5 Reasons Why Your Marketing Strategy Shouldn’t Slow Down During a Recession
It is now 2023, and the outlook of what this year holds for the future could be more positive. At least based on all the news, we’re constantly seeing in the media today:
- The adverse and long-lasting effects of the pandemic.
- Increasing inflation and interest rates.
- The war in Ukraine.
- The great likelihood of going into recession, and more.
The reality is these worldwide issues are directly affecting us right now! And although this article does not pretend to predict what will happen in the future – as marketers and business owners, we need to be prepared for what it may hold!
So, what should our marketing strategy be if the worst-case scenario becomes true and we head into a recession?
Should we freak out and pause all marketing? Reduce budgets? Or do the opposite and advertise more aggressively?
While it may be tempting to cut back on marketing spend during tough times, doing so could actually do more harm than good!
In this blog, we’ll explore why maintaining a solid marketing strategy is more critical than ever during a recession and the benefits this can generate for a company of any size.
Stand Out From Competitors
During a recession, many businesses are forced to close their doors or cut back on their advertising and marketing budgets to save money – leading to less market competition.
By continuing to invest in advertising and marketing, a company can stand out from the competition and position itself as a leader in its industry. While your competitors are pulling back on spending and reducing marketing efforts, you can increase brand equity in a less overcrowded marketplace.
Brand Awareness & Customer Loyalty
A strong advertising and marketing strategy can help a company establish itself in its target audience’s minds, build brand recognition, and create a loyal customer base.
This can be especially important during a recession when customers are more likely to be cautious with their spending. By providing them with consistent, high-quality advertising and marketing messages, a company can build trust and encourage customers to choose its products or services over those of its competitors.
Not to mention, when fewer businesses are competing for advertising space, the cost of running these ads decreases – meaning reach more customers at a lower price!
While the overall economy may be in a downturn, consumers still are in a position to spend money. By providing them with a compelling reason to buy your products or services, you can help to stimulate demand and increase sales.
A strong advertising and marketing strategy can create new demand by reaching new target audiences or introducing new products or services to existing customers.
Sets Up Your Company For Success
Finally, maintaining advertising and marketing during a recession can help your company be better prepared for the eventual economic recovery. While the timing and trajectory of the recovery are uncertain, businesses that continue to invest in marketing during a recession will be better positioned to take advantage of the opportunities that will become available as the economy improves.
What has history taught us?
History shows that economic recessions are unavoidable, but despite all the gloom and doom we’ll often see in the news – history also indicates that recessions come in cycles. After every economic downturn, there is often a more extended period of economic growth.
Many of the world’s largest companies understand just that! Kellogg’s became a cereal leader in the 1920s recession, overcoming their competitor, Post. They “slashed marketing budgets due to the poor state of the economy, and Kellogg’s doubled its own and launched Rice Krispies at the time (snap, crackle and pop). Market share grew by 30%, and it has been a breakfast cereal leader ever since”. (Smartcompany.au, 2020).
“In the 1990-91 recession, Pizza Hut and Taco Bell took advantage of McDonald’s decision to drop its advertising and promotion budget. As a result, Pizza Hut increased sales by 61%, Taco Bell sales grew by 40%, and McDonald’s sales declined by 28%.” (Marketing Moves, 2020).
What’s interesting is that McDonald’s strategy changed entirely by the 2008 recession, where they not only managed to stay afloat but also increase market share from their competitors. The key to their success was not increasing budgets but taking advantage of cheaper TV ad rates and a low pricing strategy, McDonald’s Dollar Menu!
In conclusion, the amount of examples is endless. Groupon, WhatsApp, Uber and Airbnb were all founded during the 2008-2009 recession. Maintaining a solid advertising and marketing strategy can bring opportunities to businesses of any size, even in the worst economic times.
As Former chief of Procter & Gamble Alan Lafley said of marketing in economic downturns: “We have a philosophy and a strategy. When times are tough, you build share.”