The Recession
Introduction
Most of the companies find it hard to make their products and services during recession. This is because the companies do not have the right strategies. Some of the strategies used to market products and services in normal times cannot be used to market products and services during recession. This is because the customer confidence and purchasing power is affected during recession. Customers have different priorities during recession and companies should be able to meet their needs.
Companies that have developed good strategies to market their products during recession have recorded good profits. This is in contrast to companies that have not. Some of the companies that have not developed good strategies have found it hard to retain customers and attract new customers. This has in turn affected sales and productivity in the company. This paper analyzes the importance of marketing during recession and strategies that companies can use to market their products and services to consumers during down turn.
Discussion
The article ‘how to market in a downturn’ by John Quelch and Katherine Jocz analyzes how companies can meet the needs of consumers during recession. The authors claim that firms should understand the needs of the consumers during recession. This is because the needs of consumers change during recession. Understanding the needs of the customers makes it easy for the firm to change their communication strategies and what they offer. The economic recession experienced during the great depression and after the depression affected consumer confidence. In addition, it also affected the buying power and forced consumers to change their behaviors.
Most of the consumers change their budgets and priorities during recession. The consumers post phone products that are not important or which can be post phoned. Also, the consumers do not buy products that they see unnecessary. The consumers buy goods and services that they see unimportant. The change in purchasing powers affects companies negatively. This happens when the companies are not able to meet consumer needs. Consumers are sensitive to prices during recession and are less loyal to brands. In this case, the consumers prefer to get the brands and products at a cheaper price than before. Others opt to get other brands and products.
Companies are supposed to segment their markets differently during recession. For instance, the companies should segment the market according to the psychology of recession. The firms can segment their products from important goods to expendables. Additionally, they should segment their markets into fearful customers and carefree customers. Many companies segment their markets according to age, gender and lifestyle. For example, some companies target customers who are aged 40 years and above. Others target new parents and middle income earners. These kinds of market segments are not applicable during recession (Quelch &Jocz, 2009). Instead, companies have to develop other market segments.
During recession companies are supposed to segment markets according to customers who are more vulnerable to the recession and have been affected by the financial crisis. These kinds of customers tend to post phone products and services and spend less. They also substitute the products and services with other products that are cheaper. The market segment can include low income earners and some high income earners. Also, companies can segment their markets into “pained-but patient consumers”.
The consumers are optimistic in future, but they are not confident about recover in future. Another type of market segment is the “comfortable well off”. In this case, the customers feel secure now and in future. The consumers in this segment are selective about what they purchase. This market segment includes consumers who are confident in terms of financial stability, but they are not rich. Companies should also have a market segment to accommodate those who do not care about their savings. Such customers extend their timetables for goods they want to purchase (Quelch, 2008).
Further, companies should develop the right marketing strategies so as to be able to overcome the economic recession. For instance, firms can improve their brands and invest their resources wisely. Also, the companies change their product line and improve the affordability of the products. They should also improve the customer trust. Companies that have adapted the strategies above have managed to meet the needs of the customers during recession (Cohen and company creative Inc, 2008).
First, companies are supposed to research the consumers. Most of the firms prefer to cut their marketing budget so as to reduce the costs in the organization. This in turn affects the marketing of products and services as the companies do not have adequate information about the customers. Firms are supposed to know how consumers are changing their value and reacting to the recession so as to be able to meet their needs. Customers spend time looking for goods that are durable and also looking for cheaper products. A large percentage of consumers are always willing to post phone what they have to buy. Most of the consumers are interested in cheap brands. The brand loyalty fades during recession and consumers choose brands that are cheap and meet their needs.
Additionally, consumers prefer trusted brands as they are durable and meet customer expectations. Companies are required to put more money in researching more about their customers and improving the brand loyalty instead of cutting the marketing resources. Introducing new brands might not help as customers are not interested in new brands during recession. Thus, marketing during recession has a lot of benefits to the firm. This is because it helps improve the brand offered to customers instead of developing new brands (Cohen and company creative Inc, 2008).
Further, marketing during recession helps improve the market share and returns on investment. Cutting marketing spending does not help reduce the cost of production instead it affects the marketing process and cost. Most of the companies cut their marketing budget and this affects their market share and return from investment. This in turn makes it hard for companies to compete with other companies during good times. Companies are supposed to ensure the marketing budget is not cut. They should find for methods to ensure the marketing of products is carried out regularly. Most of the uncertain customers need reassurance about the brands.
Consumer trust is affected during recession. Many consumers who are worried need trusted brands. Also, the consumers need products that are safe and comfortable. Companies need to offer reassurance messages to the consumers. Reassurance messages enhance emotional connection with the brand and show empathy. For instance, the companies need to inform the consumers how they are going to overcome the challenges. The companies should design messages that meet the needs of customers in different market segments (Shulman &Clancy, 1995).
Reassuring the consumers often helps build consumer trust and brand trust. This in turn helps improve sales in the company and productivity. This is because consumers are able to buy products from the company even in economic down turn. The company should always back the messages with action that show the company supports the consumers. The company should not take out on the consumers when the sales reduce. For example, the companies should not affect the brand quality or raise the products price. Instead, the company should focus on improving the quality of the brand and products so as to boost consumer confidence. Most of the consumers buy products that meet their expectations during down turn and so the company should be able to offer high quality products.
