Since last summer, a recession has been predicted due to a certain downward trend called a yield curve inversion. I’m not a financial analyst by any means, but my own personal experience tells me there is a roughly eight-to-twelve-year cycle between downturns. What I do know is that branding and marketing are essential in a downturn. Here are 3 opportunities you can’t neglect in a downturn.
1. Understand your customers better.
A recession or downturn is an opportunity to make sure you understand your customers. Customers who feel understood won’t forget about you. Consumers and businesses alike realign their behavior during a downturn, reassessing their spending habits. How will that affect your business? How is it affecting your industry or market sector? If you understand where you fit in your industry and in your customer’s world, you might have the key to knowing how to survive with the right branding and marketing during the recession.
This is a great time to take a look at your value proposition.
Marketing and branding in a recession can be tricky, because you want to be sure your messaging conveys value and makes the sale, but if you come across as tone-deaf to the current situation you’ll never recover. Meanwhile, you can take a closer look at the products and services you offer. You might discover aspects of your business that you’re not talking about enough that could make a difference in your bottom line.
Understand consumer psychology in light of the recession.
Harvard Business Review published an excellent article about understanding recession psychology back in 2009 when we were dealing with what we now call The Great Recession. There are four types of consumer personalities in a recession, and four types of purchasing categories. Everything gets reevaluated and recategorized depending on consumers’ attitudes and predispositions. Your product or service might be reassigned or recategorized or even eliminated. How do your offerings fit into those new categories? How does that affect your branding and marketing in the recession?
2. Look for opportunities to grow and expand.
A lot of businesses cut back on marketing and advertising and product development during a recession, but the ones that come out ahead are the ones who invest in those things. If your competitors are in a holding pattern, this is the time to experiment with new offerings and acquisitions, targeting smaller segments, and making improvements to existing systems and processes. Zig when others zag.
Don’t be afraid to experiment.
If you’ve been on social media lately, you know people are experimenting with cooking and baking while quarantined at home. This is a great time to try explore in your business as well. Is there a by-product of your business you can sell? Or a “mini” or “lite” version of something you already offer? Perhaps there’s a better delivery method. Or do you see a need that isn’t being filled right now? Or is there something you’d like to try for a while but haven’t gotten around to? Sometimes a “quick fail” approach can lead to something you can test in your market.
Identify weaknesses in your current business.
I think right now we are seeing weaknesses in how the supply chain works. Again, I’m no financial analyst, but my hunch is that this is one of the underlying factors in the predicted recession. The COVID-19 situation just underscores it. Remember how we ran out of toilet paper in March?
What can you acquire?
In a recession, technology and patents might be more accessible than when the market is expanding. And if you’re in the right position financially, you can acquire other businesses that complement yours at a bargain.
Focus on marketing and branding rather than sales.
When branding and marketing in a recession, tailor your messages appropriately. Be sensitive to the situation. Establish an emotional connection between your customers and your brand by demonstrating empathy. The last thing you want to do is raise prices and lower quality. Invest in your customers by offering better loyalty programs, education, training, new experiences, and better access.
Invest in your employees.
While investing in your branding and marketing, be sure to invest in your employees. The best ones are the ones most likely to jump ship as they are probably already looking elsewhere. Help them grow and learn new skills that will in turn expand your business. Have a graphic designer who wants to get better at copywriting? This is the time to sign him up for that copywriting course. Reward the employees who stick around by investing in their education and training. The best employees aren’t content to stay put. They want to grow.
See the recession an opportunity to expand and dominate a market.
Historically, there have been a number of businesses to come out the other side of a recession (or depression) to dominate a particular market. Let’s take a look at a few situations and businesses that grew in spite of (or because of) those downturns:
- The Great Depression: Kellogg’s replaced Post as the dry cereal market leader by doubling it’s advertising budget for for it’s new cereal, Rice Krispies, with the memorable characters Snap, Crackle, and Pop.
- The Energy Crisis of 1973-1975: Japanese automobile makers such as Toyota and Honda gained a foothold in the American market by positioning their vehicles as more fuel-efficient than their American counterparts. Some 45 years later, at least half the vehicles I see on the road are Japanese.
- The 1990-1991 recession: When McDonald’s dropped its advertising and promotion budget, Pizza Hut and Taco Bell ramped up theirs. It’s a classic case of “zig when they zag.” Pizza Hut and Taco Bell grew while McDonald’s declined.
- The Great Recession of 2008-2009: online properties such as Amazon and LinkedIn exploded. Amazon made book-buying cheaper and easier by rolling out the Kindle, and LinkedIn capitalized on job-seekers looking to build their networks in a tough economy.
3. Position for Recovery
Keep in mind that it takes a year or two for things to return to “normal.” I think it might take a little longer to rebound from this one. I expect this recession to be a bit prolonged as the situation is two-fold. First, there’s a very real health threat that might not be eradicated for 12-18 months, or longer, depending on when a viable vaccine is developed. Secondly, there was economic instability to begin with, and people were beginning to be wary with their spending habits.
My grandparents were little during the Great Depression, and they were affected by it all their lives. I think the COVID-19 situation has the potential to have similar long-lasting effects. I’ve seen a meme on Facebook that goes something like this:
Little girl: “Daddy, why does grandma wipe down all the groceries with Lysol?”
Father: “Because she lived through COVID-19. We don’t talk about it.”
I realize this could very well be me in 30 years. I’m already wiping down groceries with Lysol and wondering how to build a good stockpile of non-perishables for the next emergency. I’m also thinking about how to build up a financial buffer for the next recession, whenever that is.
That’s why right now is the best time to prepare for a long-term shift in values, attitudes, and spending habits.
Some might say the coronavirus-caused economic collapse is the recession, but as I stated before, I have a feeling that has only aggravated the existing problem. The good news is we have the chance now to fix those problems not just in business processes but in how we conduct our branding and marketing. You a great opportunity to employ the right marketing approaches to cement yourself in your customer’s mind, explore avenues for growth, and position yourself for recovery.
Don’t miss it.