When recessions happen, as is the case right now following two quarters of negative growth, the temptation is to tighten belts, pull back on the spending and try to ride out the storm. In some respects this makes sense, especially perhaps when it comes to personal finance. But the financial wellbeing of your business is different to your own personal accounts.
You might think that during a recession it is time to cut back on any non-essential spending, but this may be the worst thing you can do. Marketing might actually be the best way to see out a recession – and not just surviving but actually growing your business.
In the past, many of the companies that have bounced back quickest from a recession are not those that have gone into hibernation or stuck their head in the sand like an ostrich. It is those that have been proactive and positive with their marketing that have done best.
Understanding consumers’ needs
The thinking goes that in a recession people stop spending, therefore there is no point marketing your goods and services. But this is misunderstanding the problem. What actually happens is that people spend money in a different way. As a business, it is up to you to understand this evolving consumption and finetune your marketing response to tap into it.
Indiscriminate cost cutting is always a mistake. Yes, it is wise to contain costs and think more carefully about your spending than in the boom times. You need to be more delicate with your marketing during these times, being more nimble and agile in your strategies.
Marketers usually break down their work by looking at demographics. This is the idea that you can identify your target market by defining characteristics such as age, lifestyle, gender or income. In a recession, these segments might be less relevant and it may be wiser to focus more on the emotional response and economic environment.
You need to understand how the recession affects different groups. This will include those that are the hardest hit financially. How can your goods or services offer them help or benefit during these tough times?
Then there are those who are suffering but are resilient and hopeful about a positive future. Try and tap into these aspirations for a better period to come.
Those that are well off and feel secure will consume at much the same level as before. They are usually high earners in the top 5% of income brackets. They have planned well for their future and are comfortable that they will be able to survive the recession relatively unscathed.
Finally there is a bracket of people who always live for today, the risktakers for whom a recession is no big deal. They will spend and throw caution to the wind even in tough times.
Once you understand these four types of people and how they spend, you can devise marketing strategies aimed at reaching the core groups that best suit your products.
It is this kind of marketing flexibility that means you can continue to market successfully even in tough times.
Understand your product
As well as knowing your customers and how they will react in times of trouble, you also need to understand the different types of products and where your offering fits into the scale. In general there are four types of product. These are essentials, which are necessary for survival; treats, which are indulgences that can be considered justifiable; postponables, which can be put off for another time; and expendables, which are purchases that can be abandoned altogether.
You need to decide where your product fits into this scale and then try and adapt your marketing to shift perception. For example, you might not be able to make your product move from the postponable category to the essential, but if you can nudge it into a treat, then you may be able to boost sales.
In a recession it is all about using your marketing to redirect peoples’ understanding of what you are offering. Conversely, you could also play upon this idea, using humour to reposition yourself against a certain backdrop.
Using the combination of understanding customers’ needs and working out where your product sits in the scale of necessity is key to successful marketing during a recession.
More focused marketing
Marketing costs can often be trimmed much more quickly and easily than other areas of the business. It is much easier to cancel a planned marketing drive than it is to let staff go. However, it is still possible to cut marketing costs and still be effective. It’s all about directing and managing your budget in the right way.
You need to try and move away from your standard thinking and consider more creative ways of maximising your value for marketing pound. Assess the way you have been marketing and make cuts to the least effective channels. Use social media and other cheaper forms of advertising, and remember the above messages about your brand positioning and customer needs.
Plan for the long term
Recessions can be difficult, but your marketing strategy should never just be about surviving. You should always be planning for the future and what happens when the economy begins to recover. Again, it is about being nimble and able to adapt your marketing strategy to what is required.
You should always be working hard to understand the data and use it to work out what your customers are telling you. By being more focused, you can both cut your marketing spend and improve its focus.
Recessions should not be just about slashing budgets and trying to see out the worst. Use it as an opportunity to reassess how you have been marketing in the past.
If you would like help with this or for a full audit of your marketing strategy, then get in touch with a member of our team. We believe we can help your business to survive the coming slump, no matter how long it lasts or bad it gets.