Depression / Recession = TomAto / TomAHto
It doesn’t really matter if it’s a recession or a depression. It’s bad. Unemployment is high, businesses of all sizes are shutting down, and the world is in trouble.
Survive and Thrive
To calm concerns about your company’s viability, and to attract buyers looking for vendors in whom they can be confident, maintain or increase your advertising/PR/communication efforts. Decreasing your advertising does not merely reduce your positive sales message. On the contrary, it sends a negative message that buyers are more sensitive to during the current economic climate.
Targeting – Shift and Readjust Your Marketing Focus:
For example, a shoe manufacturer will notice that during a slump, consumers forego purchasing expensive designer shoes. But the sales of moderately priced shoes meant for the average consumer will purchase these brands unabated. The shoe manufacturer will be better off shifting focus to low end and moderately priced shoes rather than concentrating on high end — designer shoes.
Similarly, financial and investment companies will find that the shares of certain industries still remain high despite an economic slow down. Industries related to food and other products that are basic to the needs of people will remain upbeat in a slump.
If you are part of a high-end or luxury businesses, you should take a completely different approach. You should appeal more to people’s emotions, Williams notes, emphasizing the need for some release or comfort in difficult times.
To the extent that advertisers feel their clients or consumers are experiencing anxiety, ads should try to empower consumers and help them think of ways to be in control in a world where they feel out of control.
Value is another important message to build into marketing campaigns during a downturn. High-end advertisers should emphasize long-term value — such as suggesting that a watch is not just a purchase for today, but for years to come.
In challenging times, marketers must also work harder to segment consumers with specific messages.
Solutions: So What Do You Do?
An economic depression may be a time to reconfigure the advertising mix between traditional media and digital or other outlets, depending on the product, brand positioning and overall corporate strategy.
Consumers may not be spending as much but they are still spending. If you’re not the company they think of when they do spend, your sales will decrease.
While your competition is cutting back, you have the chance to be the company consumers spend with now while gaining their future business as you continue to advertise in good times and bad.
That’s when you can really take advantage. The big brands will reduce their spend, giving you not only a chance to talk to people you would never usually talk to but to also tailor cost-saving messages just for them.
Innovate
In a previously held Wharton Marketing Conference titled “Connecting with the Evolving Consumer,” it was determined marketers need to be especially innovative when it comes to making sense of the shifting economy — and profiting from it.
In fact, several panelists stressed that marketers should be aware of the anxieties buffeting potential customers.
The goal is to reassure customers that in buying a particular brand, “I made a good decision. Maybe there aren’t good decisions being made around me. But with the money that I have, I’m doing the right thing and controlling my controllables.”
Don’t forget the basics!
New conditions create new opportunities. Develop new approaches to advertising such as creating a new or improved logo, getting a memorable phone number, launching a microsite with a unique URL, or present a unique value proposition that differentiates your business..
And make sure you include your Web address, email and slogan consistently on all marketing materials— including email signatures.
Keep a file of good ideas, direct mail samples, great ads, and other information. Each quarter, use this information to brainstorm new ways to help your company gain visibility and drive new business in the new economy.
Factors to keep in mind when making your marketing plans
Research the customer. Instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the recession. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less.
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.
Maintain marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions. Brands with deep pockets may be able to negotiate favorable advertising rates and lock them in for several years. If you have to cut marketing spending, try to maintain the frequency of advertisements by shifting from 30-second to 15-second advertisements, substituting radio for television advertising, or increasing the use of direct marketing, which gives more immediate sales impact.
Adjust product portfolios. Marketers must reforecast demand for each item in their product lines as consumers trade down to models that stress good value, such as cars with fewer options. Tough times favor multi-purpose goods over specialized products, and weaker items in product lines should be pruned.
Support distributors. In uncertain times, no one wants to tie up working capital in excess inventories. Early-buy allowances, extended financing, and generous return policies motivate distributors to stock your full product line.
Your sales team needs help, now more than ever.
American Business Press analyzed 143 companies during the economic downturn back in 1974 and 1975. Companies that advertised in those years saw the highest growth in sales and net income during the recession and the two years that followed.
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.
Now the one instinct to fight is to compete purely on price. According to Sable, while price is important in a recession, the majority of price-driven consumers still factor in the importance of branding.
One word of caution is if you want to create loyal customers, you don’t want to be overly competitive. You want to highlight what you do best and be sensitive to the needs of your customers rather than bashing the competition.
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.
Your people could start by joining industry associations, your local and state business bureaus, city clubs, rotary, and any other relevant groups. Volunteer to speak about your business and build your network.
All forms of media can be successful even in a recession, although the impact of digital marketing might be easier to quantify and therefore able to withstand the close scrutiny of senior executives demanding justification for any spending while their operations are under recessionary pressures, says Lodish.
Having a positive story published about your business is free and a great marketing tool.
Optics
Now lets address the elephant in the room. Business owners and managers feel that if they are laying off staff, investing in marketing would be “bad optics.”
This is the farthest thing from the truth. When under attack and your market share is eroding, now is the time to put up a marketing fight of your life to ensure your company survives.
While cutting wasteful expenses is necessary expenses on advertising and PR should only be reduced with caution.
Ultimately it boils down to the diligence, marketing savvy, business ethics, and optimism of the organizations that determine their success in a slow economy.
Budgeting
How much are you currently spending on marketing? How much can you afford to spend? Determine what you can do in-house, and what needs to be contracted out.
Bonus: Reasons why a bad economy might just be the best thing for your business.
In a bad economy, more employees will stick with the status quo, or will consider staying for other career incentives besides just a healthy salary.
Focus on improving your customer service game. Offer clients more value, like on-site consulting for your software or access to premium training videos, and offer more one-on-one attention. The more value you offer your customers, the more likely they are to stick with you despite their own financial woes.
Carve a niche for yourself in an incredibly specific service or product offering when the economy goes south. Otherwise, you’ll be forced into a game of cutting your prices.
Downsizing can be done strategically to refocus or pivot your company away from unnecessary money-wasters.
Remember, your clients are also likely in survival mode, and looking for opportunities to thrive. Give them the solutions they need to get ahead by consulting them through the process. For example, consult one-on-one with clients who need help figuring out their social media campaigns or content marketing needs.
When the economy tanks, all marketing channels struggle as once-eager advertisers cut back their budgets. This is your chance to negotiate new deals and look for inexpensive options.
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