The fact that the U.S. is in a period of economic volatility and vulnerability is no secret. Whether you are already struggling with rising costs or have yet to feel the blow, a recession is looming. You will have to navigate continued labor shortages, inflation, and supply chain disruption for the undetermined future.
But there is a silver lining.
How? Through marketing. You can come out of this period of economic adversity on top. The way you use media platforms, advertise your products, and invest in new marketing strategies will determine how well you fare. If you take advantage of the opportunities that arise, you will better protect yourself against disruptions and downturns.
Marketing Challenges During a Recession
What actually happens during economic adversity? The first thing to note is that consumer behavior changes. You have to get to know audiences all over again because their concerns, pain points, and interests may be fundamentally altered. Take a look at recent inflation, for example. Today’s consumers are navigating an expensive world; they are having to rapidly reevaluate what products and services they consider indispensable.
Next, you have to consider the economics of your company. Think about how much the raw materials cost to make your products, for instance. Typically, when the cost of materials goes up, you pass it along to consumers in the form of a price increase. However, during a recessionary period, consumers won’t spend the extra money. In fact, because people’s spending power decreases, you may have to utilize tactics like coupons and promotions.
Finally, you have to think about budget cuts. Too often, companies cut their marketing spend, believing it is a less-essential cost. However, the brands that maintain their media spend usually end up better off than they were before experiencing economic adversity. Companies that pull back on media spend typically open up room for competitors to move in, increasing their share of voice — and their sales in the process.
Economically volatile times introduce unique challenges for companies. But what you learn in a downturn can serve you well even after the recession comes to an end.
Lessons to Learn From Recessions
A recession is looming; its effects are already being felt across industries. Luckily, you can learn from how other companies handled previous recessions and what they are doing currently.
For instance, one of the biggest mistakes companies have made during recessions is not listening to how consumers’ needs changed. Without realizing that consumers cut nonessential products or find lower-cost alternatives, brands have fallen over themselves trying to offer a product that no longer exists on a customer’s budgetary radar. According to a 2009 article by Harvard Business School staff, even people who are comfortably well-off will delay or eliminate expendable purchases from their shopping in a recession.
The best way to learn from previous economic downturns, however, is to look at the companies that have turned challenges into triumphs.
During the 2008 recession, for example, Kellogg’s triumphed by increasing its advertising budget even as it was surrounded by uncertainty. The company even launched a new cereal during this time, thereby appearing to cereal consumers as a consistent, solid, and trustworthy presence at the breakfast table.
Other brands found success by changing up their in-store strategies. Colgate, for instance, responded to the recession by shifting product into dollar stores and marketing its smaller toothpaste tubes alongside non-name brands. The company priced its small-sized tubes higher than competitors, but because Colgate is a household name, consumers did not mind.
Other winning brands survived turbulence by rethinking or reframing their products or packaging. If an audience stops buying premium dog treats, for example, a successful brand may focus marketing attention on reframing their original products as lower cost and more essential.
Hyundai Motor America is a great example. During the pandemic, the company instated its Assurance Job Loss program, which covered payments for new car owners that involuntarily lost their jobs from March 14 to April 30, 2020. Hyundai also offered 90-day deferred payments for select purchases. Hyundai listened to its customer base and approached peoples’ needs with sympathy.
The Most Self-Aware Brands Win
What has worked in the past? What could work today? While different industries and different environments create unique conditions for marketers and consumers, there are some winning strategies that you can zero in on despite your circumstances.
Self-awareness is the one major quality that separates survivors from recession casualties. Knowing your own brand — its strengths, weaknesses, messaging, audience, etc. — is the first step toward making it through. When you are aware of your brand’s nuances, you can better spot chances to move and pivot. This is key to making the most out of recession-era opportunities.
Brands that are self-aware fully demonstrate their evergreen values even while exploring new, innovative, or unusual marketing tactics. It is important to maintain this familiarity while utilizing more promotional strategies. If you don’t, audiences might see your efforts as disingenuous or tone-deaf and decide to stop purchasing.
A promotional model will only work right now if it genuinely takes notice of consumers’ economic situations and pain points. Is free shipping the perk that will be most helpful right now? Or just money off the purchase? Profile your audience in the sense of self-awareness to further understand their behaviors, affinities, attitudes, and sentiments. Leveraging this first-party data and translating it into marketing and loyalty strategies will pay dividends.
From there, you can make promotions work by tailoring pricing and offers to alleviate some of the pressure consumers are feeling. Get creative! Alongside this model, you need to tweak your brand messaging. You have to show that you “get it,” which is why you are offering a discount. A brand’s empathy can go an extremely long way in the minds of a consumer.
Even though your loyal customers’ behaviors might have changed, you still have a direct line to an audience that has the power to carry your company through hard times. After all, it costs more to acquire a new customer than it does to retain an existing one. Leaning on your customer base and catering to this audience will lead to greater levels of success during a recession.
While the economic environment may be volatile right now, and brands may not be able to predict where their next lead or sale will come from, the storm will eventually pass. Learning from companies’ strategies during previous recessions and continuing your marketing efforts will help you survive this turbulent time.