Times of economic contraction are no time for wholesalers to cut back on marketing and advertising. Entrepreneurs in our industry have to market differently, with more flexibility, more wholesale/retail branding, and by digging out prospects in new places. But even steely-eyed economists do not advise heading to the bunkers or pulling marketing budgets when the going gets tough. Here is why.

Japanese kanji for Crisis is Danger + Opportunity.

With challenge comes opportunity. The Japanese kanji character for Crisis is built from two parts: One icon means “Danger;” the other means “Opportunity.” An English translation might be: Silver lining in the dark cloud, or that bad times contain the seeds for good times.

Economic Troubles

· The U.S. credit crunch was tripped partly by investments backed with weak assets (subprime mortgage crisis). The Federal Reserve cut prime interest rates, tinkering with the cost of money banks charge each other. But banks don’t trust much these days to advance credit and guarantee payment transactions. This crunch — combined with falling demand as our “consumer-driven economy” transfers more personal budget to housing, energy and food – stretches payments on wholesale/supplier contracts, often well past 30-Days Due clauses.

· The U.S. dollar has fallen against major currencies – euro, Japanese yen, British pound, Swiss franc – in quick drops over the past six months and in a long, slow slide against the euro and yen for two years. One result of a weaker dollar is higher-priced imports.

· Export/Importers expected the U.S. Federal Reserve and European/Japanese central banks to stop the dollar slide, buying up dollars to lower the cost of imports. Economists find this “solution” as unlikely as the deus ex machina — Greek playwrights’ god in the machine who descends from above and fixes everything in the last scene. Cynics about bailing out the US$ may be right: It does not fit official goals to expand (not contract) the dollar supply to keep banking sectors from crashing; Currency Whisperers say the world is re-pegging to Euros. Expect higher U.S. inflation.

· Last, are ripple effects of higher energy costs. With oil topping $100 per barrel (energy analysts project $200/bbl), fuel costs rippled over to auto sales and domestic travel. Fuel surcharges hit passenger airline operations. And, because of higher energy costs, producer prices increased over 6% in 2007, not even counting pass-throughs like drop-ship charges to retail customers.

Marketing Opportunities

Keep marketing your brand.
Buyers take more time on purchase decisions during economic down times, and they need higher comfort levels, brands they know and trust. Count on increased competition for this contracting pool of buyer prospects. Pulling back ad spending and going quiet on your company’s brand are false economies.

Pay-per-click search advertising is cost effective because you are charged only when a prospect clicks on your ad, not for every 1,000 pairs of eyes that see your ad on search results or web pages. The bid price of general keywords you buy in PPC can be high if you sell jewelry or popular brands of footwear or handbags. But you have far less competition – and lower PPC costs — on branding keywords: Your company name, proprietary product names, unique distribution territories (i.e., TriCities only source for X-brand totes).

This is the time to advertise how your business differs from other wholesalers or suppliers. Do you have better Return policies? Live customer support? Loyal customers who had a shipping or order SNAFU resolved to their satisfaction? Can you prove lower average shipping charges or more reliable on-time shipments or a higher percentage of longtime, repeat customers over your competitors? Buyers during down cycles search for maximum value. Get company brand and benefits in front of prospects to add value and trust.

Mine new markets.
One upside to a weak U.S. dollar is cheaper exports. (Stories buzz around brands like Coach leather goods that are purchased by foreign visitors to the U.S. for cheap dollars and resold at premium back home.) An online reseller of a product that is easy to ship, even if not unique, can be competitive in Europe, South America or Australia due to the price break of selling in dollars. Also, foreign customers are used to paying higher import duties and Value Added Taxes, which you can offset with cheaper, dollar-pegged inventory.

International marketing does carry a learning curve: Product names and ad messages may have very different meanings in other cultures. International shipping fees can knock lower-margin products out of inventory. It is important to find safe payment/financing transactions – like accepting payment only through international platforms like PayPal or credit cards – and working with a reputable local agent to navigate customs fees and bulk shipments.

