In a recession, consumers become value oriented, distributors are concerned about cash, and employees worry about their jobs. But a downturn is no time to stop spending on marketing. The key is to understand how the needs of your customers change, and adapt your strategies to the new reality.
You need to maintain your marketing spending, this is not the time to cut advertising. Itís well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television and reading magazines can deliver higher than expected audiences at lower cost-per-thousand.
If you have to adapt your marketing spend then maintain the frequency of adverts, try shifting from 30-second to 15-second spots, trial substituting some radio for television, trial different sized print adverts and increase the use of direct marketing.
Direct marketing in particular is results focussed, itís simple to track so you can measure the immediate cost benefit to your business.
You also need to invest in market research. Now more than ever you need to know how your customers are reacting to the recession and how they are redefining their purchasing decisions. They will invest more time in product research, negotiate hard on price, they may postpone buying, trade down or buy less.
Look at your products and reassess your portfolio, reforecast demand for different items in respect to the redefined consumer behaviour. Value becomes king, gimmicks are out. Businesses and consumers are making purchasing decisions based on reliability, durability, safety, performance and cost.
Although customers are shopping around for the best deals, you donít necessarily have to cut list prices. You may need to offer more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers, and price smaller pack sizes more aggressively. In recession, price cuts attract more consumer support than sweepstake promotions and
Tough times favour multi-purpose goods over specialised products, and weaker items in product lines should be pruned. In grocery-products categories, good-quality own-brands gain at the expense of national brands. Industrial customers prefer to see products and services unbundled and priced separately.
Support your distributors with early-buy allowances, extended financing, and generous return policies, this will motivate distributors to stock your full product line.
Economic recession can result in slashing costs at the expense of customer relationships, business owners and senior managers must react carefully. Successful companies do not abandon their marketing strategies in a recession, they adapt them.