The COVID-19 is not just a health hazard, it’s also a terrifying economic catastrophe, likely to take many businesses under all over the worlds. Let’s assume you’ve reacted quickly and pivoted your business model to become more digital than ever, you’re not out of the woods!
Marketing will play a critical role in getting your business to survive the crisis, especially as your customers will be poorer or feel poorer and stop buying many things, including potentially yours. The longer the crisis last, the more scared and the less willing to spend they will be. They will be more frugal and cautious in their expenditures. Reassuring the consumer, holding her hand in a “we’re going to get through this together” manner is a vital ingredient of successful marketing during a recession.
Marketers should fasten their seat belts for a long and difficult 2020. Budgets will be cut. Team members will be lost. The pressure for proven returns on marketing expenditures will increase: “doing more with less”. More agency consolidations and single client-single agency alignments are likely.
But if you can afford it, maintain some marketing spending so as to stay salient in consumers minds rather than having to start from scratch again when the situation normalises.
In any case, there are a few rules of thumb to follow to help cushion the shock and adapt quickly:
1/ Value brands with low cost structures will do better. Fighting brands — low priced brands supported by minimal advertising and competing on price to retain market share — will play a greater role. Companies targeting the middle segment of the market will face the most difficulties.
As a priority, you need to re-evaluate the consumer’s decision and purchasing journey, as everything changed in the last few weeks. Of particular importance is to understand how consumers are now redefining value.
2/ Make every dollar work harder: your marketing should be contextual in both channel (digital and TV) and message (“at home”). On the positive side, media is very cheap right now (as many have stopped advertising), so you can negotiate very low rates.
Consumers are also likely to want to be reassured and therefore use familiar brands and products: if you have a new product to launch, it might be best to postpone until the situation calms down, unless it is only an incremental (rather than radical) innovation, eg a new soup flavour. You don’t want to have to explain a brand new product at this moment. If you still introduce new products, they should address the new consumer reality and thereby put pressure on competitors, and advertising should stress superior price performance, not corporate image.
You also probably need to change your messaging to focus on family and community values.
3/ Analyse your current sales and adjust which products to support: you might be selling different items than before. Are consumers trading down? Buying different services or accessories? You will need to keep your finger on the pulse and be very reactive. Ideally, do some small scale tests through digital platforms to validate your assumptions.
4/ Support your partners, especially your retailers and distributors. Even if your go-to-market is now largely online, you will need to keep good relationships for the after-crisis. If you can afford it, help them with financing or generous return policies. Now may be the time to drop your weaker distributors and upgrade your sales force by recruiting those sacked by other companies.
5/ Adjust pricing and go after market share. Customers will be shopping around for the best deals. In tough times, price cuts attract more consumer support than promotions. To cut your own costs and protect margins, go after anything less valued by customer so as to save the most money with minimum customer impact.
6/ Lastly, emphasize core values. Focus on existing customers, maintain quality and deliver the best experience possible. Same for your employee experience, especially if you are in a service industry. Make sure you over-communicate.
Successful companies do not abandon their marketing strategies in a recession; they adapt them.