The business world is now in a period of unprecedented transformation and uncertainty due to Covid-19. It’s a time that presents worry, uncertainty, risks but incredible opportunities for brands to reach out to consumers via digital channels.
A downturn in the economy can represent valuable opportunities for brands that are positioned to capitalise on them. By understanding your customers’ changing needs and wants during a downturn and fulfilling them in creative and unique ways, you can gain market share, increase profit margins, and be situated for explosive growth once the market recovers. All it takes is a little foresight and planning.
Let's have a look at a few recommendations.
1. Don't cut your marketing budget.
For most business leaders and marketers, their first reaction in the face of a looming downturn and uncertain future is to slash their marketing budget. Many assume that marketing is not an important factor to consider during a downturn, but this is a very short -sighted tactic, and ultimately can damage your brand and hurt your bottom line in the long run. Brands that pump up their marketing spend during a downturn to gain a larger market share over their competitors realise the long-term benefits throughout a downturn and beyond.
Brands without a marketplace presence are those left most exposed during an economic downturn. In todays digital landscape, digital campaigns enable brands to micro-target to most valuable audiences, even on a very tight budget. Delivering good relevant content to individual consumers is key to driving consumers further down the purchase funnel, and influence purchasing behaviour. Marketing is one of the last things you should consider cutting back on when better times are on the horizon. Keep your brand alight and create the future for your brand.
2. Capitalise on opportunities.
Opportunities abound during a downturn in the economy, you just have to know where to look—and have the cash on hand to capitalise on them when you find them. Let's hope you've prepared for bad times, and have put away a portion of the profits when times were good.
Provided you have the capital to do so, now is the optimal time to innovate. Experiment with new delivery mechanisms, service options, or packaging alternatives. Deploy quick-fail initiatives in test markets to gauge what audiences will respond to. Put time into projects you’ve been wanting to do but have been too busy to undertake.
Now is also a great time to look for acquisition targets who may not have planned as well as you did. Otherwise strong brands laden with insufficient cash, poor debt structure, inflexible pricing, or general mismanagement are prime targets for stronger brands looking to expand during the downturn. New technologies and patents that would be unaffordable during expansion years are also often available during a downturn in the economy.
If acquisition opportunities are unavailable in your segment, consider simply expanding your market share with other shrewd business maneuvers. Brands like Lego, Netflix, and Hyundai that grew during the Great Recession only consolidated those gains in the years that followed.
3. Reassess your brand positioning.
A downturn in the economy is the perfect time to take a step back and reassess your brand to make sure you are optimally positioned for the recovery in the market. Covid-19 will realign customer behaviours, after all, forcing consumers to reconsider their priorities when it comes to spending money. Understanding exactly how these behavior shifts will affect your industry (and ultimately your business) is key to making the most of an economic downturn.
Step one in any reassessment of positioning should be a brand audit. It’s imperative to know where your brand stands with regards to the competitive landscape before you can plan for the future. Understanding how your competition is positioned will help you identify opportunities to differentiate your brand in the minds of your customers, particularly with regards to their changing needs in the face of a recession.
Both consumers and businesses are struggling during Covid-19. The key is to find ways to address the unique needs of those who are suffering by offering distinct value they can leverage to pull themselves through the hard times. Identify the things your customers are most likely to cut back on during a downturn and present more valuable alternatives.
The areas where consumers are likely to cut aren’t always the most obvious. During the Great Recession, counterintuitive luxuries like wellness, localism, and personalisation thrived. By repositioning luxury offerings as an investment in personal comforts in the face of mounting budget sacrifices, smart brands were able to counter social pressures to cut nonessential indulgences.
4. Explore a new target market
One of the best ways to minimise revenue loss during a downturn is to look for new opportunities in previously unconsidered market segments and reposition your offerings accordingly. This is particularly true if your traditional target audience is set to be hit hard by the economic downturn.
One place to look is industries that have historically proven to be recession-proof. Healthcare and government are both sectors where demand is not strictly tied to the vagrancies of a waning market. While those non-profits that rely primarily on donations will typically see a hit to their revenue streams during a recession, those that are funded by grants from the government or longstanding foundations represent another potential target audience that is likely to withstand long-term economic dips.
In addition to exploring new audiences domestically, look overseas to countries or regions and reposition your offerings. An international market can require a bit of research and logistical ingenuity, but it can be well worth the investment if the alternative is being tethered to a domestic market whose prospects are unpredictable at best.
A recession can also be the best time to launch a new brand or venture altogether. The competition is measurably less intense, and consumers are more likely to respond to unique value offered by an alternative to the brands they normally buy. Offset risk by targeting smaller, niche audiences during the downturn and then use the foundation to grow the business post-recession.
5. Focus on your unique value
Often the best positioning strategy is to focus on what you do best. For brands and consumers alike, making the most of a recession is all about understanding value. As a brand, what value do you provide to your customers? It’s critical that you not only understand your unique value propositions, but that you can articulate them in a way that your audiences understand. Do your customers see your brand as an affordable luxury? Do you offer services that enable your customers to reduce costs in other areas? Answers to these questions will give you the tools you need to tell the most compelling story about your brand and offerings.
The best way to emphasise your value is often simply to get hyper-focused on your core competencies. The more specialised your offerings, the harder you are to replace. Brands that target niche industries with niche products and services are better suited to withstand a recession because their customers don’t have the luxury of looking elsewhere to fulfill their needs.
Covid-19 will no doubt bring changes to the marketplace and brands need to adapt accordingly if they want to maintain and gain market share. In the last recession, digital sales actually increased significantly and new competitors to legacy brands came out of the woodwork. These changes have continued to shape their respective markets as e-commerce drives exponential evolution and direct-to-consumer brands offer alternatives to established companies in many different industries. The brands that emerged ready to compete in this new market landscape are those that recognised the unique opportunities that arose during the recession.
Make sure your brand is kept alight during these times and be smart about where your cut your budget. Be open to change, understand the true value you provide to your customers, and be willing to explore and research new markets you may have never considered before.
The most important thing is to have a robust digital marketing strategy in place as this will enable you to micro target valuable audiences even on a very tight budget. Ensure your objectives are SMART, and when targeting consumers via digital channels a RACE planning framework is a good framework to use.
Written by Laura McAllister - see more blogs here www.lkmarketing.ie