before you raise prices.

Testing risk in marketing is key to your emerging from the past six years. When economies rise up from such a prolonged period of slow or no growth, they are changed in the way they do business. In other words, we will not be on automatic rewind taking us back to the fat cow years. That will take time. As we emerge, test out the market. Be keenly aware of what your customers are thinking. It is crucial for your growth and success.

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* See Genesis 41

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