How to Market During an Economic Downturn

Inflation, record-breaking layoffs, talent shortages, supply chain issues, and the overstated 'Great Resignation' as some may refer to it, have left many Australian professionals worried that we are headed into another economic recession, and what that will mean for their employment.

Whether we end up facing a recession or not, the economy is constantly fluctuating, and markets react to global events and crises while consumers set stricter priorities and reduce their spending. As sales start to drop, businesses typically cut resources and postpone new investments to reflect this.

In doing so, my fellow Marketers would feel me here - marketing is always part of the conversation on how to cut expenditure.

Marketing has traditionally been seen as the 'luxury department' who spends all the money and receives little return.

Thankfully times and technology have changed, and with the right tech-stack, we now have full visibility over data and insights, which tracks and nurtures SQLs and MQLs, and in turn proves just how many of those sales have actually been driven by the marketing team.

This same data tells us that the companies who in times of despair, place full trust in their marketers and maintain advertising spend, will see expotential growth the moment the market starts climbing back.

Whereas those competitors who cull the marketing budget really struggle to regain their brand position.

Effective marketing during a recession is the key to coming out of that period successful and profitable. Even in a recession, there are plenty of opportunities to build customer loyalty and gain new leads.

This entirely predictable behaviour is the opportunity.

Looking back at the cyclical economy behaviour, we should all be looking at the lessons from the past and applying the actions that will prepare us for the choppy road ahead.

Regardless of the economy's movement, it's always wise to monitor and contain costs, but failing to support your brand or respond to your core customers’ changing needs, will jeopardize your company's performance over the long term. Safest suggestion is to nimbly adjust strategies, tactics, and product offerings in response to shifting demand.

Understanding how your existing and target consumers adjust to life during a recession is essential.

Harvard Business Review categorises our consumers into four groups; and these consumers will then prioritise consumption by sorting products and services into a further four categories:

IMAGE: Harvard Business Review, Consumer Segments

Throughout an economic downturn, consumers will generally reevaluate their consumption priorities.?As these priorities change, they may eliminate purchases in certain categories altogether.

Marketing is a Good Cost.

When the economy gets tough, a focus on customer loyalty is more important than ever. Loyal customers and a consistently positive customer experience, will ensure you have an enduring source of cash flow and organic growth.

Marketing isn’t a 'nice to have' department —it’s a “good cost,” and an essential player to bringing in revenues from key customers and raising brand awareness among potential markets.

Why is Marketing so valuable?

• Building and maintaining strong brands - ones that customers recognize and trust - remains one of the best ways to reduce business risk.?
• Catering to the consumers stage of life - helps in stabilising your brand and never alter your positioning. At a time when your customer could be considering cutting costs, it's now vital that you remind them of how the brand matters and can add to the cushion provided by previous investments in building the brand and customer satisfaction.?
• Research your market - In deciding which marketing tactics to employ, it’s critical to track how customers are reassessing priorities, reallocating budgets, switching among brands and product categories, and redefining value. It’s therefore essential to continue investing in market research.
• Be flexible and innovative - In recessions, marketers have to stay flexible, adjusting their strategies and tactics on the assumption of a long, difficult slump and yet be able to respond quickly to the upturn when it comes. This means, for example, having a pipeline of innovations ready to roll out on short notice. Most consumers will be ready to try a variety of new products once the economy improves.

Companies that wait until the economy is in full recovery to ramp up will be at the mercy of better-prepared competitors.?

• Because new-product activity slows in recessions overall, innovation launches can economically gain visibility and you may be able to attract a greater share of the market in your advertising spend.
• Consumers need someone they can turn to - Empathetic messages must be backed up by actions demonstrating that the company is on the customer’s side.?

“Solve their problem, don't sell your product.”

Reassuring messages that reinforce an emotional connection with the brand and demonstrate empathy are vital.

You can either be disrupted, or cause the disruption.

I’ve approached life with this perspective, “prepare for the worst, but have faith in the best”.

Perhaps it’s not the most optimistic mindset one could have, but I feel as though I’ve always been prepared and confident to lean into uncertainty without suffering excessive misfortune.

So with all of these resourcing and talent shortages, how can we as marketers, and especially freelancers, “future-proof” ourselves?

Paul Chaney dived into this topic in his piece, “How to Thrive as a Freelancer during a Recession”:

• Develop essential recession-proof skills.
• Focus on recession-proof industries.
• Create recession-perfect service packages.
• Enforce rules and maintain your rates.
• Prepare early for the next crisis.

During and after the recession, it would be foolish of marketers to ignore these rapidly changing consumer expectations. While businesses are putting customers under a microscope and tracking their every movement and desire; customers are, in turn, examining companies behaviours more closely than ever before.

So, your five reminders:

• Pay attention to how consumers are spending
• Don’t cut your marketing budget, increase it (or at least remain consistent) instead
• Explore new marketing strategies to target both existing and new customers, but keep the messaging concise
• Use analytics to set realistic goals and regularly measure performance
• Keep your messaging and corporate behaviour positive to portray stability

Above all of this, good marketers need to be two things: nimble and strategic. No one knows how this recession could play out, but to survive, we must not resist the wave, rather learn to ride it.