There’s no getting around it – times are tough and the recession is officially here. So how can you market your business in this climate and is it worth pushing your marketing or cutting budgets? Let’s take a look into recessions of the past to see how businesses have weathered the storm.
Recessions are nothing new, in fact they’ve been around since the early 1800s. And although each one is different, there are some similarities that can be drawn between them. For example, most recessions are caused by a combination of factors including an increase in interest rates, an increase in the cost of living, a decrease in consumer spending and/or a decrease in business investment.
How Does A Recession Affect Marketing?
In terms of marketing, businesses tend to either cut their marketing budgets and advertising spend or push their marketing harder in an attempt to increase sales. However, there is no clear evidence that either approach is more effective and it depends on the individual business and the products/services they offer.
Some businesses choose to cut their marketing budgets in a recession as they believe it is a non-essential expense. Others argue that marketing is even more important in a recession as it can help to increase sales and grow market share. So which approach is right for your business?
It’s not an easy question to answer as each business is different and will be affected by the recession in different ways.
Questions To Ask Yourself During A Recession
There are some things you should consider before making a decision that will impact your marketing strategy.
What Are Your Competitors Doing?
If they are cutting their marketing budgets, it could be an opportunity for you to gain market share or jump in the decreased advertising costs from the lack of competition in keywords. On the other hand, if they are increasing their advertising budget, it could be an indicator that you need to do the same to stay competitive.
How Much Can You Afford To Cut?
Marketing is an investment and like any other investment, it needs to be carefully managed. Cutting your marketing budget too dramatically could hurt your business and display your lack of corporate stability.
What Are Your Customers Doing?
If your goal is to increase market share or enter new markets, then cutting your marketing budget is probably not the best idea.
Companies That Don’t Slash Their Marketing Budget In Recessions…
Many firms don’t know whether to stick to their marketing budget or to slash it. There are arguments for both cases but as seen in research and studies, companies that kept or even increased their marketing budget during a recession, generally fared better than those who reduced it.
In fact, most companies that came out of a recession had one thing in common- they maintained or increased their marketing during the tough times. Advertising is an essential component of any business and should not be stopped just because there is an economic downturn.
Many studies have shown that firms that cut advertising during a recession generally have a harder time recovering when the economy bounces back. So if your company is thinking about reducing its marketing budget, you may want to think again. Companies that maintain or increase their advertising during a recession generally come out stronger on the other side.
Industries That Do Well In A Recession
In case you’re wondering, certain industries tend to do well during periods of economic recession.
The Discount Retail Sector
As consumers become more price-conscious, they are more likely to seek out retailers that offer low prices on a wide range of goods.
The Food Industry
People still need to eat, regardless of the state of the economy. In fact, in some cases, an economic recession can actually boost the food industry as people cook at home more often rather than eating out.
The Healthcare Sector
Even when consumers are cutting back on spending, they typically still prioritise their health and well-being. As a result, companies that provide essential health services often continue to see strong demand even during difficult economic times.
The Entertainment Industry
The entertainment industry often does relatively well during recessions. As people look for ways to escape the stress of everyday life, they often turn to movies, television, and video games as a form of affordable entertainment.
While some industries experience a downturn during economic recessions, the education sector often continues to grow. This is because people see education as an investment that will pay off in the long run.
How Long Does A Recession Last?
A recession is typically defined as two consecutive quarters of negative economic growth. However, the effects of a recession can be felt long after the economy has begun to recover.
The last recession in the US started in December 2007 and lasted for 18 months, making it one of the longest recessions since World War II. However, the severity of the recession varied across different sectors of the economy. For example, while the housing market and construction sector were hit hard by the recession, other sectors such as healthcare and education continued to grow. As a result, it can take several years for the economy to fully recover from a recession.
What You Can Do
The best thing to do is not to panic and focus on what you can do.
Even in a recession, there are still people who have money to spend. The key is to identify these individuals and target them with your marketing strategies. This part will take some serious market research into your target audience.
Segmenting Audience & Targeted Marketing
One way to do this is to segment your audience by income level. For example, if you sell luxury goods, you may want to focus your marketing efforts on high-income earners who are less likely to be affected by a recession and carry on with their previous spending habits.
On the other hand, if you sell more affordable products, you may want to target lower-income earners who are more price-conscious. By segmenting your audience and targeting them with specific marketing messages, you can ensure that your campaigns are more effective, even during a recession.
Change Your Offerings
If your target audience is struggling financially, you may need to change your offerings to appeal to them. For example, if you typically sell high-end products, you may want to introduce more affordable options.
Or if you typically offer services, you may want to consider selling products instead. By changing your offerings to fit the needs of your target audience, you can continue to generate sales even during a recession.
Focus On Needs Over Wants
When consumers are cutting back on spending, they typically prioritise their needs over their wants. As a result, it’s important to focus your marketing efforts on products or services that are essential.
For example, if you sell food items, you may want to focus your marketing campaigns on items that are necessary for everyday cooking, such as flour and eggs. Or if you sell clothing, you may want to focus on items that are versatile and can be worn for multiple occasions, such as jeans and t-shirts.
By focusing on needs over wants, you can ensure that your products or services are more likely to be purchased during a recession.
Take Advantage Of Technology
In today’s connected world, there are a number of ways to reach your target audience without spending a lot of money.
For example, you can use social media to connect with potential customers and promote your products or services. You can also use email marketing to reach a wider audience without incurring high costs.
By taking advantage of technology as part of your advertising strategy, you can reach your target audience without breaking the bank in marketing expenditures.
Conclusion – Keep Calm & Carry On
The most important thing to remember during a recession is to keep calm and carry on. While it’s natural to feel anxious about the state of the economy, it’s important to remember that recessions are temporary and there are things you can do to weather the storm.
By segmenting your audience, changing your offerings, and adjusting your prices, you can continue to generate sales and increase business growth in the long run, even during tough economic times.
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