Why Marketing Makes Even More Sense During A Slowdown
Your first response to an economic downturn is to keep in step with the sluggish markets. Most of the time, it means cutting down on marketing budgets. For instance, during the Great Recession of 2008, ad spending decreased by 13%.
Nothing could be farther from the truth. Roland Vaile and Reavis Cox, who examined the 1920-21 recession, found that companies that invested in marketing continued to drive sales and growth. The 2007-2008 economic downturn also saw a similar pattern, with businesses that reduced marketing budgets performing better but only for a short period.
The long-term consequences of reduced marketing are the same as those initially caused by a recession. So what happens when you continue marketing during a slowdown?
Look no further to find out more.
Marketing Is Essential in a Recession
There are numerous reasons for investing in marketing during a slowdown.
Retain Your Customers
A recession changes customers' spending power. So, their priorities change even if your customers wish to stay loyal. That does not mean businesses stop marketing to them completely. The right strategy requires a deep dive into the customers' needs and then tweaking and adjusting strategies, tactics, and products to their changing demands.
Gain More Attention
During a recession, most businesses cut their marketing budgets. As a result, they lose their voice and brand value. Continuing to invest in marketing will ensure that your brand is not just another footnote in economic history.
Project Trust and Stability
Businesses consistent with their volume and output enjoy four times the brand visibility over those who don't. This is especially pertinent during a recession as it signals trouble for your brand. Because of this, your consumers might lose confidence. By continuing with a strong marketing game, your customers would have no reason to worry about your business' health.
Target New Opportunities
A difficult time is good for testing your ability to innovate and find creative solutions. Instead of considering recession a period of stagnation, it could be just the opportunity to look for newer markets, alternative marketing techniques, and revenue streams.
For instance, the events industry quickly turned to a virtual mode when the global pandemic struck. They adapted and innovated to create products that allowed people to network and meet virtually at a time when social distancing was the new normal. And these trends are here to stay.
All of this is easier said than done as the question remains—how do you market during a recession?
5 Ways of Marketing During a Slowdown
Pivot Toward Psychological Segmentation
Traditional segmentation of your customers – one based on demographics or lifestyle – will not work during a recession. Instead of demographics, orient towards a psychological segmentation of your customers. Here is why:
Also known as psychographics, psychological segmentation focuses on unique personal factors driving consumers' choices and decisions, including personality, activities, opinions, interests, social class, and lifestyle. This type of segmentation:
- Allows for a better understanding of your consumers
- Reveals unseen attitudes
- Finetunes your targeted messaging
- Generates opportunity for product positioning
According to Harvard Business Review, your customers fall into four groups during a recession:
- Slam-on-the-brakes: These customers are the ones who are hardest hit financially and most vulnerable. They reduce spending by eliminating, postponing, decreasing, and substituting their purchases.
- Pained-but-patient: These consumers are less optimistic about their standard of living in the near future but resilient and confident about the long term. They also downsize like the slam-on-the-brakes segment but not as aggressively.
- Comfortably well-off: This segment comprises the top 5% income bracket, which is mostly unaffected by the recession.
- Live-for-today: They carry on as usual and remain, for the most part, unconcerned about savings. Their response to the recession is by postponing their major purchases.
By segmenting your users based on these four types, you can create the right message and tone for your product.
Invest More in Advertising
Historical data of past recessions and advertising during those periods clearly show the benefits of promoting your product during a downturn.
First, advertising space becomes less competitive because everyone is reeling from reduced budgets and cost-cutting. You can get more attention towards your products in a less noisy marketplace. In short, more recognition for your brand.
Second, investing in advertising reflects your corporate stability and that your buyers don't have to worry about your product/service going out of business.
Third, your Share of Voice – a brand's advertising share among the available portion in a marketplace – increases vis-à-vis your competitors.
Further, your ad investment should be a strategic one. Make sure your system is optimized to target potential customers and ads are customized to people depending on their place in the sales cycle. Investing in programmatic advertising also makes for a good advertising strategy.
Create Targeted Campaigns
Apart from advertising, streamline all aspects of your marketing campaign, especially during a recession. The pressure to generate more MQL leads to increases in a downturn. For that, you need to create optimized, targeted campaigns based on your customer's choices and preferences.
Ensure that your content and event marketing campaigns, content syndication, and digital lead generation ads are highly optimized and targeted.
Ensure Effective Marketing Approach
A recession allows you to overhaul your marketing department for maximum efficacy. Take steps like these to make your marketing run like a well-oiled machine:
- Integrate all your campaigns
- Develop a robust digital marketing strategy to support your event campaigns.
- It can start from a simple campaign harnessing the power of social media. If you already have a social media presence, you need to diversify, optimize and post interesting and relevant content for your audience.
- Mobilize your employees to extend your social media presence while leveraging ways to get your customers to generate content. It could be a review, an endorsement, a viral hashtag, etc.
- Online competitions are an excellent way to engage with your audience and generate new leads without giving too much away. It gets a lot of exposure and followers. For example, you can ask customers to share pictures along with your product. For every x number of likes or follows reached, you can then have a prize drawn amongst these contestants.
- Consider promoting and hosting virtual events. It helps reduce costs for your company.
- Develop email and other lead nurture streams to be highly optimized.
- Ensure your department works to maximize its effectiveness; create an atmosphere where your employees' skills are used properly and for growth and learning opportunities.
Focus on Value-Based Marketing
The most significant impact of a recession on marketing is a loss of consumer confidence. You can counter this by improving your value-based marketing strategy. This refers to placing your products based on the values it delivers to your audience. This particular strategy contrasts feature-based selling and marketing, often used by technology companies while marketing their products.
The value-based approach helps ease the spending mindset of your customers by focusing on the value your product will generate for them.
A recession tests your resilience. Your loyal customers are only biding their time when things take a turn for the better to continue with their brand loyalty and consumption. Instead of an instinctive-driven response to the reduced income or market share, you should develop a creative marketing plan that works with your strengths for a longer period.
You will ensure that you will capture maximum market share by continuously investing in marketing even during a slowdown.
At Growth Natives, we understand what goes through your mind during a period of downturn. Our help is at hand to help you navigate through. Contact us or write to us at email@example.com to find out more.