Also, the company should not increase the product price as this might affect consumer trust negatively. Instead, the company should offer products at a cheaper cost. The company should ensure the product and brand are affordable to consumers. The firm should also reinforce customer trust by encouraging them to buy the brand. The customers should be made aware that buying the brand is a good choice. This will motivate the consumers to buy more. Companies can make the products affordable to consumers by reducing the price and offering discounts. In addition, they can make them affordable by reducing the quantity of the products offered. This is mostly common in restaurants (Shulman &Clancy, 1995).
Most researchers argue that companies should not cut marketing and advertising from their budgets as it has more harm to the company. Though cutting marketing from the budget can help reduce expenses in the organization, it can have negative impact on the overall performance of the organization. Marketing is an investment in the growth and survival of the firm in future and companies should take it seriously. Companies should realize that marketing during hard economic times is important to the organization. Marketing during downturn gives firms an opportunity to increase their market share and achieve competitive advantage. Most researchers like Cohen argue that marketing during this time can put a firm in a better position in future and now. This is because firms are able to achieve competitive advantage and compete with other firms (Shulman &Clancy, 1995).
Moreover, cutting marketing during recession can affect the organization and consumers. First, removing marketing in the organization can make it hard for consumers to reach the company and hence affect the business negatively. Most of the companies that have eliminated marketing in the organization during down turn have found it hard to retain their customers and attract new customers. This has in turn affected the growth of the business and even lead to loose of market share. This is because the company is not able to compete with its rivals. Such businesses have to start creating brand awareness and product awareness after the recession. This compels the firms to use huge amount of money on advertising and marketing. Hence, this increases expenses in the organization instead of reducing them On the other hand, companies that invest in marketing during recession help increase their market share and retain their customers. This is because they are able to get information about the customer interest in their products (Lamb, 2009).
Most of the consumers might not be interested to buy products during recession and this affects the demand in the organization. During this time, companies are supposed to gather adequate information about consumers and their products so as to be able to enhance their product line. The company should not insist on offering the same product line to consumers, but it should change it. The company should reduce the complexity in the product line being offered. Developing a broad product line requires a lot of money and resources and hence affects the marketing costs and production costs in the organization. Reducing the product line helps reduce the cost (Lamb, 2009).
As a result, the company should look for alternative ways to make the product simple. The company can improve innovations in the organization so as to make the product simple. Consumers in different market segments prefer simple products instead of complex products. For instance, consumers who are affected by the crisis, but are patient might prefer goods that have fewer features, but good value. Other consumers prefer goods that are simple and cheap. Hence, carrying out marketing regulary helps determine the changing needs of consumers and design products that meet the expectations of the customers (Darroch, 2009).
Most of the firms that have stopped marketing their products due to high costs resulting from recession have found it difficulty to improve their product line and meet the consumer requirement. This has led to poor sales and loss of customers. A large percentage of consumers do not buy products from such companies as they offer low quality products or products that are complex and expensive. Hence, there is need to market products during recession. Most of the firms that prepared well during the great depression and 2008 crisis by adapting the right marketing strategies and investing in marketing performed well. Companies like Dell invested a lot in marketing during the 2008 crisis and this helped boost the performance of the firm after the crisis. This is because the firm was able to respond to the needs of consumers well after the recession (Darroch, 2009).
Conclusion
In conclusion, most of the firms have been forced to slash their marketing budgets during recession or remove marketing from their plans. This is aimed at reducing the impact of marketing on the organization. Some of the firms have cut the marketing budget so as to reduce costs. Others have been compelled to lay off some of the employees. Cutting the marketing budget might not help at all, but affect the firm. This is because it leads to loose of consumers and lowers sales. Firms are supposed to put more efforts in marketing and invest a lot in marketing during recession instead of reducing the budget. Increasing marketing budget has a lot of benefits to the organization.
First, it helps improve the consumer trust as the companies send messages that are aimed at boosting consumer trust. In addition, it helps build brand trust as consumers are encouraged to buy the products. Marketing during recession helps improve the performance of the company in future and enhance growth. It also helps improve the product offered to consumers and meet their needs. In addition, marketing during recession helps improve brand loyalty by creating brand awareness. Thus, firms should encourage marketing during recession by developing the right strategies.
Reference
Cohen and company creative Inc.(2008).The Importance Of Marketing During
A Recession. Retrieved from http://www.free-press-release.com/news/200906/1245679698.html on 23/05/2011
Cure for Death Wish Marketing. McGraw-Hill Professional
Darroch,J.(2009).Marketing Through Turbulent Times. Palgrave Macmillan
Lamb,C.W.(2009).MKTG. Cengage Learning
Quelch,J.A.,&Jocz,K.E.(2009).How to market in a down turn. Harvard business review
Quelch,J.(2008).Marketing Your Way Through a Recession.
Retrieved from http://hbswk.hbs.edu/item/5878.html on 23/05/2011
Shulman,R.S.,&Clancy,K.J.(1995).Marketing Myths That Are Killing Business: The
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