In one of the most obvious examples of cause-and-effect in finance, the UK has entered a recession immediately after the coronavirus lockdown forced thousands of businesses to close.
The economy shrank 20.4% and household spending plunged as shops were ordered to close and millions of workers were furloughed or fired, making almost everyone worse off.
As the UK economy has suffered two consecutive quarters of economic decline, we are now officially in the first recession since 2009. In the words of shadow chancellor Anneliese Dodds, “A downturn was inevitable after lockdown,” but what does this mean for us?
Consumers will be more cautious and stingier when it comes to purchases, as they are less certain of where their next payslip will be coming from. Reassuring the customer and convincing them that your product or service is ‘the safe bet’ is a vital ingredient of marketing in uncertain times like a recession.
Value brands are sure to see continued demand (or potentially increased demand as more people seek out budget options), but things are less certain for other market segments. When planning your marketing strategy for the coming year, it may seem tough to commit, but here are eight principles that will help you to make an effective strategy for even the most uncertain times:
1. Research the Customer
Instead of cutting market research, you need to know how consumers are responding to the recession and – most importantly – how they are defining value. In trying times, customers will be harder to win over as they are less willing to splash out on luxuries and more likely to trade, down, buy less or postpone purchases until a sale or their next payday.
In times where you can’t afford to make mistakes, the ability to make an informed decision is more important than ever.
2. Focus on Common Values
Between the economic crisis, the COVID-19 pandemic and the possibility of another government lockdown, people have a lot on their plate, so keep your advertising nice and comforting. Avoid zany humour, appeals based on fear or images of extreme sports and exotic locales so that your marketing can resonate with a wider audience.
3. Keep Up Marketing Spending
Brands which increase advertising during a recession when their competitors cut back can increase their market share and see better return on investment than in a strong economy. In times of uncertainty, familiar brands will seem even more inviting to consumers, and with lockdowns corresponding to greater media consumption, a captive audience is more likely than ever.
4. Adjust your Product Portfolios
Tough times favour versatile, budget products over specialised, gimmicky or premium items, and so should your product portfolio. By focussing mainly on products and services that stress good value, you can address the new consumer reality and phase out products that are less competitive over time.
5. Support Your Distributors/Suppliers
In uncertain times, many distributors and suppliers are unwilling to keep more stock than they need in the short-term or regularly carry newer/rarer products. By offering incentives like extended financing, generous return policies or early-buy allowances, you can motivate distributors to stock more of your products more of the time, improving relations and supply.
6. Adjust Pricing Tactics
As more customers will be hunting for the best deals, you should work hard to stay competitive, but this doesn’t always mean cutting prices. By extending price promotions, extend credit to loyal customers or price smaller pack sizes more aggressively, you stand a better chance of keeping repeat customers and attracting new ones.
7. Emphasise Your Core Values
While most companies will make at least some of their staff redundant during a recession, you can help to cement the loyalty of your remaining staff by emphasising core values. Assuring your team that the company has survived difficult times before, focussing on delivering quality products and working to retain loyal customers will all help to foster esprit de corps, or company loyalty.
While the financial forecast might be doom and gloom for the next few quarters, you shouldn’t be afraid to double-down on your company’s Unique Selling Point and increase marketing to increase your market share. Sure, you might have to trim the fat on your annual budget or cut staff, but if you work hard and tighten your belt, you might just come out of the recession a lean, mean profit-making machine!
If you’re unsure of the best marketing tactics or want some advice on how to adapt your strategies to the modern age, why not read some of our other educational blogs or get in touch today?