Effective Marketing in a Down Economy

In these days of economic turmoil, we find ourselves under constant pressure to control costs and maintain liquidity.  Our efforts to achieve these goals usually find us treating advertising budgets as mere luxuries capable of fading off into nothingness with little or no repercussions.  However, despite the rosy outlook that the savings may provide over the short term, executives who yield to the temptation to lessen their marketing budget put their companies at risk by withdrawing from the public consciousness.  As one company lowers its advertising budget, it leaves room for more aggressive marketers to gain marketshare, mostly at the expense of the companies who choose to bow out of the marketing game.  Today's economy provides an opportunity to differentiate and stand out from the crowd, but it may require convincing the senior management that the move will pay off in the forseeable future.

When overall demand for marketing services slackens, the cost of these services drops and makes spending money on the activities defensible in a stale business climate.  Companies that have something relevant to say in such an environment will find that they’ll be able to say what they need to with even greater efficiency.  Research shows that companies that consistently advertise even during recessions perform better in the long run; a study of 600 companies over a five-year recessional period found that the businesses that chose to maintain their level of advertising during the recession not only had higher sales during the period but also after the economy recovered.  What’s even more astonishing is that companies that advertised aggressively during the period experienced sales more than twice as high as those that chose to cut advertising.  For companies that do continue to advertise into a recession or even increase their promotional activities, the key is to craft messages that properly reflect the times while clearly defining how the consumer can benefit.  Although companies may be tempted to emphasize price in a recession, that only works for companies built around a strategy of consistently providing low prices such as Wal-Mart.  Durability, ease of use and efficiency can also benefit the consumers and must be considered in communications rather than simply touting cost savings.

As certain products (such as organizations in financial services) require a forward approach, the vast majority of companies should not dwell on a recession.  While financial services companies would be foolhardy to behave in the same manner as in a healthy economy, consumers may be weary of the negativity generated by the recession and are likely to be receptive to positive messages.  If it is possible to put a positive spin on how your company can genuinely help- without reminding people about the current state of affairs- your marketing will undoubtedly be more effective than one preying on fears of a recession.

Certainly, people are going to be spending less in a downturn but they will still be spending . . . and that will provde your organization the opportunity to weather the storm and come out stronger than the competition when the market begins to strengthen.  Advertisers should approach recessions with caution; along with an economic downturn comes anxiety characterized by a sense of little or no control.  Ads in these conditions should empower consumers and make them feel as though they’re in control.  Building value into marketing campaigns during a downturn is of the utmost importance, as is advertising, period.  If a company cuts into advertising in a down period, regaining that lost share once the surroundings brighten may cost upwards of five times as much as the reductions saved. In short, don't go dark when your consumers need you because these are the times that they need to hear you the most.  A recession can be an opportunity disguised as a problem if you successfully position your brand as an ally to consumers in tough times; it is possible to do this though many methods, such as product development or sponsorship programs that put the idea into the consumer consciousness that you are on their side.  A solidly placed message such as this will provide a return during the recession and long afterwards.

Businesses positioning themselves towards the top should take a completely different approach, appealing more to emotion, and emphasizing the need for some emotional release or comfort in difficult times. Luxury advertisers should attempt to emphasize long-term value (such as suggesting that their products are a purchase for years to come rather than a temporary commodity).  For those companies positioned towards the top tiers, the worst thing to do is cheapen products as some have in the past.  While price is important, the majority of price-driven consumers still factor in the importance of branding and companies must maintain product quality and good distribution systems in order to keep brand association and leadership.  These attributes also come through communication; being so, cutting the communication creates a major problem.  Make certain that you fully understand the elasticity of your brand and comprehend what level of advertising is necessary to sustain necessary sales levels.  While it is admittedly far from science, you can properly support your product through thorough research of past (industry wide) marketing during downturns.

Advertisers in all categories must be in step with their consumers in a climate such as we are currently experiencing.  LG Electronics, long known for their "Life is Good" slogan, has decided to distance themselves from this phrase due to consumer sentiment.  As this is completely opposite of the current consumer mood, it may generate resentment.  Messages must be fine-tuned for sensitivity and must work harder to segment consumers with specific messages.  This approach may mean more work or a slight increase in marketing budgets, but it also has the best chance of maintaining profitability. Targeting the competition during economic downturns is sometimes necessary in order to stave off shrinkage.  When the marketplace begins to shrink, the marketing tone becomes more competitive although the aggressive approach can backfire. Even in a downturn, if you want to create loyal customers, you don't want to be overly competitive.  Rather than pointing out the flaws of another, simply highlight what you do best and be sensitive to the needs of your customers.  If mass media was used in the past, you should now use a more narrow medium to make sure the message gets to the right people.  It is always prudent to reexamine your mix of marketing mediums, the exercise becomes even more wise in an economic slump.  Maintaining the proper balance between traditional media and digital or other outlets depends on the product, brand positioning and corporate strategy; when times are tight, it becomes easier to pay for the more expensive media outlets.

Through it all, keep in mind that all forms of media can be successful even in a recession if the message is worth sending and the product has a potential benefit to consumers.  Making sure that the message properly conveys both of these points will keep your sales at a level which can sustain your organization through economic downturns and lead you to better days . . . not sending any message at all might hurt throughout the recession and beyond.  Make sure that your numbers are correct before resorting to such drastic measures- you may even experience growth should your competition bow out of the marketing race.

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