Recessions can severely affect a business’s bottom line and its survival. However, all businesses are not equally affected by a recession. Some businesses view recessions as opportunities for growth and invest aggressively to establish their advantage over their weaker competitors, whereas others cut back, waiting for the recession to pass. The good news for businesses that defend their brands is this: maintaining or increasing brand recognition is likely to be cheaper than in normal times, due to the competition dropping out.
Reducing spending, costs, and budgets in recessions seems scary, however, evidence from previous recessions has shown that businesses that bounced back from the economic slowdown the strongest are the ones that did not reduce their marketing spending and, in some cases, even increased spending. According to this LinkedIn article, now is a good time for businesses to be building market share through a balanced mix of brand building and sales activation. Making your voice heard in hard economic times can help drive brand recognition and awareness in the recovery periods. Let’s begin by looking at the various categories of marketing costs that are commonly adjusted during a recession:
New Product Launches
While launching a new product is risky during the best of times, research shows that unveiling a new product during a recession has both higher long-term survival chances and higher sales revenues. That’s partly because there are fewer new products to compete with, but it also comes from the fact that companies maintaining R&D have focused the investment on their best prospects.
Prices & Promotions
Resist the urge to cut or increase prices. Price adjustments can permanently erode a company’s profitability and strategic position. As recessions make consumers more price sensitive, any increase in price will further reduce the likelihood of making a sale, while price cuts will undermine the bottom line and make it more challenging to catch up.
During recessions, when most firms are cutting back on their brand advertising, a firm’s share of voice increases if it can maintain or increase its advertising budget. The content of advertising during recessions must reflect the challenges that consumers are encountering. Consumers in a downturn want to see brands show solidarity. Successful brand advertising during a recession not only injects humor and emotion but also answers for consumers the question: How can we help?
There are clear patterns in consumers’ behavior and advertising strategies that either propel or undermine performance. We’d love to help our current and future clients understand the evolving consumption patterns and fine-tune their strategies accordingly. Reach out to firstname.lastname@example.org for a free audit, and visit our website.