Things To Consider When Marketing In A Downturn (According To History)

Things To Consider When Marketing In A Downturn (According To History)

Since 1900 the average recession has lasted 15 months while the average expansion lasted 48 months, says Geibel. It is possible that when an economy is in recession or a market downturn occurs, something slips through, but no one knows for sure. A recession is not declared until it lasts at least six months, and it is, by definition, two consecutive quarters of economic decline.

The Great Depression, which began in August 1929 and lasted 43 months until March 1933, is the second contraction of the twentieth century. The 2008-2009 Great Recession lasted 18 months, the longest period of economic decline since World War II. It was an economic recession that was triggered in the United States by the 2007-08 financial crisis and spread to other countries.

The two sharpest declines in output, with the exception of adjustments after World War II in 1945 and 1947, occurred during the Great Depression of the 1930’s. One quick way to illustrate the difference in severity of economic contractions associated with recessions in the 1930-2006 period is to examine the annual real GDP growth rate over the chain of years in $2,000 USD.

In a speech on March 2, 2004 in Washington and at Lee University, former President and Fed Chairman Ben Bernanke compared the severity of the initial downturn of the 1930 – Great Depression with the less severe post-World War II recession of 1973-1975.

Seven of the past 11 bear markets have been associated with recessions, according to the analysis, so don’t give up your day job just yet. The COVID19 case shows that bear markets can arise even in a healthy economy. In the two previous recessions, marketers have found themselves in the water every time one has occurred.

There are some guidelines, says Quelch-Jocz, who has studied the marketing success of Smuckers, Procter & Gamble, Anheuser-Busch and other failures in past recessions and identified patterns of behavior among consumers and businesses that can affect performance.

In examining marketing successes and failures of dozens of companies that have survived recessions since the 1970 s, we identified patterns of consumer behavior and corporate strategies that have driven or undermined performance. During recessions, marketers often find themselves caught between two downturns. The idea is to be brief between two recessions so that you can map the waters in advance.

Companies need to understand evolving patterns of consumption in order to refine their strategies. Limited budgets, changing priorities and changing customer purchasing patterns require you not only to continue marketing as usual, but also to change how you market your business during a recession.

Now that you understand the general signs of an economic pause and the impact on business, you can better prepare your business and your workforce for an economic retreat. Here are five strategies to find out how a recession affects your business and how to deal with it.

Nobody can predict whether an economic recession will come, but a slowdown is inevitable. That’s how the first Great Recession ended more than a decade ago. In the months leading up to a recession, consumer spending and available capital fall, causing a company to feel the squeeze on its tight budget.

When a recession occurs, companies are afraid of falling revenues and start making cuts in various areas, including their ad spending. However, companies that retain a share of voice and market share during a downturn show that long-term improvements in profitability outweigh short-term savings.

In the past, many companies have increased their advertising spending to gain market share from more conservative rivals. Companies with dominant market shares and high marginal costs for acquiring new customers could cut back on spending in a recession. On the other hand, companies with low market share and low marginal customer acquisition costs can use a recession as an opportunity to invest in advertising.

Advertisers who maintained or even increased ad spending increased sales and market share during the recession. Many companies that increased their advertising spending at lower costs were typical of those that were rewarded with sustained growth after the recession ended.

McGraw-Hill Research analyzed 600 companies between 1980 and 1985 and found that those who maintained or increased their advertising spending during the 1981 recession had 25.6% higher sales than in 1985. In other words, those who did not find ways to grow their revenue through innovations or brands that moved relative to their competitors in the recession lost market share as it improved. Only 8% of the 25,000 consumers surveyed by Kantar said brands should stop advertising.

Here are some tactics you can use to gain market share during an economic crisis. No matter what your company’s budget is, what industry you’re in, or what company succeeds during a downturn, everyone succeeds in downturns by adopting a set of similar creative tactics.

While there is a natural tendency for advertisers to limit advertising during a recession, brands that maintain their ad budgets and change their messages and messages can last longer, increasing sales and market share. For growth hacking agencies and advertisers who do not receive cost incentives, they can change advertising messages that are too expensive to be worthwhile. A brand campaign may not lead to immediate sales, but it can position a brand to gain market share during the inevitable recovery.

Most of us would be surprised to learn that increased marketing can lead to growth during a recession. In a Forbes story of last fall, Brad Algate published a few examples of how recessions can be pivotal moments for brands to regain market share. I will give real examples of companies that were not at the forefront of the recession but are still at the forefront of their industry today.

As you can see, companies that remain in the forefront of consumer minds when they remain trying to market themselves during a recession can acquire money to spend when they turn to them. As you continue your marketing efforts during an economic downturn, the message that you convey to your audience is one of strength, leadership and foresight, particularly when consumers are looking for something to do in such uncertain times. You can choose to hire a growth hacking agency for best results.

 

Categories: Business

About Author