3. Concentrate on retaining current customers
Customer retention is a crucial company strategy at any time, but it is especially important during a recession. Existing customers account for the majority of a company’s income, and the costs of keeping consumers are far lower than the price of attracting new ones. One thing I’ve witnessed firsthand during this recession is that new consumers are less willing to try unusual products or services, which is why existing customers should be prioritized and kept satisfied.
By focusing on existing consumers, you can save money without cutting the marketing budget. Maintaining customer satisfaction will benefit your company in the long run since satisfied consumers are more likely to submit positive reviews and suggest your company to their friends, resulting in free word-of-mouth marketing. Retaining consumers may be the key to your company’s survival and success throughout the recession.
4. Examine Performance Metrics from the Past and Present
Performance metrics can show if your company is on track to fulfill its objectives or is on pace to meet its objectives. These measurements can aid in strategy development and serve as early warning signs when things aren’t going as planned. During a recession, tracking KPIs is even more critical, as a single blunder could spell disaster for the company.
To help guide decisions, businesses should look at their previous performance indicators. The firm will be able to see how the marketing campaigns are performing in this peculiar landscape and time by tracking current performance. Businesses will be able to invest their time in areas that have shown to work in the past, and check if what worked in the past is still working today, thanks to the mix of historical and current data.
5. Maintain Consistency
It’s not the right time to reinvent yourself or your company. While you may believe that rebranding your company will help you stand out and attract new consumers, this is unlikely to happen and will almost certainly result in a loss of income. Businesses should keep their names, branding, marketing, and consumer interactions consistent. Your company should not switch from bi-weekly to bi-monthly emails, nor should it switch from weekly to monthly blog articles. These attempts to maintain consistency will also help to keep prices low, which is critical during a recession.
While the recession will have an impact on your organization no matter what methods you employ, these strategies can help you emerge stronger. Businesses have suffered as a result of the Covid-19 issue, but the downturn will not last forever, and reevaluating a marketing plan can help businesses weather the storm. Businesses should research the market and make judgments that are in their best interests.
What is a smart marketing plan during a recession?
During downturns, marketers must strike a balance between cutting costs and boosting short-term sales with long-term brand health expenditures. Three successful approaches to achieve these aims are to streamline product portfolios, improve affordability, and strengthen trust. (For a full look at how to appeal to each market segment, see the exhibit “Tailoring Your Tactics.”)
What impact does a recession have on marketing?
Consumer confidence is one of the effects of a recession on marketing. Companies will conduct greater investment due diligence. Especially if you’re in the IT business. Improve your value-based marketing strategy to combat the drop in consumer confidence.
Do items become less expensive during a recession?
Lower aggregate demand during a recession causes firms to reduce production and sell fewer units. Prices eventually fall, but this process can take a long time, so the negative demand shock can result in a long-term recession.
What should I buy before the financial crisis?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage circumstances, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be willing to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
In a downturn, who benefits?
Question from the audience: Identify and explain economic variables that may be positively affected by the economic slowdown.
A recession is a time in which the economy grows at a negative rate. It’s a time of rising unemployment, lower salaries, and increased government debt. It usually results in financial costs.
- Companies that provide low-cost entertainment. Bookmakers and publicans are said to do well during a recession because people like to ‘drink their sorrows away’ with small bets and getting drunk. (However, research suggest that life expectancy increases during recessions, contradicting this old wives tale.) Demand for online-streaming and online entertainment is projected to increase during the 2020 Coronavirus recession.
- Companies that are suffering with bankruptcies and income loss. Pawnbrokers and companies that sell pay day loans, for example people in need of money turn to loan sharks.
- Companies that sell substandard goods. (goods whose demand increases as income decreases) e.g. value goods, second-hand stores, etc. Some businesses, such as supermarkets, will be unaffected by the recession. People will reduce their spending on luxuries, but not on food.
