So, how can you tweak your strategy to ensure that your organization not only survives this difficult time, but comes out of the recession stronger than ever? Race ahead of your competition, get to know your customers, and discover the secret marketing genius behind Coca-Cola’s smaller cans with these data-driven tips for success.
1. Do Your Research, and Segment, Segment, Segment
If you are going to be spending precious resources on advertising, your efforts have got to be targeted. Investing in market research and knowing how your customers define value will be crucial to success.
“In a B2B environment, the top 20% of customers in a business may generate as much as 80% of the company’s profits. It is therefore necessary to focus on existing customers that matter.”
Although it may seem counterintuitive, drastically decreasing marketing will not only hurt your company in the long term, it will prevent you from taking advantage of the comparatively “quieter” marketplace that emerges during times of recession.
First, it has been proven that cutting adspend during a recession delays your recovery. Ultimately, you are likely to spend even more than you originally saved trying to claw your way back to your original, pre-recession position once the market picks up again.
Second, as your competitors scramble to cut costs by decreasing their marketing spend, your own efforts will be more noticeable and effective. As branding experts Millward Brown explain in this POV article, an increase in your share of voice will lead to an increase in your share of market in subsequent years.
“If you increase your marketing investment at a time when competitors are reducing theirs, you should substantially increase the saliency of your brand.”
3. Emphasize Family Values
As spending decreases, we tend to stay home and surround ourselves with the less expensive comforts of food, friends, and good family fun. The recession is a time of uncertainty in Alberta, and customers will be craving reassurance and security.
Your marketing campaigns should reflect this: think cosy fireplaces and warm smiles, not solo treks in dangerous mountain ranges. While that kind of independent adventure may appeal in other years, it’s the wrong message to focus on right now.
4. Adjust Your Products. Less Is More!
According to the Harvard Business Review, purchasing behaviour changes dramatically during economic downturns. Customers may choose the lower-price versions of their usual products, either by switching retailers buying store brand instead of name brand, or doing away with frills.
If your products are the lower-price versions, this may be good news for you! If not, it’s time to get creative with your pricing strategies and product mix.
One strategy is to take a steer from beverage giant Coca-Cola and offer smaller sizes. Not only is Coke retaining customers during the recession and getting a lot of positive attention in the media for helping consumers to cut calories, the higher profit margins on the cute little cans have led to a 7% increase in profits.
The HRB also points to another innovation that can be seen across budget airlines. Now that luxuries such as checked baggage, in-flight meals, and headphones are sold separately, customers are able to save money on basic flights.
Could your company find a way to offer reduced prices by unbundling one of the services it offers?
5. Drop Your Prices—But Not Too Much
When customers are shopping for a bargain, price promotions and flash sales can generate much needed excitement and revenue. Aside from the standard 10% off, your pricing tactics could include reducing the threshold for bulk buying, or buy now-pay later schemes.
In these tough economic times, shoppers are much more likely to respond to price decreases than to other types of promotions, so this strategy should generate short term sales.
As this fascinating study shows, money and value are wired together in the human brain: the more something costs, the more value we ascribe to it. The last thing you want is to accidentally create a cheap or negative long-term perception of your product that may well outlast the recession.
Think about it this way: if Birks started selling diamonds at steep discounts, how would you feel about purchasing full-priced jewellery from them in a few years’ time?
6. Focus on Cost Structure to Increase Market Share
Savvy marketers will take advantage of customer consolidation to increase the strength and efficacy of their communications and maintain or even improve market share.
Of course, this could be an expensive strategy, so it’s important to know the cost structure of your business. Where can you safely save money, and where should you invest for maximum impact?
A lot of thinking in this area is based on research drawn from the Profit Impact of Marketing Strategies (PIMS) database. As econometrics consultant Les Binet summarizes, the study basically found that admin and manufacturing costs are most expendable, whereas budget cuts linked to product quality, marketing, or market research can lead to underperformance.
The current economic situation means marketers in Alberta may be faced with budget cuts and tough decisions in the months ahead. We hope that this post has given you the tools you need to make a case for the importance of marketing, adapt your current strategies, and work more effectively.
If you invest in research and segmentation, focus on family values, adjust your products, think creatively about promotions and discounts, understand the cost structure of your business, and take advantage of less expensive marketing channels, then the challenge of the recession can be changed into an opportunity to gain traction in a quieter market.
And Now for the Great News
While marketing during a recession might seem overwhelming at first, the discipline and skills you develop during this difficult period will make you a marketing superstar when the economy recovers and will continue to serve your company long after recession time is over. So be bold; and good luck!
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