Navigating a Possible Recession: How Marketers Can Plan for Tough Times Ahead
When an economic recession hits, it switches to survival mode, cuts deep, and reacts differently. However, we can control how we plan, prepare and react. Recessions are technically defined as two consecutive quarters of negative economic growth and are characterized by high unemployment, low or negative GDP growth, falling income, and slowing retail sales.
In a recent survey, 70 percent of Americans said they believe a recession is imminent in 2022. According to Bill Conerly (Senior Contributor, Forbes), the recession will begin in late 2023 or early 2024. Needless to say, not all experts agree on the timing, or whether it will happen at all.
Before talking about the prediction of recession, let’s remember March 2020 (COVID-19). When the news spread that an epidemic would hit globally, nobody thought the whole world would suffer this much & didn’t take that much preparation to face this during that period. As a result, almost everyone suffered miserably. Let’s see the predictions for the emerging recession:
- Marketing budgets will hurt brand growth in the long run
- New customer segments will emerge and the winners will find the market for them
- ‘Nice to have’ industries will need to innovate to be relevant
- Digital marketing will become more critical to the brand’s success
- Luxury brands will continue to outperform despite the recession
Consumer & brand psychology during a recession
Consumers often feel confused during economic downturns. They think customers will start closing their wallets during recessions. They will force themselves to prioritize their purchasing decisions and reduce costs. Customer psychology and buying patterns are relatively predictable, and so are company responses. Once sales begin to slow, brands often cut costs, lower prices, and reduce R&D investments. One of the first things companies do during an economic recession tends to be to cut marketing team budgets or get rid of them altogether. Businesses create a disturbing narrative where the marketing department is treated as something disposable and all the time, effort, and money invested in marketing suddenly become irrelevant.
Recessions and Marketing Movements of 2023
“Don’t push people to where you want to be; meet them where they are.”
— Meghan Keaney Anderson
Every recession brings a new and completely novel set of challenges for marketers. With that being said, a recession doesn’t mean that your brand has to face hardship, or your marketing budget and campaigns need to be slashed.
As marketers, an impending recession presents an opportunity to rethink marketing strategies, rebalance team efforts, and refocus on ways to connect with customers over the long term. While we can’t control the highs and lows of the global economy, we can swivel our strategies and adjust the way we market our products and services to weather the storm.
Marketing is often seen as negotiable. But in a world where consumers are inundated with advertising and massive amounts of information, cutting through the noise is more important than ever. Just think: How will your potential customers know to come to you for what they need in their time of unpredictability?
In times of slow economic growth and volatile markets, what’s really important is having a strategy that can survive or even capitalize on business. Fear, greed, and hope have destroyed more value than any recession. When the worst happens, the following moves will be lifesavers in your back pocket.
1. Marketing historical facts
Marketing is a process that requires consistency over time to be successful, and the best time to plan or start to work on a recession is before the recession hits. Time and time again, history has proven that companies willing to invest in marketing enjoy rapid growth. As the proverb says,
“When times are good, you should advertise; when times are bad, you must advertise.”
During the recessions of 1981-82 and 1974-75, companies that continued to invest in advertising grew more than their competitors that shrunk or eliminated their budgets. In 1981-82, this growth was a staggering 256%. In the 2008 recession, many businesses debated whether to trust the economy and advertising spending fell 13%. Yet statistics show 3.5 times more brand visibility for companies and organizations that maintained their marketing output. Walmart for example, continued to invest in data-driven marketing and product development during the 2008 economic downturn with great success.
2. Take care of your existing customers
When the economy is down, no one is spared. This is when you need to give more focus on your existing clients and fully appreciate their value. Client retention is essential to the success of companies, as the bulk of their revenue depends on the services purchased by existing clients. Focusing your efforts on servicing existing clients offers five to 25 times greater yield, with far less effort and cost than it takes to acquire new clients.