Apparel resellers can network through an organizer like ASAP Global Sourcing, which matches production facilities in Asia with EuroAmerican manufacturers. ASAP just completed its 10^th China Department Store mission, in which it introduces International Retailers (rather than manufacturers) to major department stores in rapidly developing metro areas of China. See asapshow.com for details on this, plus twice-yearly trade shows in Las Vegas.

Segmenting. New markets can be found segmenting prospects by size, targeting small businesses who are underserved by big suppliers. Here at TopTenWholesale we match wholesalers, importers, auctioneers and retailers through online auctions, vertical search advertising networks and product searches accessed through thousands of keywords in apparel, jewelry, footwear and general merchandise. One segmenting trend that has emerged is for online auction participants to break product lots into smaller Minimum Sale units … reaching smaller retailers. That flexibility in breaking lots and serving smaller retail customers can replace, in aggregate, higher volume sales during better economic times.

Mining smaller underserved segments is a strategy in highly competitive industries like mobile phone service. While big brand wireless companies – AT&T, Verizon – compete for market dominance by bundling broadband and consulting services to big business, regional cell phone middlemen package various equipment brands and service plans, which they market through B2B ads to companies that need 100 or fewer contracts. The 100-handsets threshold is consumer level to telecom giants, who seldom dedicate sales and customer support to them.

Localize ad campaigns.
If you sell products offline, or if you’re a wholesaler who serves regional/local resellers, get into local shopping engines. Local search marketing involves matching buyers searching for specific products or brands with brick-and-mortar sellers in a geographic territory.

Potential buyers who enter keywords into a general (Yahoo!, Google) or local (Yellowbook) search engine are matched to local merchants in two ways: Either the searcher entered local search terms, such as jewelry silversmiths in Boston. Or a searcher’s unique IP address is read by a search engine to narrow the list of results returned, such as for business lawyer.

Local search marketing is low- or no-cost advertising if you optimize your web site to be found by locals: Put city names and local landmarks in web page copy. Include retail street address and phone number on every web page so that search engine spiders can “see” location information. Also, submit retail site info to free local listings, such as Google Maps (via Google’s Local Business Center) and Yahoo! Local Basic listing. Both search engines also offer pay-per-click ads that can be geo-targeted by location or keyword.

Local search demand is increasing faster than general searches. And, local searchers tend to be closer to buying than general searchers, especially for products that require offline retail sites (fitted clothing and apparel) or have prohibitive shipping charges.

Focus on customer support.
Lean times demand more customer attention. Track return on ad spend or ROI and you’ll find it costs five times more to acquire a new customer as it does to retain an existing one. Research on business-to-business marketing – such as wholesale-to-reseller — suggests acquisition costs 10 times more than retention, because B2B purchases take more time and demand more evaluation than consumer buying habits.

Be proactive anticipating your customers’ needs. Dedicate sales and staff with industry experience to major customer accounts, contacts who can craft advertising messages and keyword marketing communications to help customers achieve their goals. Be a knowledge resource to key customers, offering industry trends, research, sales/marketing tips and evolving consumer demands that will impact their business success. Examples include an apparel wholesaler who tracks micro-trends, regional/cultural preferences and seasonal sales trend data, sharing it with reseller customers by product line.

Another example is TopTenWholesale Trends, which lists the most-demanded search terms for dozens of products – licensed children’s apparel, brand-name accessories, hottest jewelry items, emerging fashion trends – culled from wholesale and retail site searchers.

Help customers save time and get a better return on their ad dollars by recommending specialized ad networks and search sites organized around their industry, product category or community of interest. These specialized or vertical search sites eliminate the clutter of general, consumer-focused search sites, where business users often get irrelevant results. (Outsell’s 2006 study, “Vertical Search Delivers What Big Search Engines Miss,” found a 31% search failure rate for business users at big consumer search engines.)

Verticals deliver sales prospects and leads who are closer to making a purchase decision. And, because they cater to niche audiences, vertical networks offer lower-cost PPC ads and return more relevant matches to keywords pre-filtered by experts for a specific industry.