So we’ve heard it, a downturn is coming. People lose their jobs and are more wary about spending. Traffic to retail stores are dropping and businesses stress about ways to increase retail sales. While we may not technically be in a recession right now, we hear of layoffs and restructuring and there is plenty of uncertainty in the future. It’s not all dark clouds in the horizon though.
Small and medium enterprises (SMEs) and start-ups can take advantage of a weaker economy and step up growth during this period. Beyond tightening up your purse strings and cutting costs, a bad economy is the perfect time for you to step up on your marketing efforts.
There are 5 things to remember about marketing in a downturn.
1. The big players are vulnerable
Giant corporations are likely looking to scale back during this period, and your toughest competition is in a vulnerable state. Since SMEs have lower overheads (and if you are a Singapore SME, you enjoy support from Singapore government grants), it will be easier for you to ride out the storm.
2. Know your customer
Market research is essential to strengthening your brand. How are your consumers redefining value and responding to the recession? Price elasticity curves are changing. Consumers take more time to research before buying and try to look for the best deals. They are more willing to compromise on what they want –what used to be a “must-have” feature becomes a “good-to-have” or “can-do-without”. Interest in new brands and new categories is likely to reduce but trusted brands can still launch new products.
3. Sell on the Internet
Are you selling online yet? If not, why not? If your sales are dropping, your business is slow and you still think that your customers don’t shop online, it’s time to look at the numbers again. Even when your customers buy in person or because of their personal relationship with you, they are likely to research online before making a decision on what to buy and from whom to buy it. If you are not online, you will be left out of this important purchasing conversation.
4. Adjust pricing tactics: People want to save money
Customers will be watching their wallets and looking for cheaper alternatives or better value, so it’s the perfect time to sell in and win them over. Keep them satisfied and you will keep them even when the economy recovers. You do not necessarily need to cut your retail prices, but you may want to offer temporary price promotions and have more attractive quantity or bundled discounts. During a recession, price cuts attract more consumer support than lucky draw prizes or contests.
5. Branding during recession: Focus on values and emotions for a stronger brand
When hard times loom, we tend to seek comfort in our home. Build and maintain a strong emotional connection with customers in your brand messages rather than focus on low prices and special offers (even if you are offering them). A bad economy prompts us to stay at home and be connected with family and friends, so scenes of warmth and connection will tend to appeal to consumers more during this tough period. Another example on how to have a brand-centric message with a price cut is to talk about how your company’s technology and innovation has resulted in customers spending less.
In hard times, a trusted brand can lose consumer confidence in a matter of mos. Focusing on how your brand is different and how that difference results in value for your customer will increase consumer confidence in your brand. The best course of action in a recession is a proactive stance. Only then will you retain your customers and attract a new audience by taking market share from weaker brands.
When consumers trust you, they will buy from you even when times are bad. Don’t you agree?