This is the fifth downturn in my lifetime and it sure is scary out there.
The stock market is a roller coaster with record losses. Events are cancelled. School is cancelled. There are even government travel bans.
These restrictions are being put in place with good reason! COVID-19 is a major threat and the pandemic is not to be taken lightly. I know I’m socially distancing, wearing my N95 Respirator, and making sure I’m not seeing anyone I don’t need to. I hope with all my heart these measures help stop the spread of this deadly virus.
As bad as things are, there is some good news. This isn’t the first downturn we’ve experienced, and we can learn from the past. In fact we should be pros at this by now. Just take a look a the list below of previous recessions:
History of Recessions in the United States:
1797, 1857, 1873, 1893, 1907, The Great Depression – Lasting from 1929 until 1938, 1945, 1949, 1953, 1957, 1960, 1970, 1973–1975, 1980–1982, 1990–1991, 2001, 2008–2009
I’ve been lucky enough to be in business since the late 90’s and lived through the last two of these disasters.
What I personally learned in trying to market in a recession, both in 2001 and 2008-2009, is you have to be careful how you react because the downturn is not going to last forever. No matter how scared you are, or what the headlines are screaming today we are just too resilient for that.
The reality is corporate managers are going to be under enormous pressure to control costs and maintain liquidity. As a result marketing budgets often appear to be a dispensable luxury in the struggle to survive.
Executives who succumb to that temptation, however, put the long-term future of their companies at risk, according to Wharton faculty and advertising experts.
Wharton faculty and advertising experts.
“The first reaction is to cut, cut, cut, and advertising is one of the first things to go,” says Wharton marketing professor Peter Fader, adding that as companies slash advertising in a downturn, they leave empty space in consumers’ minds for aggressive marketers to make strong inroads.
Today’s economy “provides an unusual opportunity to differentiate yourself and stand out from the crowd,” says Fader, “but it takes a lot of courage and convincing to get senior management on board with that.”
According to Wharton marketing professor Leonard Lodish, with demand slack for advertising services, the cost of these services goes down. This lower cost makes advertising expenditures all the more defensible in a bad business climate.
Marketing Your Way Through a Recession
In 2010, Harvard Business Review also looked at which businesses weathered the 2008-2009 recession, and which crumbled and were left behind.
According to HBR, history has shown that companies can receive great value by advertising and continuing to innovate during a down economy.
In the study 9% of the sample actually flourished and outperformed their rivals. The reasons for success varied but included factors such as being prevention-focused, promotion-focused, pragmatic, and progressive.
Sales-Focused Case in Point: McDonalds’s
Lets look at a real world example. While many other businesses struggled, McDonald’s saw a 10 percent climb in its sales in 2010.
How did they do it? Their campaigns were multifaceted and measured. The key was when sales are going up, they kept with what worked and success was not dictated by how long the campaign was running, but by how well it impacted sales.
Your Customers are Distracted.
We love our clients, but they are not thinking about us, or you right now. They are thinking about their job, their family, if they can buy toilet paper, and how they are going to finish their daughter’s science project and find some way to submit it online. With all these other things dominating their thoughts, you have to remind them you are there.
Step #1: Focus on your clients.
It sounds simple enough. To break through the noise means establishing a rigorous level of service. It is expensive to acquire new customers and relatively cheap to keep existing ones. You can save money and effort by concentrating more on existing customers through impeccable customer service.
Step #2: Advertising is cumulative.
Continuity is key. It’s important to establish a team dedicated to marketing and public relations – either internally or through an external agency. Create a plan with realistic short and long-term marketing goals to attract new customers and grow your market share.
Evaluating Existing Relationships:
A study from Canon Communications, entitled, “Selecting a Supplier in a Down Economy” offers insights into how buyers in the medical device manufacturing marketplace were behaving during the tough economic climate.
Ironically, a shake up in the economy provides the best opportunity to have new prospects discover your company. Companies that want to continue thriving are best served by stepping up the advertising/communications programs, to both prevent current customers from jumping ship and to take advantage of the new sets of eyes looking for new vendors.
Remind your customers you’re still alive and well.
According to a study published by the American Association of Advertising Agencies, “a presence in the market during tough times can act as a beacon of strength for customers and employees, and also for shareholders and investors.”
But the overriding reason to advertise in a downturn is simple: firm visibility. With the markets frozen, business at a virtual standstill and everything in a state of flux, many existing relationships are being re-evaluated, making this is the ideal time to get your firm on the radar screen of new prospects.
Let’s say you own an auto parts store. Consumers still need your company, no matter what the economy. Cars still break down. They still need windshield wipers and people will even buy those tree air fresheners. By advertising when all other stores are pinching pennies, you can scoop up a ton of new business.
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 Focus:
The market composition changes when the economy is slow. Consumer demand and preferences change so you have to adjust how you market in a recession. Astuteness lies in studying and understanding the changes in the market and in consumer’s behavior.
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, Wharton Professor 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.
Don’t Get Left Behind
According to one study, companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise. So how you end up when this is all over depends 100% on what you do right now. There’s the old saying “the best time to plant a tree is 25 years ago. The next best time is today.”
Time to start planting.
About The Author
