In every recession, marketers find themselves in a brand new situation. No two recessions or economic slowdowns are exactly the same. However, professional marketers and organisations have been studying what marketing works during economic recessions. There is a lot of information and data considering marketers have studied this field since the 1970’s. Marketers can examine companies that effectively navigate recessions and come out in a better position. Marketing strategies need to constantly evolve with the times. Digital marketing can have a significant impact on your business because it is usually cheaper than traditional marketing. The return on investment is also significantly higher than traditional marketing campaigns.
Digital marketing also allows companies to gather important marketing data and analytics which will be essential to understanding the evolving consumer patterns and trends. When used correctly, data can be used to fine tune a company’s marketing strategy accordingly.
Typically, during a rescission most companies see their sales start to drop and panic. Businesses will typically cut costs, reduce prices and postpone new investments. Marketing spend is usually one of the first areas within a company to get cut. However, such indiscriminate cost cutting is a mistake.
Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardise performance over the long term.
Consumer Psychology During A Recession
During economic growth, it’s important for organisations, companies and marketers to know and understand that an increase in sales, or awareness might not be associated with marketing activity. Purchases depend on consumers’ having disposable income, feeling confident about their future, trusting in business and the economy, and embracing lifestyles and values that encourage consumption.
However, in a recession consumer confidence in the marketing and their financial future is not the same. These combined effects create a profound challenge for marketers, not only during the downturn but in the recovery that will eventually follow.
Typically, marketers create customer personas based on gender, age, income status, location etc. During a recession, Harvard Business Review (HBR) noted that companies who increase spend on marketing and view customers through a different framework often come out on top when compared to their competitors. So what is the ‘different’ framework?
Think of your customers as falling into four groups:
- Comfortably well-off
The slam-on-the-brakes segment feels most vulnerable and hardest hit financially. This group reduces all types of spending by eliminating, postponing, decreasing, or substituting purchases. Although lower-income consumers typically fall into this segment, anxious higher-income consumers can as well, particularly if health or income circumstances change for the worse.
Pained-but-patient consumers tend to be resilient and optimistic about the long term but less confident about the prospects for recovery in the near term or their ability to maintain their standard of living. Like slam-on-the-brakes consumers, they economise in all areas, though less aggressively. They constitute the largest segment and include the great majority of households unscathed by unemployment, representing a wide range of income levels. As news gets worse, pained-but-patient consumers increasingly migrate into the slam-on-the-brakes segment.
Comfortably well-off consumers feel secure about their ability to ride out current and future bumps in the economy. They consume at near-pre recession levels, though now they tend to be a little more selective (and less conspicuous) about their purchases. The segment consists primarily of people in the top 5% income bracket. It also includes those who are less wealthy but feel confident about the stability of their finances—the comfortably retired, for example, or investors who got out of the market early or had their money in low-risk investments such as CDs.
The live-for-today segment carries on as usual and for the most part remains unconcerned about savings. The consumers in this group respond to the recession mainly by extending their timetables for making major purchases. Typically urban and younger, they are more likely to rent than to own, and they spend on experiences rather than stuff (with the exception of consumer electronics). They’re unlikely to change their consumption behaviour unless they become unemployed.
Regardless of which group consumers belong to, they prioritise consumption by sorting products and services into four categories:
- Essentials are necessary for survival or perceived as central to well-being.
- Treats are indulgences whose immediate purchase is considered justifiable.
- Postponables are needed or desired items whose purchase can be reasonably put off.
- Expendables are perceived as unnecessary or unjustifiable.
All consumers consider basic levels of food, shelter, and clothing to be essentials, and most would put transportation and medical care in that category. Beyond that, the assignment of particular goods and services to the various categories is highly idiosyncratic.
Managing Marketing Investments During A Recession
During recessions it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth. Marketing isn’t optional—it’s a “good cost,” essential to bringing in revenues from these key customers and others. That’s why the natural urge to cut marketing spend during a recession can have drastic consequences.
Building and maintaining strong brands—ones that customers recognize and trust—remains one of the best ways to reduce business risk. The stock prices of companies with strong brands, such as Colgate-Palmolive and Johnson & Johnson, have held up better in recessions than those of large consumer product companies with less well-known brands.
