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.