How to Market in a Recession By Clare Brace

Now we are firmly in a global recession companies should bear eight factors in mind when making their marketing plans for 2009 and 2010.

1. Research your customers. 

Instead of cutting your market research budget, as the market reduces your need to increase or even retain your share of the market is a prime time when you need to know more than ever how consumers are redefining value and responding to the recession. Price elasticity curves are changing. Consumers are now taking more time searching for goods, looking for durability, guarantees and comparing prices. No Rush – consumers are slowing and thinking about purchases, trade down, or buy less. The must-have ‘I want one of those’ of yesterday are today's non essentials. Trusted brands and bigger brands are especially valued and they can still launch new products successfully but interest in new brands and smaller companied which may not be around in 12 months to honor 12 month guarantee have seen a fade in consumer confidence. Therefore – research, understand and act on consumer research or risk wasting your marketing budget.

I recommend ECOTEC for any market research.

2. Focus on family values and comfort.

In the thick of economic hard times, we tend to retreat to our ‘village’. People aren't looking to take risks or be adventurous at the moment, be soft with your advertising and comforting and avoid images of extreme sports, adventure and rugged individualism. Humor and appeals on the basis of fear are out. Greeting card sales, telephone use and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends.

3. Maintain marketing spending.

A recession is no time to cut advertising. It has been well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during strong economic times. Uncertain consumers need the reassurance of known brands. Consumers numbers at home watching television has increased and this advertising channel can deliver higher than expected audiences at lower cost-per-thousand impressions. If you have a healthy marketing budget you may be able to negotiate favorable advertising rates and lock them in for several years until we are moving out of the economic crisis. But if you are limited on your marketing spending, invest in maintain frequency of your advertisements by shifting from 30-to-15 second advertisements, substituting radio for television advertising, or increasing the use of direct marketing, which gives more immediate sales impact.

4. Adjust product portfolios.

Marketers must reforecast demand for each item in their product lines as consumers trade down to models that stress good value and longevity, such as cars with fewer options and can be seen as the budget option and justifiably affordable. Tough times favor multi-purpose goods over specialized products and weaker items in product lines should be fine tuned for the credit conscious market. In grocery-products categories, good-quality own-brands gain at the expense of national brands but this will be more effective for bigger brands. Industrial customers prefer to see products and services unbundled and priced separately. Gimmicks wont appeal to consumers; reliability, durability, safety and performance are in. New products, especially those that address the new consumer reality (which your market research will have helped you recognise and know how to target) thereby put pressure on competitors should still be introduced but advertising should stress superior price performance, not corporate image.

5. Support distributors. 

No one wants to tie up working capital in excess inventories. Introduce early-buy allowances, extended financing and generous return policies which motivate distributors to stock your full product line. This is particularly true with unproven new products. Be careful about expanding distribution to lower-priced channels; doing so can jeopardize existing relationships and your brand image. However, now may be the time to drop your weaker distributors and upgrade your sales force by recruiting those sacked by other companies.

6. Adjust pricing tactics.

Customers will be shopping around for the best deals, TV advertising is littered with comparison websites which now makes price comparison easier. You do not necessarily have to cut list prices but you may need to offer more temporary price promotions and emphasis the temporary savings, reduce thresholds for quantity discounts, extend credit to long-standing customers and price smaller pack sizes more aggressively. In tough times, price cuts attract more consumer support than promotions such as sweepstakes and mail-in offers. Try not to ignore the importance of price comparison websites – they are being used by thousands of people on a daily basis.

7. Stress market share.

The majority of companies are in a battle for market share and possibly even survival. Knowing your cost structure can ensure that any cuts or consolidation initiatives will save the most money with minimum customer impact. Brands with strong positions and the most productive cost structures in their industries, can expect to gain market share.

8. Emphasise core values.

Business owners must spend more time with customers and employees. Maintaining quality rather than cutting corners and servicing existing customers rather than trying to be all things to all people. Economic recession can elevate the importance of the finance director's balance sheet over the marketing manager's income statement. Managing working capital can easily dominate managing customer relationships.