An economic crisis may radically change consumer behavior. Hence, the ability of a small firm to effectively adjust and realign marketing strategies and approaches to match the current economic environment can be vital for the firm’s success in the marketplace.
Nevertheless, instead of altering marketing activities and strategies during a recession to match the current environment, small firms often end up reducing their marketing budget, thus negatively impacting business performance and profits. Most compelling scientific evidence has found that firms that increased their marketing budgets during an economic downturn earned a market share three times as fast in comparison to those that reduced them. Therefore, to be able to survive during difficult times and be lucrative in the future, it is recommended that businesses plan their marketing resources for the long term and sustain expenditure over the short term.
Type of orientation
It is highly recommended that during a severe recession, business owners should implement a new marketing orientation that is resilient, dynamic, and adaptable to the new recessionary environment and the new social needs and realities of their target markets. However, before we discuss the new marketing orientation that should be adapted during a crisis, let us briefly review the fundamental principles of the original marketing orientation as there is diverse management of marketing variables following the marketing orientations.
The original marketing orientation positions the customer at the center of every business decision-making, whereby a business creates products or services that the target market needs and wants. The main aim of this orientation is to satisfy customers’ needs and deliver exceptional customer satisfaction while communicating and delivering superior value to customers. Basically, the original marketing orientation supports a customer-centered approach and concept.
Nonetheless, during an economic crisis, it is recommended that businesses change their marketing orientation from the “original marketing orientation,” or the orientation where the firm focuses on producing and offering what customers within the target markets need and want, to an “AFFORDABILITY MARKETING orientation,” whereby the firm basically produces and offers what customers within the target markets can afford. Therefore, the basic principle of this orientation would be to position the customers’ reduced income at the center of every business decision-making.
This new marketing orientation is vital for businesses since it focuses on consumers’ needs from the perspective of a recession. This orientation views that during a crisis, consumers will pursue products, services, and brands that are affordable, and in turn, businesses deliver products and services to consumers at the lowest prices.
In the final analysis, the best marketing orientation and strategy is a sustainable one, by which a company can consistently provide the long-term needs of its target market with the long-term survival of the company while meeting the expectations of society and maintaining environmental and ethical issues. For this reason, during times of economic downturn, firms should shift their marketing orientation and strategies in order to deliver inexpensive and reasonably priced brands, products, and services to the marketplace. In other words, implement the new marketing orientation of affordability marketing: providing products, services, or brands that consumers within the target market can easily afford.
Now that you have adopted the affordability marketing orientation, let us focus on the recommended marketing strategies of general measures that should be taken by firms during an economic crisis.
Marketing strategy suggestions
An economic downturn requires some modifications to be made in the general marketing strategies and especially to the four core elements of the marketing mix (4ps): product, price, place, and promotion. Notably, a firm must modify its strategies appropriately to fit the environment.
Below are some applicable policy recommendations that can support the maintenance or improvement of business performance in times of crisis. Although these recommendations are generic, they will offer valuable insights for all managers and marketers in achieving sales, market share, and profitability in times of economic crisis. These recommendations are based on the four elements of the marketing mix.
Product policy recommendations:
Source: Adapted by the author of TJSTLOUIS&COMPANY
Price policy recommendations:
Price is a highly prominent marketing variable shaping managerial and consumer decision-making during an economic crisis. The logic is that during times of economic downtown, firms focus on increasing sales volume in the short term, therefore, are compelled to make major reductions in their pricing decisions. However, in the long term, this strategy may cause a business to decrease profitability and damage brand image, as well, as consumers might avoid returning to previous price levels after the crisis has ended.
In that case, what are the suggested pricing strategies a firm can adopt in circumstances of crisis? A company can offer and apply various pricing strategies, such as:
Source: Adapted by the author of TJSTLOUIS&COMPANY
In any event, if firms choose to lower prices, it is recommended that the product’s quality should be either maintained or increased. Contrary to popular belief, reducing the product’s quality and price would impact the firm’s performance negatively in times of crisis.
Place policy recommendations:
Building customer relationships in times of crisis is still exceptionally important. And one way to do that is through proactive personal selling; this would help understand customer needs and be better able to respond to them. Here are some appropriate ways that you can alter your “place” component of the marketing mix in crisis conditions.
Source: Adapted by the author of TJSTLOUIS&COMPANY
Promotion policy recommendations:
During a crisis, firms must make appropriate changes to their promotional strategies. The promotional element of the marketing mix is considered an essential factor. As a matter of fact, it has been revealed that companies that experienced increased income, sales, and market share during and after a crisis either increased or maintained their prior advertising and promotion levels. Furthermore, firms that did the contrary performed worse during a crisis. When we speak about promotion, we are referring to various components, such as but not limited to advertising and promotional strategies, public relations activities, after-sales service, quantity discounts, media usage, rational message appeals, etc.
During crises, in comparison to other economic periods, consumers are more likely to switch their brand choices frequently. Hence, appealing to the consumer and winning their confidence is of crucial importance during these times. Therefore, communication with consumers through promotional strategies is of particular significance during a recession. Below is a list of applicable recommendations that small firms should implement to improve their income, sales, and market share while appealing and winning over the consumer.
Firstly, and most importantly, firms need to budget their promotional expenditure efficiently and effectively and allocate individual budgets for the implementation of activities such as:
Source: Adapted by the author of TJSTLOUIS&COMPANY
The most prominent element of the promotional element is advertising. Especially in media advertising.
Source: Adapted by the author of TJSTLOUIS&COMPANY
Source: Adapted by the author of Tracy's Blog
Main Takeaway:
Applying only one core element change in the marketing mix does not affect the company's performance. Therefore, for the most successful strategy during an economic crisis, an analysis and changes in all four elements of the marketing mix should be implemented in collaboration with the other elements described.
Contrary to popular belief, the tactics that many companies undertake during a crisis have only short-term impacts on firm performance. For the most part, in order for a firm to survive and be profitable even during an economic downturn, it by altering its strategy to appropriately fit the changing environmental conditions.
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