How to market effectively during a downturn

It’s tempting in a downturn to find quick and easy cuts, and the marketing budget is often the first place companies start looking. Yet there’s increasing evidence that the companies that successfully ride out the storm of a recession are those who maintain their marketing spend and commit robustly to their marketing plan; albeit modifying it to take into account changes in the environment.

There are several reasons why this makes sense. Firstly, customers do not stop buying in a downturn they just buy differently. This means tailoring your approach to ensure that they buy from you, rather than a competitor; and that means marketing to them effectively. As the marketplace gets tighter, customers become more careful about who they buy from. This creates a need to target more effectively than before, to attract potential customers and prevent them going to the competition. Targeting is also important because you don’t want to be forced into a pricing war, and so you find other ways of finding and keeping customers who are perhaps spending less and being more cautious about their buying habits.

The other important aspect is to ensure that you’re effectively differentiated. That can be in terms of better service, a strong brand, a sustainable and ethical outlook, or better innovation than your competitors.

Adapting to the environment is what survival of the fittest really means; so the companies than can adapt to the downturn are the ones that will thrive. It’s arguable that there are only two real business drivers, innovation and marketing. With this in mind, its clear how steady as she goes is potentially a trap to be wary of. To achieve growth, sustain profits, maintain market share and fight off your competitors, you need to continue your investments in innovation, training and marketing, not cut back on them.

Tesco, for example, achieves its growth by identifying what customers want and providing it to them in ways that make the competition seem irrelevant; the essence of good marketing, and the clearest benefit of having Terry Leahy, a marketer by trade, as CEO. Faced with a downturn, Tesco does not look at ways of cutting back on service, or close under-performing stores, or reduce quality, or trim quantity of product to enable it to continue selling at the same price. Instead it looks at customer-focused solutions. At the moment, it is considering more own-label products and finding ways of reducing the price of its standard lines, without compromising quality.

Its only by thinking from the customers point of view i.e., developing a marketing mindset that you can research and identify what customers want and expect, discover what your competitors are doing, and develop new service strategies that will satisfy your existing customers and encourage them to continue buying from you.

It’s still vital to communicate effectively in a downturn otherwise, how will customers know what you can offer them? That means maintaining, if not increasing, your marketing spend. When the airline industry suffered a downturn after the 2001 attacks, most airlines pulled up the drawbridge and reduced their marketing, accepting they were going to take a hit on profits. Ryanair bucked this trend by robustly increasing their marketing, and experienced significant growth as a result.

This is partly because customer psychology doesn’t always follow the logic you might expect. There’s evidence that customers can behave counterintuitively in such situations; or as the marketer might say, when times are tough your holiday is the one luxury you can still afford. Not only that, but if people love your brand, they will still buy from you as long as you maintain a positive presence. What could prove fatal, however, would be to risk damaging your brand by producing cheaper alternatives; or by falling into the temptation of heavy discounting. Whilst this might increase sales in the short term, the long-term results are likely to be that you devalue your business. If you communicate panic to the customer, the customer is likely to panic too, and decide against buying.

Two thirds of Financial Directors think that the downturn will only get worse over the coming months. Yet for the qualified marketer with the right attitude, a downturn offers as many possibilities as problems. Key for any organisation that wants to weather the storm of tougher economic times is to find out how their customers behaviours are changing, and offer products and services that match consumers changed expectations.

Instead of battening down the hatches, investing in marketing during a downturn is the best way to ensure their long-term survival. If you cut your marketing, the gap between you and other brands will merely increase. Instead, maintain your advertising and promotions; just don’t overdo it. Allocate your spend differently if needs be, but don’t slash it. Try to offer increased value, rather than price cuts; and bear in mind that customers don’t always behave as logically as you might expect them to.

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