The Ultimate Guide to Marketing During a RecessionWritten by Marya Sutimi on April 10, 2023
Marketing during a recession is often faced with new challenges, as economic downturns are usually different than the previous ones. More often than not, it forces marketers to adapt to changes in their strategy during a recession.
Despite the differences, the patterns during a recession are usually similar, as consumer behavior and spending habits are the elements that get hit the most. Marketing your business during a recession is still necessary, but what could you do to optimize your marketing approach during the economic downturn?
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In this post, we will share the ultimate guide to marketing your business during a recession. What are the best ways to adapt your marketing strategy during a recession? How do you market your business on a shoestring budget in your company? Let’s find out!
Why You Still Need Marketing During a Recession
It doesn’t matter if your business doesn’t fall in the category of industries that thrive during a recession, you still need to keep it consistent in your marketing attempts for various reasons. After all, marketing is a long-term game, and if we’ve learned anything from the previous economic downturns, recessions won’t last forever.
The data compiled by the National Bureau of Economic Research in the US Business Cycle Expansions and Contractions shows that the previous recessions since 1854 lasted around 17 months on average. The statistic shows an improvement in the data for recessions after World War 2, as most recessions lasted for less than a year with an average of 10 months.
There are several reasons why cutting back your marketing budget due to the economic downturn can backfire and why marketing during a recession can be a fruitful attempt for your company in the long run. So, why do you need marketing during an economic downturn like a recession?
- Marketing helps you boost your brand awareness. Your customers may cut back on their spending during a recession, but maintaining a strong marketing presence can benefit your brand. It is a great way to ensure that your brand remains top-of-mind when the economy improves and your customers are ready to purchase the things you sell.
- A great opportunity to showcase your competitive advantage. When we face an economic challenge like a recession, some companies cut back on their marketing budgets. While this might be a good idea for the short term, you would miss the opportunity to gain a competitive advantage when your competitors don’t market their products as hard. It is the best time to take advantage of marketing your business and winning over potential customers!
- A consistent marketing strategy will help you maintain to build customer loyalty. Customers might be more price-sensitive during a recession, but maintaining a strong marketing presence will help you build customer loyalty and retain your existing customer base for the long term.
- Marketing is great if you aim for a long-term strategy. While you may not see the result instantly, a great approach to marketing your brand can help you build long-term relationships with your customers. By continuing to market your business despite the recession, it means you are investing in the long-term success of your business.
During a recession, many businesses may face budget constraints. More often than not, marketing expenses become the first ones to be cut on top of everything else. However, cutting marketing expenses for your business during a recession could be a short-sighted decision as it may harm your business in the long run.
How to Adapt Your Marketing Strategy During a Recession
Now that you get some ideas on why you still need marketing despite the recession, the next thing you need to remember is that adapting your marketing strategy is also essential.
During the economic downturn, customer behaviors will be different from the normal economic period. You may also need to shift in the market dynamics that force you to adjust with your target audience or product offerings. So, what’s the best way to adapt your marketing strategy during a recession?
#1 Focus on your existing customers
Retaining your existing customers is always better than adjusting to new target audiences who know nothing about your brand or products. It is especially important during a recession, as it can be a cost-effective strategy to market your brand and a great way to develop customer loyalty.
Starbucks is a good example of companies focusing on their customer base to retain customer loyalty despite the economic downturns. With Starbucks Rewards, they attract their existing customers to spend more at their coffee shop in exchange for rewards like free coffee or some freebies.
Offering incentives to your existing customers can be an effective way to market your products during a recession without spending extra costs on your marketing budget. By providing value to your customers through promotions and loyalty programs, you can encourage your existing clientele to continue purchasing your products despite the challenging economic condition.
#2 Adjust your pricing strategy
The significant difference that happens during a recession is the change in customer behaviors when people tend to be more cautious about their purchasing decision. Most customers become more price-sensitive that they try to get the best deal whenever they make a purchase during the economic downturn.
As a company, it is also a great way to evaluate your pricing strategy so that you can cater to these customers by bringing value to what you offer.
McDonald’s has proven that their pricing strategy adjustment during the 2008 recession is one of the success stories of how businesses could create growth despite the economic challenge such as a recession. In 2008, McDonald’s innovated the “Dollar Menu” as a response to the recession. As a result, despite the economic downturn, McDonald’s increased their net income to as high as $1.19 billion, with sales increasing by around 6.2% compared to the previous year.
Understanding your customer behavior is essential to see the potential growth and how you can restrategize your marketing strategy accordingly.
#3 Target niche market
Niching down your target market can also be a great strategy to market your business during a recession. By focusing on a specific niche market, your business can tailor your advertising efforts to reach your desired audience more effectively. The latter is especially essential if you plan to use digital advertising like Facebook Ads or Google Adwords as a part of your marketing strategies.
Another alternative is that you can consider targeting niche markets that are less affected by the recession. Niching down your target market can also give you an opportunity to charge premium prices for your products or services. By doing so, you can also maintain profitability despite the economic downturn.
With the change in customer behavior during a recession, you can also target two different markets to stabilize your sales. Either you target the high-end luxury consumers, or you can focus more on the budget-conscious shoppers to offer them a discounted price for the products they need. Whichever market you focus on, it will help you create a tailored marketing strategy based on your targeted customers.
#4 Leverage digital marketing channels
Digital marketing is a low-cost marketing idea that is highly effective when using the right strategy. During a recession, many consumers are most likely to search for deals and discounts online, making it a great channel to market your business. On top of that, there are so many platforms you can choose to create a digital marketing strategy for your business.
It was only recently when Amazon was thriving during the Covid-19 pandemic, as people turned to online shopping due to physical distancing restrictions. People tend to spend more time on the internet, especially those who start working from home. Increasing your online presence through digital marketing can be a lucrative way to reach more potential customers for your business.
Create a business website to establish your online presence by getting a relevant domain name for your brand. After having your business website, you can promote your business through blog posts by optimizing your website for search engines. You can also simplify your customer experience by enabling online payment features on your website. In addition, you can integrate InvoiceBerry and your online payment platforms to streamline the invoicing process through your business website.
Alternatively, you can also leverage social media channels by creating targeted ads for customers that fit your ideal client persona. And if you already have a customer base, you can also create an email list to optimize your email marketing strategy.
#5 Monitor your competition
Monitoring your competition is essential in any business environment, but it becomes more critical during a recession since you don’t want to risk losing opportunities to your competitors during the economic challenge. By keeping an eye on your competition, you can stay ahead of the curve with the new marketing trends that may arise during the recession to remain competitive in your industry.
Understanding your competitors can also give you insights into what your customers want during a recession. Look for the gaps in the market that you can fill, or find ways to differentiate your products or services from your competitors to win the market.
During the Covid-19 pandemic, Netflix identified an opportunity to focus on original content after analyzing its competitive advantage compared to the other streaming services. Producing their own movies and series led to the peak of their business growth, as Netflix gained around 8.5 million paid customers during this period.
Despite the economic hardship, there’s always an opportunity to grow your business during a recession. Marketing your business during economic downturns might come with various challenges, but halting your marketing strategy can hurt your business in the long run.
The best way to market your business during a recession is by keeping an open mind, as marketing trends can change during this time. Be aware of the change, and stay alert to adapt when necessary. Most importantly, analyze your customers to tailor what you offer to what they need during a recession.
Some companies prove that they can thrive and survive during a recession. With the right marketing strategy and preparation for what’s to come, your business can also gain some profit despite the recession. The question is, are you ready?