Economic slumps are bound to happen from time to time. Looking back at the past few decades we can remember the “Great Recession” and the housing market crash of 2008, or the deep economic downturn after September 11th, 2001. While we never look forward to a recession, from a marketing perspective, these challenging months become a rare opportunity to connect with our target markets and send a positive message to prospective customers.
Whether your business is B2B or B2C, your marketing message during difficult times should shift towards a tone of community involvement, to create an ongoing dialogue between your customers and staff.
This article is the first of two. Here, we’ll explain why recessions become the perfect time to double-down on your marketing efforts and explore ways your marketing message must change. For part two, we’ve developed a guide of actionable ideas you can take to move forward with, right now.
First, let’s acknowledge that:
- Know that during a recession, your marketing tactics and strategies will change.
- Your message must be dynamic and fluid, and you’ll need to move quickly.
Before we get into any of that, let’s have a quick refresher about marketing strategies and tactics during recessions.
Marketing Strategies v. Marketing Tactics During Economic Contractions
We’ve touched on this with other marketing blogs. Marketing strategies are the primary goals you’ll be working towards with your advertising. Recession goals very likely be different from your “good times” goals. For instance, in 2019 when the economy was booming, you may have focused on increasing the size of orders customers were placing or creating a wider profit margin. Now in 2020, you’ll be looking to solidify your relationships with customers.
Tactics are the specific actions your organization was taking to achieve your goals. There are thousands of marketing tactics, but yours might have been:
- Opt-in email campaigns
- Content development
- SEO, PPC and Social Marketing
- Branding, logos and image development
- Radio, television or program book advertising
- Experiential marketing
Naturally, when your marketing strategies change, many of your tactics will need to be adjusted. So the question quickly becomes: What messages matter most during a recession? And how can we spread that message soon?
Marketing During a Recession — Recognize Changes in Consumer Behavior Proactively
During the last economic contraction in 2009, McKinsey research found that “in any given category, an average of 18 percent of consumer-packaged-goods customers bought lower-priced brands… Of the consumers who switched to cheaper products, 46 percent said they performed better than expected, and the large majority of these consumers said the performance of such products was much better than expected. As a result, 34 percent of the switchers said they no longer preferred higher-priced products.”
- Those same studies found an additional 41 percent said that they still preferred the premium brand, but no longer felt it was worth a higher price.
As we can imagine, changes in consumer behavior that affect B2C sellers ultimately lead to changes in the B2B realm. When end-users stop choosing specifically top-shelf brands, providers of raw materials or packaging feel the shift.
Consumers don’t stop buying when a recession strikes, but they do change buying behaviors.
To put a finer point on it:
- They are far slower to make significant purchases — cars, homes, appliances, and the like.
- They’ll spend more time using technology to research first-time purchases — and first-time providers — even if these aren’t significant buys.
- Consumers may switch from more prestigious or costly brands to more economical versions of the items they deem essential.
- Hoarding is an example of unusual behavior that may rear its head among consumers during a recession. In these instances, consumers won’t care what level product they’re purchasing, as long as they’re buying enough of it.
It becomes a balancing act for marketing professionals. You may find yourself asking: “How can we attract new business and keep margins healthy while competing with economy brands?”
But you’re asking the wrong question!
Your goal during an economic contraction should be to encourage brand awareness and promote a sense of community among your customers, centered around the brand. Your questions should read more like:
- How can I use my product/service to bring customers together?
- Do I have platforms in place to promote a sense of community among my customers?
- How can my brand provide a memorable service during a time of upheaval?
- What can we do to make customers feel this product is healthy and safe?
- Is my company behaving in socially responsible ways that will be remembered later?
- How can I add value to my high-end products to prevent cautious buyers from switching brands?
The Slippery Slope of Price-based Marketing
Understand that price-based selling (advertising your product as the most affordable option) is a decision you’ll never be able to come back from, once it’s made.
If your message has always been centered around being the cheapest choice, that’s one thing. But don’t go looking to change your entire reputation from a luxury brand to an economical one during a recession.
- Once you drop the prestige level, it’s nearly impossible to come back up.
- You’ll also lose dedicated luxury-level customers.
Value-based marketing can be worthwhile during a recession, but your new marketing strategies and tactics mustn’t appear too opportunistic. You risk losing your entire customer base.
Instead, find ways to add value to your products to keep them competitive with lower-priced brands, and focus on customer loyalty.
For instance, let’s imagine you sell high-end shampoos and bath goods. You sell B2C on your website and B2B to salons and spas. Due to the COVID-19 recession, sales are down by 60%.
- If you were to drop prices down to “economy” brand levels and push into discount department store retails space, you’re looking for a piece of market share that’s already seriously competitive.
- Furthermore, your current customers will question the move — did you change your formula? Is this product as good as it once was?
- Once you drop your price and placement, your luxury-level customers will either start purchasing a different luxury-level brand OR consider trying all the other products in the economy shelves. Either way, you’ve lost them for a slimmer margin on a more competitive shelf.
You’re far better off creating value promotions and encouraging customer dialogue with technology. For instance, sell your luxury shampoo at the same price but include a free bottle of bubble bath product for your customers to try. Ask them to review the product on your website or forum, and offer them a significant coupon or gift certificate for doing so. Remember, you don’t want to lose prestige or lower your future margins, but you can get them interested in a new product.
Marketing during a recession becomes all about building your relationships with users. To that end, let’s talk about the right kinds of messages that consumers want to hear.
Sending the Right Message with Your Marketing Efforts
American consumers want to feel healthy and safe during times of economic instability. A focus on family health or personal wellness is ideal, as are concepts of community and togetherness. Messages of financial security or easing your customers’ concerns about their ability to pay bills are incredibly meaningful during these times.
As you see, your marketing strategies become less about increasing order size, and more focused on supporting your customers emotionally – even financially! This is your turn to give back in whatever way is appropriate for your organization.
We hope you’ve enjoyed this article, it’s a bit longer than what we usually write. Stay tuned for Part II, where we’ll provide you with an actionable guide for recession marketing, and explain ways you can build community involvement around your brand.