Marketing during Recession

marketing during recession

Every one speak about recession these days, Day to day we hear news regarding the retrenchment of employees by firms, reducing their expenses, bankruptcy  etc etc. Yesterday when I was chatting with my former employer and the director of a holding company, his mind set seemed totally different. He said he wanted to get out from the recession and to try something new.  He did not want to admit failure of firms by just sticking into recession talks. He said people fail because they make mistakes. Yes I must say that  it was a very true statement.

So what firms can do during recession. When ever I speak to people they say cutting cost would be the final solution. But this morning I went through many articles and presentations in the web written and done by many marketing experts. All they say to spend more if you have enough cash.

 First question as marketers we can raise is that  during recession do we need to spend more or not? However all the evidence suggests that it is not good to reduce the marketing spend during the recession times. By doing this it might leave the companies and brands in a less competitive position when the economy recovers. Based on an analysis of the Profit Impact of Marketing Strategies (PIMS) database when brands spend more on recession time and During the recovery, the “spenders” achieved significantly higher return on capital employed and gained an additional 1.3 percentage points of market share.  This can be explained with three factors

1 – The relationship between share of market and share of voice- If the share of voice is high when compared to the actual market share, the brand will grow significantly in the forthcoming years.

2 – The relationship between brand size and profit margins – A brand that increases its share during the recession period stands the benefits from the multiplier once the economy get recovers.

3- Reduced “noise” during recession provides opportunities- A new product launch may actually give the firms a greater impact during the recession. There are several reasons for this. A new product that is unique or better than the others can rule the higher price. During the recession when the competitors are scared to  do the same,  may be late come up with a “me too” products.

John Quelch, Professor, Harvard Business School also stated the same in an interview which is shown below

But again the big brands those who have the cash flow can spend more, so what about firms those do not have extra money to spend. Here some survival tactics mentioned by Nigel Hollis Chief Global Analyst Millward Brown

1 – Focus on Competition

Analyze company and brand health- Keep finger on the competitive pulse

  • track their annual reports, media data, feedback from customers and consumers
  • Try to know the companies with better financial position
  • What the record tell about their recession strategy

Anticipate their actions – Recessions are generally times for change. More than ever, firms need to foresee what the competition might do and plan. If everyone else cuts spending, firm can gain an edge simply by maintaining you the level of investment.

2- Focus on Your Brand

  • Concentrate on core brands and products- Concentrate marketing Muscle behind the brands that are most likely to survive, and leave the others to sink or swim.
  • Support core proposition and emphasize its value
  • Don’t price promote unless can cut costs or live with lower margins
  • Don’t cut quality
  • Think internal branding and morale
  • Focus on Customers
  • Review consumer segmentation
  • Focus on Communication

I think that every brand will not cut spending, but firms those who do so will find a disadvantage when the recession comes to an end. Marketers need to make the best from every single point of their brands if they hope to maintain a very strong relationship with the consumers. Marketers need to make the most of every spent in support of their brands if they hope to maintain strong consumer relationships. Those that do well should then be well placed to take advantage of weaker competition when the good times return.

Should firms need to cut Marketing Budget During a Recession?


The news in the industry are like thunder blots and every day we used to hear news “DHL cuts Jobs, Dell sent off xxx employees, yes we are in an economic downturn. People every day talk about this, It’s on the news, blogs, webs and it is in the papers. A common trend I can see most of the firms try to cut their marketing budget. I took part in a poll survey created by Linkdin. In the poll results I saw most of the professionals are worried about their marketing spend. Let’s start reducing and cutting costs and marketing is the first to go. Makes sense, right? No! Let me explain.
Don’t you dare cut your marketing budget. That is one of the first mistakes managers make during times of economic crisis. They tends to do it because of pressure from CEO or director, or they try to act as the competitor do.
Its time for a smart thinking about your marketing spend to bring the desired results. Yeh it sounds good but you may think how do you do it?The key is to look at your marketing spend as an investment not an expense. Use the customer knowledge that you have and implement SMART marketing during these times of financial distress.
SMART marketing consists of the following
S – Strategize
M – Maintain market spend
A – Assess and allocate the budget
R – Research your customer thoroughly
T – Target and reach out to them
Stand fast during this time and make sure you never rest until you achieve the results. There are companies survived difficult times and have came out strong. Don’t think these are just words. I came across a very good study done by Smeal college. Research: Proactive Marketing During Recession.
All business owners should read this, they remind of us of companies that weathered the storm and succeeded. Some good examples mentioned in the articles are stated below
Procter and Gamble – During the Great Depression they pushed Ivory soap.
Intel – In 1990-1991 during economic difficulty they pushed out the campaign “Intel Inside”.
Wal-mart – Walmart launched their “Every Day Low Prices” campaign in 2000-2001.
Even when there are difficult times in the economy well-positioned, branded companies can in fact survive and thrive in them. It truly is about being SMART in marketing and taking marketing seriously now more than ever. Practice marketing very strongly. Put your effort in total. Know you customer well. Try to get all the inside and out about them. Make sure to practice the database marketing very effectively with proper data mining. Definitely they may also suffering with the hard economic condition and create your marketing message around that. Send them offers, promotions, free tests, they will be happy. If you feel the production is costing more revise your product but make sure you get the customer opinion. Maintain a good relationship always.
Think, if you in fact cut the marketing expenses, how your potential customers find you? But anyway put your effort to get maximum out of your existing customers, and try to find new customers as well. In my point I’m not agree with cutting marketing budget, do more campaigns with the support of resources. If you are SMART then economic downturn will never impact you. I would like to hear your comments in this regard.