We are in the midst of a recession, but do not stop marketing
The COVID-19 pandemic has plunged the world into a recession that has never been seen nor felt before and its effects are expected to be long lasting or even till a vaccine is (ever) found. From observations of past recessions, marketers usually find themselves in unfamiliar situations as no two downturns are the same. Especially during recessions, marketers need to understand the evolving consumption patterns and fine-tune strategies accordingly. We know that consumers are quick to “pull the hand brakes” in spending during hard times and business leaders who are also consumers tend to instinctively behave the same way. With reduced sales in the horizon, business leaders are inclined to cut back on costs and usually, marketing expenditures are often slashed across the board — such a sweeping measure will usually turn out to be not ideal.
When times are good you should advertise and when times are bad you must advertise.
As the saying goes, “when times are good you should advertise and when times are bad you must advertise.” A great deal of evidence suggests reducing marketing spend during recession may leave brands in a less competitive position, especially when the economy recovers. While it is imperative to contain costs, failing to support brands in adapting or communicating its value in addressing customers’ changing needs can jeopardize performance over the mid to long term. Companies that put customers’ needs first and agilely adjust marketing strategies and product offerings in response to shifting demand are more likely to do well both during and after a recession.
“Noise Level” & Advertising Costs
The “noise level” in a product or service category can drop when brands cut back on their ad spend. When “noise level” drops, it allows marketers that window opportunity to re-position a brand strategically or even introduce new products or service lines that suit the needs of consumers during a recession. New products and services that provides value to consumers may experience significant positive impact during a recession than at other times — some reasons could include competitors who are pulling back, may be late in landing their own “counter punch”. Also, because media costs are likely to be lower due to higher supply and lower demand, marketers would most probably get more bang for their buck for their marketing campaigns. These savings coupled with running an optimal campaign with strong ROIs may be compounded by the relative ease of cutting through in a less “noisy” atmosphere.
Share of Voice & Market Share
The higher the “share of voice” compared to the actual “market share”, the more likely the brand is expected to grow exponentially when the economy recovers. Being aligned with the first point, if marketers increase marketing investments when competitors are reducing theirs, the saliency of the brand could be increased monumentally. The resulting scenario could help establish an advantage that could be difficult for competitors to catch up for a long period of time. Vice versa, when marketers cut back on spending, the brand loses its share of voice and mind with consumers, leading to inevitably losing current and even future customers. An increase in “share of voice” should lead to in an increase in “market share”, which should lead to an increase in profits in time to come.
Brand Size
Enjoying advantages of scale, bigger brands usually enjoy an unfair advantage over smaller ones in terms of attracting repeat purchase and recouping their marketing investments. Therefore, brands that increase share during a recession stands to benefit from this multiplier once the economy rebounds. Additionally, brands can project to consumers the image of corporate stability during challenging times.
Conclusion
As marketing is usually perceived as a cost centre, there is a natural inclination for business leaders to tell marketers to cut back on marketing during a recession. However, brands that maintain their marketing budget and/or change their communications messaging can get a long-lasting boost in sales and market share. One distinct strategy used by marketers is by changing the marketing and communications message and using short-term pricing incentives to match the economic climate with consumers. Unless people simply cannot afford to buy their preferred brand or you are dealing with bargain consumers, the key factor still lies in perceived value. During a recession, always remind consumers why your brand is still worth consuming by focusing on practical advantages.
Disclaimer: This article does not reflect my present nor my past employer’s view, all views above are solely from my own personal standpoint.
