Businesses are now entering a period of unprecedented transformation—it is a time that presents some incredible opportunities for those that plan ahead.
In this article, you’ll learn:
- How Marketing Works During a Recession
- How to Reassess Your Brand Position
- How to Focus on Your Unique Value
- New Audience Exploration
- How to Capitalize on Opportunities
Is your business ready? In times of economic prosperity, we forget that economies are cyclical and that the next recession is always on the horizon, just waiting to catch business owners on their heels.
Do not let your business fall victim to a quickly changing landscape—strengthen it using a proven process. If you’re ready to begin strategizing, get a proposal.
Here are 5 ways to prepare for any recession, and ensure you not only survive the downturn but that you come out the other end better than your competition.
1. Avoid Cutting Back on Marketing
Businesses without a marketplace presence are those left most exposed during a recession. Cutting your marketing budget means eliminating valuable connections with the very audiences that can help you weather an economic downturn.
In reality, it’s the businesses that double down on marketing to gain a larger share over their competitors that are best positioned to experience long-term profitability throughout the recession and beyond. In Binet and Field’s seminal 2008 study on marketing effectiveness, the industry experts found that reducing your marketing spend in the face of an economic downturn weakens your brand.
The fact is that marketing gets more efficient and more powerful every day. Digital campaigns now enable you to micro-target your brand’s most valuable audiences—even on a tight budget. The ability to influence purchasing behavior by delivering hyper-relevant messaging directly to individual consumers can help your business grow in every season. Learn more about the latest in digital marketing on our blog.
2. Reassess Your Brand Positioning
A coming recession is a perfect time to take a step back and reassess your business to make sure you are positioned for the challenges ahead. After all, recessions realign customer behavior forcing consumers to reconsider their priorities when it comes to spending money.
Step One — In any reassessment, a brand audit should be done. It’s essential to know where your business stands with regards to your competitive landscape before you plan for the future. Moreover, understanding how your competition is positioned will help you identify opportunities to differentiate your business’ brand and direct the value you bring to customers, particularly with regards to a customer’s changing needs in the face of a recession.
Step Two — Identify the things your customers are most likely to cut back on during a recession and present valuable alternatives. The key is to address the unique needs of consumers during these challenging times to offer a distinct value that’ll help your customer through the hard times.
3. Focus on Your Unique Value
For consumers and businesses alike, making the most of a recession is all about understanding value. What value do you provide your customers? It’s vital that you not only understand your unique value propositions but that you articulate them in a way that your customers understand.
A recession is an ideal time to do customer research to better understand the value you provide. Do your customers see your brand as affordable? Do your services enable your customers to reduce costs in other areas? Answers to these questions will provide the tools needed to tell a compelling story about your unique offerings within a recessionary environment.
Any consumer lifetime value analysis will tell you: your best customers are costly to replace. Rather than risk losing them during an economic downturn, offer them the value that will increase their loyalty. For instance, price-cutting is never the best solution and can even lead to a competitive domino effect. Alternative approaches to bolstering customer relationships include premium education or experiential offerings, enhanced loyalty programs, and increased access to your offerings.
Lastly, the best way to emphasize your unique value is often to get hyper-focused on your core competencies. The more specialized your unique offerings are, the harder you are to replace. Brands that target niche markets with niche products and services are always better equipped to withstand a downturn because their customers don’t have the luxury of looking elsewhere to fulfill their needs.
4. Explore New Audiences
One of the best ways to minimize loss during a recession is to find new opportunities in previously unconsidered segments and reposition your offerings accordingly. This is especially true if your traditional target audience is set to be struck hard by the economic downturn.
A downturn can also be the best time to launch a new venture or brand altogether. The competition is less intense, and consumers are more likely to respond to the value offered by an alternative to the businesses they usually buy from. Offset risk by targeting niche audiences during the downturn and then use this foundation to grow your business post-recession.
5. Capitalize on Opportunities
Opportunities abound during a recession. Provided you have the cash on hand to do so; slow years are optimal times to innovate. Experiment with new service options, delivery mechanisms, or packaging alternatives. Deploy quick-fail initiatives in your test markets to gauge what audiences will respond to. Put time into projects you’ve wanted to do but have been too busy to tackle.
Recessions are also opportune times to look for acquisition targets who may not have planned as well as you did. Strong brands laden with poor debt structure, insufficient cash, inflexible pricing, or general mismanagement are prime targets for stronger brands looking to expand. New patents and technologies that would be unaffordable during expansion years are also often available during a recession.
If acquisition opportunities aren’t available in your industry, consider simply expanding your market share with other shrewd business maneuvers. Brands like Hyundai, Lego, and Netflix and that grew during the Great Recession then consolidated those gains in the years that followed.
Recessions cause shifts to the marketplace that no business can predict. During the last downturn, digital sales actually increased significantly, and new competitors to legacy brands came out of the woodwork. These changes have continued to shape their markets as e-commerce drives exponential growth, and direct-to-consumer brands offer alternatives to established businesses in many different industries. The brands that emerge ready to compete in changing market landscapes are those that can act on unique opportunities during a recession.