- Longer-term efficiency gains Some economists argue that a recession can help the economy become more productive in the long run. A recession is a shock, and inefficient businesses may go out of business, but it also allows for the emergence of new businesses. It’s what Joseph Schumpeter dubbed “creative destruction” the idea that when some enterprises fail, new inventive businesses can emerge and develop.
- It’s worth noting that in a downturn, solid, efficient businesses can be put out of business due to cash difficulties and a temporary decline in revenue. It is not true that all businesses that close down are inefficient. Furthermore, the loss of enterprises entails the loss of experience and knowledge.
- Falling asset values can make purchasing a home more affordable. For first-time purchasers, this is a good option. It has the potential to aid in the reduction of wealth disparities.
- It is possible that one’s life expectancy will increase. According to studies from the Great Depression, life expectancy increased in areas where unemployment increased. This may seem counterintuitive, but the idea is that unemployed people will spend less money on alcohol and drugs, resulting in improved health. They may do fewer car trips and hence have a lower risk of being involved in fatal car accidents. NPR
The rate of inflation tends to reduce during a recession. Because unemployment rises, wage inflation is moderated. Firms also respond to decreased demand by lowering prices.
Those on fixed incomes or who have cash savings may profit from the decrease in inflation. It may also aid in the reduction of long-term inflationary pressures. For example, the 1980/81 recession helped to bring inflation down from 1970s highs.
After the Lawson boom and double-digit inflation, the 1991 Recession struck.
Efficiency increase?
It has been suggested that a recession encourages businesses to become more efficient or go out of business. A recession might hasten the ‘creative destruction’ process. Where inefficient businesses fail, efficient businesses thrive.
Covid Recession 2020
The Covid-19 epidemic was to blame for the terrible recession of 2020. Some industries were particularly heavily damaged by the recession (leisure, travel, tourism, bingo halls). However, several businesses benefited greatly from the Covid-recession. We shifted to online delivery when consumers stopped going to the high street and shopping malls. Online behemoths like Amazon saw a big boost in sales. For example, Amazon’s market capitalisation increased by $570 billion in the first seven months of 2020, owing to strong sales growth (Forbes).
Profitability hasn’t kept pace with Amazon’s surge in sales. Because necessities like toilet paper have a low profit margin, profit growth has been restrained. Amazon has taken the uncommon step of reducing demand at times. They also experienced additional costs as a result of Covid, such as paying for overtime and dealing with Covid outbreaks in their warehouses. However, due to increased demand for online streaming, Amazon saw fast development in its cloud computing networks. These are the more profitable areas of the business.
Apple, Google, and Facebook all had significant revenue and profit growth during an era when companies with a strong online presence benefited.
The current recession is unique in that there are more huge winners and losers than ever before. It all depends on how the virus’s dynamics effect the firm as well as aggregate demand.
Which industry is recession-resistant?
Healthcare, food, consumer staples, and basic transportation are examples of generally inelastic industries that can thrive during economic downturns. During a public health emergency, they may also benefit from being classified as critical industries.
Which marketing strategy is the most effective?
The goal of social media marketing is to provide people with valuable material that they want to share throughout their social networks, resulting in increased visibility and traffic. Shared material, videos, and photographs on social media can help with Search Engine Optimization (SEO) by increasing relevancy in search results on social media platforms like Facebook, Twitter, YouTube, and Instagram, as well as search engines like Google and Yahoo.
Fast Fact: 61% of businesses use social media to boost conversions, and 50% use it to learn more about their customers or markets.
Paid Media Advertising
Paid media is a method that businesses use to increase website traffic by paying for advertisements. Pay-per-click (PPC) links are one of the most common ways. Essentially, a business buys or sells a product “when keywords relating to their product or service are searched, sponsors” a link that displays as an ad in search engine results (this process is commonly known as search engine marketing, or SEM). When the ad is clicked, the corporation pays a tiny price to the search engine (or other third-party host site) for the visitor a literal “click fee.” “pay-per-click advertising.”
Fast Fact: When it comes to making a purchase, 65 percent of customers will click on a paid ad.
