How To Survive A Recession With These Marketing And Advertising Strategies
“When times are good, you should advertise. When times are bad, you MUST advertise.”
When a recession hits, marketing is typically one of the first places business owners are tempted to cut. This is a mistake. It’s well documented that slashing the marketing budget in a downturn will only help defend profits in the very short term. Ultimately the brand will emerge from the downturn weaker and much less profitable.
Building and maintaining a brand that consumers recognize and trust is one of the best ways to reduce risk when the economy takes a turn for the worst. That’s why, in each recession cycle, the companies with a strong brand presence have come out on top.
Brands can project to consumers the image of corporate stability during challenging times.
Historical Precedents
In a study of U.S. recessions, McGraw-Hill Research analyzed 600 companies covering 16 different SIC industries from 1980 through 1985. The results showed that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn’t keep up their advertising.
Sales for the companies studied were relatively even before the recession, but varied sharply during and after it. Companies that cut advertising during both of the recessionary years maintained flat sales during the period and only modest sales growth in the following two years. In contrast, the companies that maintained their advertising experienced significant sales growth throughout the four-year period.
In analysis of the 1990-91 recession, Penton Research Services, Coopers & Lybrand, in conjunction with Business Science International, found that better performing businesses focused on a strong marketing program enabling them to solidify their customer base, take business away from less aggressive competitors, and position themselves for future growth during the recovery.
Focus On Family Values
When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising to replace images of extreme sports, adventure, and rugged individualism. Zany humor and appeals on the basis of fear are out. Greeting card sales, telephone use, and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends.
Emphasize Core Values
Although most companies are making employees redundant, chief executives can cement the loyalty of those who remain by assuring employees that the company has survived difficult times before, maintaining quality rather than cutting corners, and servicing existing customers rather than trying to be all things to all people. CEOs must spend more time with customers and employees. Economic recession can elevate the importance of the finance director's balance sheet over the marketing manager's income statement. Managing working capital can easily dominate managing customer relationships. CEOs must counter this. Successful companies do not abandon their marketing strategies in a recession; they adapt them.
Focus Intently On Existing Customers
Regardless of your industry, your brand’s biggest asset during a recession will be your existing customer base.
Make sure your marketing strategies are focused on your most valuable, happy, loyal customers. Bend over backward to keep them happy, and be sure to reward their loyalty. These happy customers will repay you in the form of recommendations and reviews, especially if you can use analytics and data to show how you’re benefiting their company during rough times.
Adjust Pricing Tactics
Customers will be shopping around for the best deals. You do not necessarily have to cut list prices, but you may need to offer more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers, and price smaller pack sizes more aggressively. In tough times, price cuts attract more consumer support than promotions such as sweepstakes and mail-in offers.
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