Marketing Through a Recession
Consumers are not the only people gearing up for a potential recession. Brands will also feel the squeeze as shoppers tighten their belts considering the shift in the economy. During economic downturns, marketers must work hard to balance costs while supporting short-term sales and considering investments in long-term brand health. Unsure how to manage your budget while continuing to grow despite the economic downturn? Keep reading to learn more.
What is a recession?
Technical definition: “a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP (Gross Domestic Product), real income, employment, industrial production, and wholesale-retail sales.”
Recessions tend to last between 12 – 18 months and assess the economy. Many times, during a recession, retail sales generally decrease as people have less money to spend. During these periods, consumer confidence tends to be more fragile than the GDP assessment of the economy and tends to be impacted before the economy dips.
Currently, consumer confidence is trending to an all-time low, suggesting that the ‘impact’ of this recession may be felt more harshly than those of recent history and brands are likely already feeling some of the impact of consumer behavioral changes. There are several marketing strategies a brand can utilize when facing a recession to ensure the impact is minimized, including:
Continuing to invest in the brand.
The "obvious" response of many companies will be to reduce their marketing investment. However, it is proven that advertisers that continue to invest in brand marketing maintain their share of voice and are the fastest to recover.
Focusing on retaining existing customers.
Each industry will have its challenges. Do your research to understand how your business has historically been affected and respond quickly.
Bad days do not last forever. Get prepared for the future.
Prepare for the post-recession wave by addressing measurement and core business areas that will inevitably return to normal.
Keep reading to dig into how these strategies can help marketing teams emerge from a recession ready to face the future.
Continue to invest in the brand.
As times get more challenging for brands, marketing budgets are often viewed as a luxury that companies can cut in the grand scheme of a business’ budget. But this is often a mistake.
Studies that look at recessions and economic data all point to the same conclusion: Those who invest in brand advertising emerge from the downturn stronger and more profitable than before. Maintaining your brand’s spending levels will likely increase your share of voice as competitors reduce budgets, allowing brands that continue to invest to capture more of the market and making continued marketing investments more practical despite the seeming downturn.
The key to successfully managing marketing investment during the downturn is ensuring that the budget is strategically used. Strategic investment in marketing tactics is vital to ensuring department dollars are invested efficiently to help reach consumers and drive sales. Promotion, rewards/loyalty, and sweepstakes campaigns are great ways for brands to help products stand out in the crowded landscape.
Continued investment through the recession pays dividends in the long term. Brands that maintain or grow their marketing presence during a downturn are positioned to bounce back faster and more robustly than their competitors once the economy picks up due to the brand loyalty they built during the downturn. After a one-year reduction in brand budgets, it can take up to 5 years of pre-reduction spending levels to get back to the same level of sales.
Focus on retaining existing customers.
Low consumer confidence means your consumer’s spending patterns may change as the purse strings tighten. Consumers may shop around more for a better deal, and alternatives will temporarily replace many brands. In contrast, others will be in high demand due to their ability to connect to a fundamental human need to save during these times.
Demand patterns are likely to change quickly and unpredictably during a recession. Discounted or inexpensive products will likely become the more practical choice. This can be mitigated by offering consumers something other brands are not. Rewarding consumers with unique rebates, prizes, cash, donations to charities of their choice, like Incentivaze™, offers, can make shoppers feel they are getting more bang for their buck. These campaigns drive sales without requiring brands to discount. Emphasizing a product’s unique proposition while incentivizing consumers to continue to purchase at full price, by offering them a reward for choosing you over the competitors.
Bad days do not last forever. Get prepared for the future.
The average recession is only 17 months. Having a post-recession plan and keeping it in mind during the throes of a recession will be critical to efficiently moving forward when the market returns to normal. After an economic downturn, we see brands focusing on efficiency and catching up on initiatives that were deprioritized for survival. We are also likely to see a return to critical marketing priorities, similar to the aftermath of COVID.
Current priorities in the industry will persist once the market rebounds:
• Developing and investing in first-party data strategies and solutions
• Deploying customer-centric / omnichannel marketing
These will return with renewed urgency for many marketing teams. Having a plan will ease the transition and prevent teams from feeling like they are going from one dumpster fire to the next.
In preparation for this return to "normal" of rebalancing, now is an excellent time to get your measurement strategy in order, identifying opportunities and platforms that will help mine first-party data. These will offer brands meaningful insights into shopper behavior and consumer demographics and will also be critical as we near the deprecation of cookies and the looming shift in the data privacy landscape.
Recession does not have to be a scary word for your marketing team. Developing a solid marketing strategy for the potential downturn in the market will allow you to continue to drive sales and engagement despite a temporary shift in consumers’ buying behavior. Tactics that promote a unique value proposition and provide consumers additional incentives to purchase, like a rewards and loyalty program from Incentivaze, can make all the difference in weathering the storm.
Incentivaze was curated by shopper and brand marketers with years of experience interrupting the path to purchase. Our programming is a great option when looking for helpful tools for your marketing arsenal to support the bottom line and drive sales through these one-of-a-kind rewards campaigns. If you are interested in learning more, schedule a demo call today.