When survival is at stake, it is easier to get companywide buy-in for revising marketing strategies and reallocating investments. Managers can defy old mind-sets and creatively search for superior solutions to customer needs.
During a recession, when your companies survival is at stake, is actually one of the best times to re-evaluate your current marketing strategy and consider new options.The challenge is to make well-defended, case-by-case recommendations about where to cut spending, where to hold it steady, and even where to increase it.
Digital Marketing Opportunities
Begin by thoroughly exploring your overall business, products, services and competitors. What are the ‘big players’ in your industry doing? You can almost guarantee that they are utilising digital marketing platforms and techniques. If they aren’t, then your business might be in a prime spot to take advantage and become the first mover in your industry.
Outsourcing what it is and how can it help your Digital Marketing?
What is outsourcing? Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that could be done internally. In the 2020 Global Outsourcing Survey conducted by Deloitte, more than 70% of companies that outsourced stated that it was a cost-cutting tool. Most small businesses outsource to save time and work on other parts of the business.
We will list the most common reasons firms decide to outsource marketing functions below;
- Time Management – Firms can only allocate so much time for marketing because there is always something more urgently that needs dealt with. Outsourcing marketing allows you to focus on the more important tasks and spend less time on heavy and exhausting tasks.
- Return On Investment – Marketing in the digital age is constantly evolving and becoming more technical. As the need for specialised marketers increases, many firms are realising that outsourcing marketing to a professional marketing agency is cheaper than building a marketing department.
- Professionals With Experience – Firms understand that outsourcing marketing functions to professionals with experience can be both cheaper, and return higher-quality results. Marketing agencies will often have teams who are capable of completing many different digital marketing tasks such as SEO, Web design etc.
- Accountability – Firms want to know if their marketing attempts are working. By contracting a marketing firm, a firm can expect to receive frequent reports. Modern analytics and marketing automation tools allow firms to see exactly what’s working and what’s not. Marketing agencies will naturally want to keep clients happy, as a result, they will make sure that the marketing efforts they are putting into your business will return results.
When Should an Organisation Outsource Marketing?
Many businesses today are unsure whether outsourcing marketing functions is right for them. If an organisation finds itself in any of the following situations, it should consider outsourcing its marketing activities to an external agency;
- Slow Revenue Growth – If an organisation is concerned about its previous and projected revenue growth, it should consider investing in professional marketing services. Marketing can result in increased brand awareness, increased leads and ultimately, increased sales.
- Marketing Team Is Overworked – If an organisations marketing team is struggling to stay on top of all its responsibilities, it may be time to outsource some marketing functions to a professional marketing agency.
- Lack of Expertise – The most effective digital marketing trends are constantly changing. In order to stay up to date with the latest and greatest marketing tactics and strategies, employees and teams require constant education and practice. Marketing agencies specialise in marketing and other IT skills. Outsourcing to specialists who are constantly putting their skills to use will allow your business to turn its attention to more urgent tasks.
- No Strategy/Vision – Owners, directors and managers in every organisation should carefully examine their marketing strategy. What are its goals and what is being done to achieve this goal? If an organisation has no clear goal or strategy, it should strongly consider outsourcing its marketing.
What Marketing Functions Can Be Outsourced?
An organisation must thoroughly verify that the marketing firm can offer those specific services before deciding to outsource marketing to one. One marketing agency’s services could differ from another agency’s services in some way.
We are an all-encompassing agency here at VIMAR Digital Marketing. Our selection of digital marketing services is extensive.
Depending on the requirements of your company, VIMAR offers specialised packages. For instance, outsourcing SEO, content creation, and social media management may be better suited for your business if you already have a website and brand and are more interested in increasing website traffic.
We are a creative digital marketing agency with true passion and experience. Our goal is to help you grow your business and brand through the power of digital marketing.
All our efforts are focused on increasing our customers’ sales and promoting their brand. We do this by improving website design and search engine visibility, generating interest on social media and implementing cutting edge marketing strategies.
VIMAR is a digital marketing agency based in Portlaoise, Co. Laois. We are a team of experienced and professional marketers.
If you would like to learn more about digital marketing and how it could help transform your business, you can book a free consultation call with our team today.