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By many reliable accounts, the United States is headed for a recession as early as 2023. The S&P 500 had dropped 23% from late 2021 through late June. Historical precedent suggests that another 10% in decline could send us headlong into a recessionary period. The head of the International Monetary Fund (IMF) has more than hinted at a global recession, forecasting some possible dark times ahead.
Business owners just standing up and brushing themselves off from being knocked about by the pandemic may be wary of reports of another financial hit to their livelihoods. However, there are several steps to take to prepare oneself for an economic downturn and still maintain your business.
Business owners may wonder where they can cut back in preparation for a recession. Many may believe marketing is an excellent place to “trim the fat,” but I’m here to urge business owners to maintain their marketing budgets and plans throughout the recession — and with good reason.
Many marketing managers and CEOs may feel that by slashing marketing budgets, they can lower prices, spur spending and help them maintain overall profitability. Although, lowering prices may be a knee-jerk reaction that could wildly backfire in the long run. What happens if the recession everyone predicts does not happen? With a slashed marketing budget and laid-off marketers, businesses can find themselves in dire straits once the market begins to rebound.
Regarding product launches or new marketing pushes, it may seem like a good idea to slow things down when times are tight. However, studies show that long-term survival and higher revenue are possible when pushing forward with a marketing plan during a recession. That said, there are several considerations that business owners and marketers should take to heart.
If your competitors cut their marketing budgets, or even jump ship upon a burgeoning recession, this leaves a more straightforward path for your business to scoop up those customers left behind. Even in a recession, people are spending money and having fewer competing businesses to choose from equates to a positive for you and your business.
Focus on best bets
When a recession looms, innovation can spark great ideas. With well-applied marketing budgets more critical than ever, businesses tend to focus on their best and brightest ideas to bring to the market. This leads to ideas that are more apt to stand the test of time, even as the recession wanes.
Timing can be everything
If a company is ready, willing and able to ride a recession out, it can time its marketing efforts to when consumers are most inclined to be in a buying position with disposable income to spend. The recession mid-point may be when consumers are more willing to stretch their purchasing dollars, so you will want them to remember your business when they set out to spend.
Don’t increase prices
While decreasing the marketing budget and prices is not advisable, increasing prices during a recession to maintain the status quo can also backfire. A better, long-term bet is to focus the company’s energy on savvy marketing, rather than debating back-and-forth on pricing. Research has shown that companies that engage in price “see-sawing” lose more market share than those that stick with their pricing and focus on marketing efforts instead.
An investment in the future
Looking at marketing as an investment in the future of your business is a good mindset to have, but especially during periods of economic downswings like recessions. Marketing and advertising create almost immediate sales, but also build future sales for people consistently seeing your marketing messaging. If they never stop hearing your name or seeing your ads, new leads and prospective customers are more apt to remember your company after the recession.
Make your marketing count
The most important aspect of marketing during a recession is making sure your marketing efforts count. Focus on ads that grab attention, possess strong imagery or visuals and a message that connects with people and creates engagement.
Consider an intriguing offer. For instance, look at what has worked well in the past for your company and consider applying the principles of that marketing to your recession-era efforts.
A business’s marketing plan during an economic downturn depends on several factors, including their financial fitness, the amount of years in operation ahead of the recession, and the strength of their marketing team.
Nevertheless, it’s clear from the evidence of past recessions that companies focused on bolstering their marketing efforts — rather than cutting them — stand the best chance of weathering tough recessions and coming out stronger and more profitable overall on the other side.
Bowery Boost co-founder and CEO Fulya Uygun is a digital marketing expert with 15 years of experience. Throughout her career, she has scaled brands through seed funding to Series B in addition to working as lead digital for corporate companies. Her agency works seamlessly to build teams and profitably scale direct-to-consumer (DTC) brands and is dedicated to investing in and supporting women and minority entrepreneurs.