Bold Marketing Strategies are the Way Forward When Facing a Recession

 

Without wanting to bring more doom and gloom after the last bank holiday of 2022 with good weather and an imminent recession that will impact businesses and consumers alike. Here is Spirited’s take on why it is important to invest in marketing pre-recession.

During the credit crisis of 2007-2008, an analysis of how businesses handled their budgets was researched. This revealed that businesses that cut spending on marketing fared better during the recession, but experienced negative performances post-crisis. In contrast, companies that started to invest more in marketing during the crisis showed better performance post-crisis period and experienced an average growth in market share of +1.3% after the recession.

We have considered three factors for success:

  1. The Relationship between Market Share and Share of Voice. Investing in strategic marketing initiatives that are carefully considered and are clear in their objective and anticipated return is crucial. The greater the share of voice compared to market share, the greater growth they will achieve during and post-recession.

  2. The relationship between size of brand & profit margins. Large brands typically benefit from more frequent purchases vs smaller brands. Companies that invest in the right marketing strategies during a recession, and continue to spend money on their messaging (functional and emotional benefits) to their consumer base, will generate greater profits once we move out of the recession.

  3. Less spend from competitors means the competitive landscape will be less ferocious. New products that are differentiated and unique and launched in a recession tend to have a greater and long-lasting impact during these times. A unique product that offers sincerely better functionality than competitors can charge higher prices, even though consumers will be more price-conscious. Competitors may be more cautious and with a general reduction in marketing spend, advertising will be cheaper for those who choose to be bold.

Businesses that took action early in 2007/8, have a long-term vision, and are focussed on growth rather than cost savings fared far better than those with no plan. If you are concerned about your marketing strategy and do believe in the opportunity that a recession can present. Get in touch with Kate.

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