Is marketing in a recession any different from marketing during other economic times? The simple answer: yes and no.

Marketing is every bit of contact your company has with anyone in the outside world (we would argue marketing is internal, as well, but we'll say more on that at a later date). Marketing is about communicating to your customers and potential customers about what their challenge or desire is and how you are the unique solution. So, no, marketing is no different in good or poor economic times. However, marketing is also about paying attention, taking action, evaluating and adapting. So, yes, marketing in a recession would be different should your paying attention strategy elicit new activities in your marketing.

Surprisingly, many companies fail to follow through consistently on the paying attention part of marketing and they continue their marketing activities without the support of real time information about what the competition is doing, what their customers are experiencing and how their purchase decisions are being influenced. Gathering information here on a regular basis helps inform your business how to adjust in any of the P's of Marketing. There are the standard textbook P's: People, Price, Positioning, Product, Place, and Promotion. Then there are the other P's that enhance marketing power: Planning, Passion and Persistence.

The following outlines some strategies to consider for each of the P's of marketing:

People: According to the Canadian Marketing Association, past research has shown that consumers tend to postpone purchase decisions, trade down, or buy less in a recession. However, consumers still spend. What are your customers doing? It is critical to know and recession is a time to deepen customer research. What is influencing your customers right now? How are they redefining value? What do they expect for their dollar with respect to your particular product or service? Who do they trust and what builds trust for them? Companies that target the middle income segment of the market may face greater challenges. Who do you target? Are there opportunities to target a different market segment? What new or repackaged offerings in your product/service mix would attract a different segment?

Price: Price slashing to keep customers buying seems a good idea when the mantra of the media is that everyone is reigning in their spending, but is this really a good strategy? Other variables affect pricing, such as cost of goods. If suppliers have increased pricing or if freight has increased, then managing margins must be considered and shrinking margins might not be the best strategy if expenses are on the rise. However, realize that your customers will be investigating for the best deals and if you are priced higher than the competition, then consider if there is room to reduce prices. A recessionary economy is an opportune time to capture some market share and adjusting your pricing may be a means to achieving this. Look for creative ways to do this without just slashing all prices. Can you offer quantity discounts, early-buy allowances or extend credit? Another option to explore is adding more value, such as generous return policies or extra services bundled with the purchase, rather than reducing the price. Note that according to the Canadian Marketing Association, industrial customers prefer to see products and services unbundled and priced separately.

Product: This is a good time to re-evaluate your product portfolio. According to the research conducted by Canadian research group, Arcus, “consumers tend to trade down to models that stress good value, such as cars with fewer options, when the economy slows down”. It is important to develop new demand forecast models for each item in a product line to adjust for new purchase patterns. What does this mean? Identify products in your portfolio that offer multi-purpose versus specialized uses. For example, a multi-purpose cleanser will sell better than a single use version. Stress superior price performance, reliability, durability, safety and avoid employing gimmicks. Also consider your product mix from a financial perspective. How can you rework to maximize revenue and margins?

Place: What is your current distribution strategy and what is the impact of consumer behaviour on it and what is the impact of this strategy on your bottom line? While this is a tricky “P” to just switch up, there may be opportunities present in a recession to take hold of, such as the possibility of reduced real estate or leasing costs.

Promotion & Positioning: Consider how you are positioned and how you are perceived in the marketplace. The general rule of thumb for recessionary economies is that brands driven by value do better than brands positioned as a premium. Research cited in the Harvard Business Press (John Quelch, Marketing your way Through a Recession, March 2008) indicates that historically, when economic fears loom, there is a return to family values and nesting. Does your positioning communicate trust, value and values? Also consider if your general promotional messaging could be adjusted to address current consumer concerns. You communications might want to give reassurance to your customers that: they are resilient, your business is stable, and you are operating from core values.

Passion: At a recent High Voltage Business Breakfast dialogue we discussed the concept of authenticity as being a powerful tool for business resiliency and came to the conclusion that being passionate about your values, your business, your employees, your products and services, and your customers’ needs will go a long way to building trust and loyalty. Does your passion come through in your messaging?

Planning: Opportunities abound during recessions and more opportunities will abound when the economy recovers. Set yourself up to launch bold strategies. For example, make long-term investments in product development or new processes to set yourself up for turbo-charged growth when the economy recovers. A recession is not the time to put your head down and wait it out. It is a time to look out and look forward and to plan and take action.
Persistence: When the economy booming, it is easy to get complacent about marketing strategies. However, to withstand disturbances in the marketplace and business environment, your marketing needs to be fine-tuned, measurable and attended to regularly. Persistence in researching, planning, acting, evaluating and adjusting is what separates market leaders from the pack. Arcus analyzed the impact of cut backs in marketing investment in a slowdown in 22 industries. They discovered that an increase in advertising in some industries during a recession can dramatically improve market share and return on investment at lower cost than during good economic times. This is backed up by research cited in Harvard Business Review.


By Delaney Tosh
February 2009

Citations:
Quelch, John; Marketing Your Way Through a Recession; March 3, 2008, Harvard Business Online.

Arcus Group, Research and Strategy Consulting; www.arcusgroup.ca

Canadian Marketing Association, Canadian Marketing Blog, Merril Mascarenhas, Oct 10, 2008,