26 May 09 Marketing in a Recession: To do, or not to do?

As the recession settles in, most of us are shifting our focus to short-term growth. However, marketing is an investment, not an expense. The proven correlation between share of market and share of voice means that if you increase your marketing investment at a time when competitors are reducing theirs, you should substantially increase the long-term value of your brand. John Quench, a professor of Business Administration at Harvard supports this notion. Increasing advertising during a recession while your competitors cut-back is an opportunity to improve market share and your ROI.

But cash is tight right? You’re looking to cut costs, and that fat marketing budget seems like the perfect place to start slashing. Rather than cut back on marketing expenditure, it is better to optimize your campaigns by more effectively targeting your prospects. This requires running your business on customer intelligence. For pure-play online retailers, this is easy. All of your customer interactions are trackable and the data is mineable.

Amazon.com is the defacto example of this type of ‘data driven’ company. By leveraging their customer data, Amazon.com are able to up-sell their shoppers by recommending additional relevant products and also getting them to come back to their store with an effective customer lifecycle messaging plan. They are also not afraid to try new things. They have deployed applications on social networks like Facebook and Linkedin, launched a mobile phone version of their store and run text message marketing campaigns to support its launch.

Take extra care of your existing customers As the life-blood of any business, customers should be well taken care of in any case. Competitors will be slashing prices in an attempt to lure your customers away. Recessions are the perfect time for new start-ups to enter the market with a product offering that is better tailored to your customers current needs. It’s important to increase your service levels and adapt to the current operating environment in order to continue to succeed. People are looking for convenience, to save money and for convenience. What are you doing for them?

But not everyone automatically loses out in a recession. Read about why luxury brands and value players will survive remarkably well and why the real problem is with players in the middle market. For them, it becomes a case of catering to consumers current needs. For example, you might normally purchase Tide laundry powder. But feeling the financial pinch, you may decide to switch to a generic supermarket brand and save money. If Tide had offered a special or coupon which cut their price to match the generic brands, then they would have a good chance of retaining that customer. After all, why would they want to risk the consumer experiencing the lower-cost brand and finding it does just as good a job? On the flip-side, the consumer also takes a risk since they don’t know how the new detergent will affect their clothes.

Update: Indian Study Shows Recession Spending puts marketers ahead

Read more: Tactics for Marketing in a Recession

Resources I used for this post:

New Ad-ology Study: Reduced Advertising During Recession Negatively Impacts Consumer Perception

Should You Up Your Marketing During a Recession?

Marketing Your Way through a Recession

Marketing in a Recession