Brands and marketing departments typically look to slash budgets immediately at the first sign of an economic downturn. While on the surface this makes sense to the finance departments, there can be deeper, lasting negative ramifications to this business approach. However, when done the right way, brands can leverage marketing with the right budget that can help them survive and come out on the other end of the downturn in a leadership position.
Some brands that cut marketing and instead focus on price cuts can actually lose market share AND sales, and then see themselves in an even worse industry position when the economy turns around.
Here we’ll discuss the psychology of the consumer in an economic downturn and offer specific examples of how both B2B and consumer brands can find opportunities to maintain the right level of marketing to weather the storm.
In any economic situation, especially a down economy, it is critical to understand individual and personal needs that become even more important. Because we now have the technology to segment and ultra-target marketing messages, marketers should leverage a more personalized approach in their marketing messages when targeting their audiences.
When creating targeted messages, be sure to understand the different levels of hesitation from the customer’s perspective. Are they completely cutting out all purchases, are they more cautious, or are they looking to increase their purchases because they are feeling the fear of the moment?
Then determine where your brand’s product value proposition fall.
An increase in the market research may be wise in order to better understand your customers at the onset of a downturn. This way, brands can identify early-on who falls into which of these categories, which then helps in the target-specific messaging strategy throughout the downturn.
Understand if your product is a want or a need in a downturn. This is paramount to surviving the downturn as a brand. In the current crisis of the Coronavirus pandemic, brands that sell healthy, cleaning agent products, or anything that contributes to the well-being of an individual or individuals fall into the need category. These brands should absolutely be ramping up their marketing in order to get their brand in front of consumers.
Another example of a need category would be any brand that has a product that caters to the work-from-home movement, such as home office uses or remote workforce technologies like Microsoft Office 365 and Teams.
But what if you do NOT fall into this category? What if your brand or product falls into the want category? For example, how can a car dealer survive this downturn? Simply put, people still have a desire to get a new car even in a downturn, it just tends to fall down their list of priorities. When this happens, car dealers should leverage marketing to continue to get their brand in front of the consumer, but in a way that is sensitive to the situation. In the case of the Coronavirus, dealers should be calming the fears of individuals who are wondering how they can come to the showroom in a time when it is important to exercise “social distance” with one another.
Dealers should leverage marketing, PR and social channels to educate consumers and potential car shoppers of the different virtual technologies and tools they now have that can help consumers research, buy, shop, and arrange to finance virtually while limiting personal contact at the storefront.
Further upstream, this applies to companies in a B2B environment that sell their services to the dealers. For example, a company such as Nsight Live, which helps dealers put on virtual events and promotions for local dealers, should be ramping up their marketing to help educate dealers on the different ways they can add value, especially in a time when virtual events will be beneficial to customers.
This is just one example in the automotive industry. However, virtually all industries and markets are facing similar situations and it’s important that business leaders create the right strategy and understand their audience appropriately in order to create the right targeted programs and message opportunities.
Brands feel it’s necessary to immediately focus solely on the bottom line when a downturn hits. While this is important, this approach fails to let executives see the bigger picture, where customer, employee and shareholder perspectives also come into consideration. Shareholders, in particular, want to see companies make the right decisions for their brand, not just the near-term decision. What’s more important in a down economy is not the price, but the message a company is delivering to these audiences.
The marketing message becomes even more critical in a downturn. Whereas during good times companies can press down hard on the promotional gas pedal in pure features and benefits style; in a downturn (especially a severe one), customers may still want your product, but they need to be better educated more about how it will bring value to their lives. In this case you need to sell them the steak maybe more so than selling them the sizzle.
Education and thought leadership become even more important. How can customers benefit from you? Why is it important that they invest their critical dollars in you instead of saving what little they have? And why is YOUR brand the one that stands out as most credible compared to others who are also trying to seize the moment? Getting out front and being perceived as a trusted, credible brand is never more important, and cutting marketing and PR budgets that limit these brand-building activities often results in a negative downward trajectory for brands. It also makes it that much more difficult to bounce back when the economic picture turns.
Maybe your brand was perceived to be a “middle of the pack” brand when the downturn began. However, now is the time to quickly change your position ion the category hierarchy by being perceived as a trusted leader during the downturn. One who is seen as the credible expert that is looking to help people when times are bad – this can be the difference between good and great.
In the current downturn, the work-from-home movement has officially arrived. This means people aren’t at sporting events (and therefore in-game sponsorships may not be a wise investment) or conferences, but instead are making a larger investment into the following:
The goal of your marketing is to bolster trust. Sure, we all want to protect, preserve and grow sales and margins. However, in any economic downturn, the objective is always to build credibility with your current and potential customers. This is simply not achievable if you completely shut off your marketing for any period of time, and worse, can do more long-term damage to the brand in during times of economic distress.
Connect with a Merit Mile marketing specialist to learn more about what your brand can do.