Marketing During a Recession

Early in October 2022, Jamie Dimon, Chief Executive of Morgan Chase, warned the United States is headed to a recession.  Because of the intense rates of inflation, the war in Ukraine, and the sharp increase in interest rates, Dimon feels a recession is inevitable by the middle of 2023.  Our last significant economic downturn of 2008 doesn’t seem that far in the rearview mirror, leaving many business owners wondering how to best protect themselves from a decrease in revenue.  The good news is that you can use sound strategies for marketing during a recession to keep your operations healthy until the economy improves.

Know Your Customers

If you haven’t conducted a deep dive into your customer demographics, now is the time to do it.  Effective marketing during a recession requires getting your message to the right people. However, what you’re looking for isn’t necessarily the age and income level of your base; instead, it’s how your customers think about spending.  There are four general types of customers:

1. The skrimpers.  These consumers may have lower income levels, be retired and on fixed incomes, or just have fears about income stability.  When prices go up, this group of consumers will likely cut their spending dramatically and save any extra cash for a rainy day.  These shoppers will look for low-cost or generic alternatives and eliminate most unnecessary purchases entirely.
2. The cautiously optimistic.  These consumers are wary of inflation and more careful in their spending habits.  They will postpone larger purchases or expenses and stock up on good deals.  Budgeting will become the foundation of their spending, and they will try to reserve extra dollars to remain loyal to the brands they feel strongly about.
3. The financially comfortable.  These consumers aren’t worried about higher prices or what’s going on in the jobs market.  They are financially well-off and will continue to buy most products and services with the same spending patterns as before the recession, although they may not be happy about the costs. Because of that, they will negotiate harder on major purchases and may hold back on spending for significant luxury items. 
4. The YOLO-ers.  The “You Only Live Once” group is the least impacted by the recession.  This group will continue spending as before because “hey…it’s only money!”  They will continue spending money, including indulging in large expenses for travel and other experiential activities.  These spenders are least likely to forego a product they enjoy for a less expensive brand.

Know Your Product

Next, it’s essential to have an honest assessment of your product or service in the marketplace.  No matter how important you feel your product is, it’s going to fall into one of these categories within the consumer’s needs:

1. Basic Necessities.  These are products and services people will purchase no matter what.  While some may choose less expensive brands, sales will remain steady.  
2. Splurges.  We all like to spend money on a treat for ourselves.  Most people will continue to purchase treats, but those more concerned about money will reduce their spending on these or cut them out entirely.
3. Delays.  There are some things we know we’ll need to spend money on, but we may not be looking forward to it and will postpone it if we can.  For example, remodeling a bathroom, replacing a roof, or purchasing a new car are all examples of purchases that consumers might delay until the economy improves.
4. Avoidables.  We can just avoid some expenses altogether.  For example, a family may decide to forego the summer vacation to a far-off destination and take a staycation instead.  These types of products and services are usually the hardest hit during a recession and require a very strategic marketing plan to keep sales strong.

Putting it All Together

Even in economic downturns, there are many opportunities to generate sales.  A good marketing agency will help you identify those opportunities with your customer segment to optimize your revenue.  

By understanding your customer and your product, your marketing agency can help you develop strategies to promote your product well during tough economic times.  The most successful companies avoid altering their brand but instead allocate their marketing budgets to their key customer segments.  In fact, this is one of the most important times to emphasize your brand.

Most importantly, companies should not panic if sales begin to decline during a recession.  One of the worst strategies a company can implement is to reduce marketing expenditures to save money.  Instead of cutting back on the marketing budget, work with experts who can ensure your dollars are optimized and you’re spending the budget on initiatives that will be most effective in this economic environment.

Paradux Media Group Will Drive Your Marketing During a Recession

We’re experts at developing and promoting brands.  Let us show you how we can grow your sales even when the economy is tough.  At Paradux Media Group, we work closely with our clients to help them make good decisions to achieve their goals.  Whether your company wants to increase brand awareness or achieve a surge in sales, we will help you select marketing strategies within your budget to get the results you want.  Contact us today to learn more about all the marketing and advertising services we offer.