I think we can call it official: the economy is a stumbling, faltering mess.
The growing rumbling of the recessional snowball can be heard loud and clear on both sides of the Atlantic now, and there are no signs that it’s going to miraculously disappear any time soon. In fact, this may be one of the most fundamental marco-economical shifts in many decades, and I can’t help but think that the magnitude of the possible changes makes us all freeze like rabbits in a car’s headlights. We’re not quite sure where it’s going and we have no idea how it will end.
“Recession” is a word that also causes marketeers sleepless nights. Suddenly, nothing across any of the four “Ps” is the way it was yesterday. Consumers have a different mindset about spending. Price elasticity curves change. Managing the company balance sheet takes priority above all else (especially marketing), and as marketeers we’re expected to do much more with much, much less.
Of course a recession affects different market sectors in different ways and to different levels, so a one-approach-fits-all for recessional marketing doesn’t exist. However, here are some key truths that hold true for all brands during a recession:
Economical uncertainty leads to uncertainty on a personal level. Consumers worry about their jobs, their household budgets, their savings. They tend to cut back on discretionary spending, postpone larger purchases, trade down or buy less. As a recent Harvard Business School article said: “Yesterday’s must-have features become today’s can-live-withouts”.
Seth Godin said: “When times are good, buying things is a sport. It's a reward. The story we tell ourselves is that we deserve it, that we want it and why not? When the mass psychology changes and times are seen as not so good, the story we tell ourselves changes as well.”
The answer? Address the consumer’s changing priorities and needs in your communication. Try to strengthen the relationship with your customer by offering great price/quality, stellar customer service and keep your brand top-of-mind with the right messages and communication efforts.
Gimmicks are out. Quality is in. Focus on your product’s reliability and performance. Reassure your consumers that you will continue to focus on quality. Products that address the new realities of the consumer – both on a product level and a communication level can do well in these uncertain times.
It goes without saying that most consumers become more price conscious during a recession. I’m not saying change your pricing strategy completely, but in the current economic climate, price elasticity will decrease in most sectors and consumers are more likely to shop around for the best deals. Offer consumers temporary price promotions, bulk buying discounts or bundled product packages to appeal to a value & budget conscious mind-set.
Don’t forget that your channels suffer too during hard times. It may prove impossible to retain your channel breadth & depth, but it would be wise to evaluate partnerships and support your strongest partners. Training them on your products and providing them with the support to promote your products will lead to a stronger relationship and will see you take market-share at a time when everyone else is cutting back!
“Successful companies do not abandon their marketing strategies in a recession; they adapt them” says Harvard Business School.
One of the most forgotten advantages of a recession is the fact that marketers have more bargaining power with media outlets. With marketing spend drastically cut, spots open up for the taking at reduced prices – paradise for astute negotiators!
Although marketing is about creating a long-term sustainable advantage, promotion during economically difficult times can focus on increasing short-term sales too. Instead of campaigns focusing on corporate image, now’s the time to invest in cross selling and up selling tactics, point-of-sale actions, direct marketing activities or channel promotions to increase revenue.
As I wrap up this article, the news has just come in that Tokyo’s NIKKEI index fell to its lowest point in 21 years. These uncertain times are the stuff nightmares are made of, for consumers and marketers alike.
The best advice I’ve had to date? Don’t panic. Stay focused. Spend frugally. Be ready to adapt swiftly.