3. Consider before offering clients
“Be fearful when others are greedy and be greedy only when others are fearful.” – Warren Buffett
During a recession, clients look at purchases more carefully, weighing perceived value for money, often reviewing service bundle offers and pricing models. Businesses in the retail sector will encourage purchases with incentives such as product sales, coupons, and interest-free credit extensions. Companies may use other methods, such as offering new services at different price levels. Marketers refer to this approach as introducing a “fighter product or brand”, where a cheaper version of a top-of-the-range product or service is sold under a different name.
4. Outsource your marketing
Marketing has become more complex in recent years, emphasizing the need for more tailor-made approaches and cross-media activity. Marketing strategies and actions have adapted and are now more versatile and diverse, sometimes it is more difficult to win new clients for in-house teams. Marketing can be completely outsourced, completely in-house, or a combination of the two. After all, marketing firms typically have a broader range of offerings, a team with broader expertise, and the ability to work more efficiently than in-house teams. If your in-house team is overstretched and running behind schedule, it may be time to outsource your marketing. Ryan Kahn once said,
“Master your strengths, outsource your weaknesses.”
Great layoffs and financial downturns can mean that companies struggle to source and retain skilled marketing staff in-house. Marketing outsourcing is the solution and now, like never before, brands can outsource their marketing projects to professional marketing firms and expert teams.
5. Focus on non-impact industries
In times of economic crisis, not all markets or business segments are affected equally or even adversely. To mitigate the seasons when your business experiences no growth or losses, your company can look to industries that are stagnant due to financial storms. Healthcare and government industries, which recent history has shown are two industries to watch, are nearly recession-free.
6. Refresh marketing strategy and plan
The aftermath of a recession can affect client purchasing patterns long after the financial crisis has resolved. Companies often assume that it will be “business as usual”, and that clients will resume their purchasing habits or behave in the same way they did during previous economic downturns.
In digital marketing, some things change quickly. As people are more engaged in social media, digital, and personalized experiences, as well as want faster service; your brand’s social media activation can engage them in time. Let’s see some ways to refresh your digital marketing strategy and plan:
- Segment your customers
- Supplement inbound marketing with account-based marketing (ABM)
- Invest in long-form content
- Add a chatbot to your website
- Tweak your website for better conversion rates
- Perform A/B testing, or “split testing”
- Satisfy Google’s updates
- Optimize your website for voice search
- Expedite your inbound campaigns through targeted social ads
7. Get more out of your marketing budget
Recessions tend to require more from a business to be successful. Competitors facing financial difficulties may lose their marketing focus, postpone projects, partially withdraw some activities, or be hindered from launching new services. This means your business will be at an advantage, gain additional visibility and, essentially, do more with less budget. With media advertising costs falling (ad spending fell 13% during the last recession), marketers can now buy more ads for less.
“You get recessions, you have stock market declines. If you don’t understand what’s going to happen, then you’re not ready, you won’t do well in the markets.”
– Peter Lynch
The aftermath of the COVID-19 pandemic and the ongoing war in Ukraine has led to a significant economic slump in 2022. Prices for some common commodities are reaching record levels, economic growth is slowing and inflation is rising. Although the global economy is experiencing turbulence, this also offers unique opportunities. The recession is going to impact your business in some way no matter what. Marketers should study the market and make dynamic decisions that will benefit them. Effective marketing during a recession is the key to coming out of that period successful and profitable. Even in a recession, there are plenty of opportunities to build customer loyalty and gain new leads. Additionally, you should focus on digital marketing strategies such as effective content marketing, data-driven campaigns, email campaigns, and effective search engine optimization (SEO) strategies, etc. Also, these are less expensive than traditional marketing tactics. The discipline and consistency you develop around a marketing strategy and execution during a time of economic downturn will serve you extraordinarily well when the economy recovers. Hence, it is better to be prepared for challenging times. After all, opportunity does not waste time with those that come unprepared. It is high time companies start developing marketing strategies for the tough times ahead.
Want results-based marketing solutions? Visit: notionhive.com