Recession is a scary word. Used in hushed tones and worried glances, seemingly just uttering the word will bring one about. Economists will try and soften the blow by using words like “pullback” or “downturn” to not immediately scare the market or the general public, but at the end of the day, it all means the same thing. Money is getting tighter, people are going to be buying less, and most of all, we really have no idea what’s about to happen.
No two recessions are the same, and while we can use history as a guide for weathering the coming storm, trying to follow our past exactly is a fool’s errand. However, we do know that common patterns are present in most downturns, specifically when it comes to consumer behavior. Marketing during an economic downturn can feel like a risk, but by understanding a few key consumer and market insights, it can become a massive success.
Cut Costs, Establish Trust, Ensure Loyalty
When it comes to goods and services, four main categories emerge that (generally) dictate consumer spending during economic downturns. According to the Harvard Business Review, these categories are:
- 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.
During a recession or economic downturn, these categories stay the benchmarks for consumers while the goods and services they sort into each may begin to shift. As money tightens, what may be considered essential becomes a treat, treats get postponed, and postponables may become expendable. As consumer priorities change, certain product and service categories may be cut altogether to sacrifice for more needed items, and customers begin to look for cheaper alternatives to brands they have stayed loyal to for years.
This presents an opportunity, as a brand, to prove to consumers that you have their best interests at heart and that you understand the importance of saving money and shopping smart during a recession. Providing discounts, sales, and otherwise cutting costs to consumers helps signal that you’re dedicated to creating trust and loyalty no matter the circumstances. This is not only massively beneficial in the short term during slower economic activity but pays off massively when the ship rights itself again down the road.
Invest in Your Customer
Lowering costs to consumers is a great way to keep the brand relationship on steady ground, but to truly continue being the brand your customer’s trust and will use no matter what, you have to continually invest in them even during a recession. Your loyal customers are the single biggest income source for your brand and business, so continuing your marketing plan is one major investment you can not only feel good about but have more control over than the investments being affected during a recession.
When recessions happen, it’s crucial to know your options and create a plan for your brand. Looking to learn about the best marketing options for your business? Check out our recent case studies and see how Kaptiv8 can help you.