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How a recession affects marketing activities

Updated: Jan 26

Author: Julia Beutel

Publication date: 25.01.2024

Recessions can be a major challenge for marketing departments. But should companies really reduce marketing spending during a recession? No! Find out why you should be doing the exact opposite.

Understanding the market during a recession

 market during a recession

In times of economic downturn, there is a significant decline in economic activities. This leads to a variety of difficulties for consumers and companies such as rising unemployment rates and declining demand. Actually, consumers adjust their spending habits and attracting new customers becomes a challenge.

Then a company's first thought is to reduce prices and cut advertising spending. But this isn’t a good idea. Companies that cut their marketing expenses saw sales dropping 7% below pre-recession levels. However, companies that increased their advertising budget during the economic downturn, increased sales by 20% over pre-recession levels. This means that you trade short-term profitability during a recession for long-term profit and growth once the economy recovers.

Efficient marketing during a recession

Here are some tips for your marketing strategy during a recession.

Optimization of sales channels

Analyze the performance of your current sales channels and identify areas for improvement. What’s more, you should consider introducing new sales channels, such as e-commerce platforms or social media sales features.

Shift to digital marketing

Increased use of digital platforms can help to increase marketing efficiency and reduce costs. For this reason, you’d better check which digital platforms and tools work best for you to achieve your marketing goals. Besides that, you should increase your use of digital channels such as email marketing, search engine optimization (SEO), pay-per-click advertising (PPC), and social media marketing.

Flexibility and adaptability

When market demand is low, the winners are those who can react quickly to changes in the market and among customers. To deal with this, you ought to have a flexible marketing plan that allows you to respond to new opportunities or risks. Develop an agile marketing plan that leaves room for short-term adjustments and aims for continuous improvement.

Innovative and creative marketing

By focusing on innovative and creative marketing approaches during the recession, you can stand out from the competition and expand your customer base.

Content marketing and storytelling

You can use appealing content and stories about your brand or products to arouse customer interest and build an emotional bond. For example, you can develop a content strategy that is both tailored to the needs of your target group and conveys the values of your brand. 

Viral marketing and influencer collaborations

Viral campaigns or collaborations with opinion leaders and influencers can help to achieve a wide reach. Develop creative campaigns that appeal to your target group and the community of the influencer.

Experiment with new marketing channels and techniques

Be open to innovative marketing approaches and new channels. In addition, you can try out new techniques to stand out from the competition and reach potential customers in new ways. Examples of this include the use of augmented reality, podcasts or chatbots. Find out about new marketing trends and technologies and test them as part of pilot projects or smaller campaigns. Last but not least, you should evaluate the success of these experiments and adjust your strategy accordingly.

Efficient marketing

Recessions as a chance to affect marketing activities positively 

During a recession, consumers spend less money and think twice before they purchase something they don’t really need. The profits of a company are declining, but this doesn’t mean that you should cut your marketing budget. Instead, you can gain market share from competitors who are decreasing their advertising expenses. So, what you should do is rethink your marketing strategy and make some adjustments because a recession has a lot of potential.

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