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With a looming US recession and inflation on the rise, many South African businesses are already feeling the pinch. But every challenge also presents opportunity, and with some forward-thinking strategies, your marketing can not only weather the storm, but actually come out ahead.
In this post, we’ll examine why some industries cope better than others during a downturn, how to prepare for the coming recession, bust some common myths about marketing during tough economic times, and share our top tips for recession-proofing your business.
Why some industries do better than others during a recession
As you might expect, when times are tough, consumers tend to gravitate away from luxury items and non-essential services in favour of more affordable options.
But it’s not just businesses that make “unnecessary” products or offer indulgent services that suffer – even companies that provide essential goods and services can see a drop in demand if customers are worried about their finances. One prime example is people choosing their own brand options in the supermarket rather than the more expensive, branded products they usually buy.
Interestingly, however, not all industries are equally affected by a recession. In fact, there are some businesses that actually do quite well during an economic downturn. For example:
Discount retailers: When people are tightening their belts, they’re more likely to seek out bargains and look for ways to save money. This is good news for discount retailers, who can expect to see an increase in demand for their products.
Home improvement stores: During a recession, people are less likely to move house or buy a new property. Instead, they’re more likely to focus on making improvements to their existing homes. That’s why home improvement stores tend to do well during economic downturns.
Essential services: Obviously, people still need to heat their homes and cook their food, no matter how bad the economy is! That’s why businesses that provide essential services – such as utility companies, supermarkets, and pharmacies – often weather a recession better than most.
Key takeaways:
- If at all possible, try to avoid raising your prices when everyone else is. Not only does this make you less likely to lose regular customers, it sets you apart and gives you a marketing edge over the competition.
- If your brand doesn’t offer any ‘must-have’ essentials, consider adding these to the mix, or offering a more affordable basic option of your existing product or service.
Common myths about marketing in a recession
There are a lot of myths about advertising and marketing during a recession. Let’s take a look at some of the most common ones.
“Marketing is a luxury item.”
Many businesses believe that marketing is a luxury item that can be easily cut from the budget when times are tough. But this couldn’t be further from the truth!
In fact, marketing is one of the most important things you can do for your business during a recession. Why? Because it’s during these times that customers are the most price-sensitive and likely to switch brands if they feel they’re not getting good value for money.
That means if you want to keep your customers loyal, you need to work even harder to stand out from the competition. And the best way to do that is with a well-planned and executed marketing strategy.
“Advertising doesn’t work in a recession.”
Another common myth is that advertising doesn’t work during an economic downturn. But this simply isn’t true. In fact, many businesses actually see an increase in sales when they maintain or even increase their advertising spend during a recession. Remember that in these times, consumers are actively searching for ways to save money. If you can help them do that, you can snatch them away from your competitors.
In fact, research has shown over and over again that cutting your marketing spend during a recession costs you money in the long run.
“People stop spending during a recession.”
This is perhaps the most damaging myth of all. The problem with this way of thinking is that it can quickly become a self-fulfilling prophecy. If businesses believe that people stop spending during a recession, they’re likely to cut back on their marketing and advertising efforts, which in turn will lead to fewer sales.
In reality, people don’t stop spending during a recession – they just spend differently. If you can show them your product is better value for money, or the smarter option, you can win them over.
Key takeaway:
- Maintaining (or even increasing) your marketing spend during an economic downturn is more likely to lead to increased sales, market share and brand loyalty than cutting back.
‘Never let a good crisis go to waste’
Remember that recessions don’t last forever, and they don’t affect all customers equally. As we mentioned above, some industries fare better financially in a recession – and so do their owners, employees, and families.
In fact, many businesses use recessions as an opportunity to get ahead of the competition. They do this by taking advantage of lower prices on goods and services, or by snatching up talented employees who have been laid off by other companies.
If you can see the potential for differentiating your brand in tough times, you may find that a recession is actually the perfect time to invest in marketing and advertising.
Trust is quickly lost and slowly gained
One of the worst things a brand can do during a recession is to ‘go dark’ and disappear from the public view. If you stop marketing and advertising, your customers will quickly forget about you. And when the recession is over, they’re likely to choose a competitor who’s been visible and top-of-mind throughout the tough times.
It’s important to keep in mind that trust is quickly lost and slowly gained. So even if you can’t afford to spend as much on marketing and advertising as you’d like, it’s important to keep your brand visible. Let your customers know you’re still there for them, and that you’re committed to providing them with the best possible products or services.
So, if you find yourself in the middle of a recession, don’t despair. Use it as an opportunity to make your business stronger and more resilient. And always bear in mind that when good times roll around once more, consumers will remember which brands stuck by them – and which ones abandoned ship.
Tips for getting the most out of your marketing strategy during a recession
How can you get the most bang for your marketing buck? Here are some marketing strategies to help you recession-proof your business and thrive during a downturn:
Diversify your customer base
Don’t rely on one or two big customers for the majority of your revenue. If they’re hit hard by a recession, you’ll feel it too. Instead, see if it might be possible to expand your target audience and tap into new markets. Even if your core product or service isn’t recession-proof, there may be related products or services that are.
Think outside the traditional marketing mix
Recessions offer an opportunity to get creative with your marketing. If you can’t afford traditional advertising, look for alternative ways to get your message out there. For example, you could use PR or influencer marketing to raise awareness of your brand. Or consider using content marketing to show potential customers how your product can save them money.
Remember that customer loyalty is more important than ever during tough economic times
If your brand offers any essential products or services, make sure to emphasise this to customers. They may be price-sensitive, but they’ll also be looking for quality and value. Find ways to reward them for sticking with you.
Don’t buy into the common myths about marketing during a recession
Advertising can be just as effective (if not more so) during an economic downturn, so don’t cut back on your ad spend.
Strike the right tone
Emotions can run high during tough economic times, so it’s important to review your messaging. It’s not a bad idea to audit your social media profiles, website and email content and make sure there’s nothing insensitive there that could offend potential customers. Even if you’re targeting a business audience, keep in mind that the people behind those businesses are human too.
Split test
A/B testing is a great way to figure out which marketing messages are resonating with your target audience. Try testing different headlines, images, copy, social media content, call-to-actions, button colours, etc. to see what gets the best response.
Get flexible
Don’t assume that the marketing tactics you relied on in the past will continue to work during a recession. Be prepared to change your approach as needed. The key is to stay agile and flexible, so you can quickly adapt to the ever-changing economic landscape.
In conclusion
A recession doesn’t have to spell disaster for your marketing efforts. No matter what happens in the economy, marketing will always be essential for businesses that want to grow and succeed. By following these tips, you can recession-proof your marketing and set your business up for success – no matter what the future holds.
And remember that you don’t need to go it alone, either. If you’d like specialist advice, analysis, and data-driven marketing strategies tailored for your business and budget, reach out to the experts at Ruby Digital.