Internet Marketing
Internet marketing, often known as online marketing, combines the use of the internet and email to promote and drive e-commerce sales. To maximize brand visibility and promote products and services, social media networks may be included. These efforts are frequently combined with traditional advertising channels such as radio, television, and print.
There’s a lot to be said for online reviews and opinions as well. Word-of-mouth advertising is free, natural, and extremely effective since individuals who have good things to say about your product or service have nothing to gain from it but to spread the word. A referral from a friend, coworker, or family member has built-in credibility, and it can generate dozens of prospects who are looking forward to having a pleasant experience with your company.
Fast Fact: By 2023, worldwide e-commerce is expected to grow at a 14 percent compound annual growth rate (CAGR) to $3,056.3 billion, with the increase mostly owing to contactless shopping practices stemming from the global epidemic (COVID-19)
Email Marketing
Email marketing is a powerful tool for nurturing and converting leads. However, whether or not your communication is caught in spam filters is not a game of chance. Email marketing, on the other hand, is a computer-assisted procedure that targets individual prospects and consumers in order to influence their purchasing decisions. Because open rates and click-through rates are used to determine the effectiveness of email marketing, strategy is important, especially when it’s part of a bigger internet marketing campaign.
Direct Selling
Direct selling accomplishes exactly what its name implies: it markets and sells things to people directly. Sales agents in this approach develop face-to-face connections with customers by showing and selling products outside of retail venues, usually in the customer’s house (e.g., Amway, Avon, Herbalife, and Mary Kay).
Fast Fact: The direct selling industry is worth $63 billion dollars right now.
Point-of-Purchase Marketing (POP)
POP marketing (Point-of-Purchase Marketing) sells to a captive audience of shoppers who are already in the store and ready to buy. Product displays, on-package coupons, shelf talkers touting product benefits, and other attention-getting “sizzle” can impact shelf purchases by making an offer simply too tempting and too obvious to pass up.
Fast Fact: Annual impulse purchases in the United States total $17.78 billion, while Canadians spend $8.8 billion per year.
Cobranding, Affinity, and Cause Marketing
Co-branding is a marketing strategy in which two or more companies collaborate to promote and sell a single product or service. Consumers are more likely to purchase and willing to pay more at retail when the brands give their collective credibility to boost perceptions of the product or service’s value. Co-branding, on the other hand, may deter private label manufacturers from duplicating the product or service. Affinity marketing, on the other hand, is a collaboration between a corporation (supply) and an organization that brings together people who share like interests, such as a coffee shop that sells goods from a local bakery.
There are plenty of co-branding alliances out there, but a few recent instances stand out, like the daring GoPro and Red Bull, the elegant BMW and Louis Vuitton, and the fashion-forward Alexander Wang and H&M.
Cause marketing, on the other hand, leverages and improves brand reputation. Cause marketing is a partnership between a for-profit company and a non-profit organization that aims to promote and benefit social and other charity causes. Cause marketing should not be confused with corporate giving, which refers to an organization’s specific tax-deductible donations. Cause marketing interactions are “feel good” and reassure customers that you share their goal to improve the world.
Customers perceive co-branding as a value endorsement from a company they already trust, potentially creating a valuable halo effect.
Conversational Marketing
Conversational marketing is exactly what it sounds like: a conversation. Real-time connection with prospects and customers via a chatbot or live chat puts the relevant information in front of them at the right moment, allowing them to self-serve and get questions answered right away. The user experience is substantially improved by personalized, relevant engagement. Conversational marketing is particularly beneficial for B2C organizations because it scales customer service and reduces the amount of time consumers spend in the sales funnel. Because relationships are formed more quickly, conversions occur more quickly.
How can a company survive a downturn?
Risks if they occur and unforeseen events are less likely to impact your firm the stronger it is. Financial management is only one aspect of a company’s strength. It also contains techniques for retaining and expanding your customer base, marketing your business on a budget, maintaining high employee morale, and improving business processes. You should also look for ways to network and build partnerships, as this will reduce your risk exposure.
The following tactics should be considered if you want to strengthen your firm during a slump.