Economic downturns and recessions bring along many questions and feelings of uncertainty. This is why it is important to be able to adapt to these times accordingly and optimize your marketing strategies for your business. With the right strategies, your business will make it through a recession and experience further growth.
This article will provide a general overview of marketing strategies that helped businesses in the past with navigating economic downturns.
There are currently a variety of different opinions regarding when the next major recession will hit the U.S. economy. The entire discourse results in a very tense atmosphere in the world of economics, and businesses now have to prepare and think about how they intend to operate, now that their customers have to be much more careful with how much money they spend and what they spend it on.
In past recessions, many businesses had to cut their spending and decided to reduce the budget of their marketing and advertising campaigns. While these companies intended to save money by cutting their marketing budget, they actually ended up hurting themselves in the long run because they opened the door for competitors to gain a bigger market share.
Companies that did not cut their marketing budget were not only more likely to navigate the recession itself better, but also have an advantage in the economic recovery afterward. For example, Amazon increased its sales by 28% during the 2008-2009 recession through continued innovation and well-timed product launches.
Consumers are much more careful with how they spend their money during recessions, and businesses must cut costs in certain areas. However, it would be wrong to assume that investments in marketing campaigns aren't worth it during an economic downturn.
During the 1990-1991 recession, McDonald’s reduced its marketing spending while Pizza Hut did not. As a result, Pizza Hut managed to improve its position in the market with a 61% sales increase, while McDonald’s experienced a sales decline of 28%.
Especially in times of economic uncertainty, businesses must keep promoting themselves and address the uncertainties consumers face by adapting to their specific needs and establishing a positive relationship for the duration of a recession and beyond. Navigating these difficult times with a plan to maximize one’s presence on the market can be seen as a sign of strength and resilience for your brand and business.
Marketing campaigns should be more focused on maintaining current core customer groups instead of trying to gain new ones. This can be done by offering long-term customers promotions or discounts or by creating advertisements that create an emotional connection to your customer and provide them with much-needed emotional reassurance in times of uncertainty.
Businesses need to understand their own service or product they are trying to promote. Is it something considered to be essential that people cannot live without? Or could it be classified as a treat or luxury?
Knowing your product or service and its importance in customers’ lives is crucial to appropriately adapting marketing strategies to maintain customer loyalty. Understanding your customers’ needs and reassuring them is crucial to maintaining a healthy relationship and ensuring further organic growth for your business.
Ask yourself the following:
Understanding your base will help you narrow down the proper course of action regarding marketing strategy. People who find themselves in difficult financial situations are more likely to have a greater appreciation for marketing campaigns that focus on promotions, discounts, and emotional support than financially secure customers.
While economic downturns are challenging, they allow businesses to assess the longevity of their products or services and potentially prepare the launch of new ones.
Suppose a product or service has already been struggling before the economic downturn. In that case, it is time to reassess whether it is sustainable for the future or if the main focus of the business should shift to reinforcing its brand and promoting products and services that will remain popular throughout the recession and beyond the time period of economic recovery.
While making the step to adapt to challenging times is important, it is essential to remember the duration of recessions. Postwar recessions lasted an average of 10 to 11 months, with the recession of 1973-1975 being the longest with 16 months. To avoid being left behind during the recovery phase, assessing whether the changes to your business will allow it to grow further is essential.
The specific needs of consumers will change over time. Once the economy picks up again, it is important to be active and take advantage of a customer base that is now willing to spend more money again.
Stay in touch with your customers. Their feedback in the form of reviews and testimonials is not only important to further improve your business but also to improve your public image. The presence of reviews can positively influence purchasing decisions, as only 5 reviews on a product increase its chance of being purchased by 270%
In the case of a recession, it can take between one or two years until people’s spending levels are back to “normal.” The time of recovery is an excellent time to introduce new or improved products, as people are not only able to spend more money again but also more willing to do so. The period of economic recovery is a great opportunity for businesses to hold events or sales intended to sell old remaining inventory in order to make space for new exciting products for their customers.
If you’re interested in learning more about marketing strategies, check out this blog post which discusses full-funnel marketing strategy.
In order to successfully navigate an economic downturn, remember to stay flexible with your business and adapt your marketing strategies accordingly. This article just provided a small overview of some effective strategies that helped companies to navigate past recessions. Implementing the right strategies according to the situation will help you set yourself up for sunnier days, where you, your business, and your customers can step into the future together.
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