Marketing during an economic crisis is absolutely crucial and it doesn’t have to break the bank!
In the midst of the Covid-19 Pandemic and the associated economic crisis, uncertainty and panic are the order of the day. Consumers’ first response has been to curtail spending. As demand lowers and sales start to drop, businesses may be forced to cut costs as well.
If your initial reaction is to slash marketing costs — this might just be a very big mistake which could spiral your business downwards.
To survive and even thrive in a crisis, businesses need to understand the change in consumer behaviour during downtimes and adjust their marketing strategy. Brands who optimise rather than cutting budgets are more likely to do better during the pandemic and grow faster when economic stability is restored.
Consumer behaviour during crisis
In a healthy economy it’s easy to become complacent , believing that good sales figures result from advertising and tempting product offerings alone. Consumer confidence and the availability of disposable income are major contributors to success.
But when the economy goes through sudden challenges like the Covid-19 pandemic, consumers who feel more financially vulnerable will limit their spending. Although lower-income consumers typically cut spending the most, nervous higher-income consumers can as well, particularly if their health or personal financial conditions change for the worse.
Food, housing, education, transport and health are essential priorities. Beyond that, any other default purchases consumers may have made, such as insurance, entertainment, connectivity and discretionary shopping are under review. A common behaviour in times of crisis is that consumers may become more price sensitive and less brand loyal.
This poses an enormous risk to entrenched brands and a unique opportunity for better priced, nimbler suppliers of similar services.
During economic crisis it is more important than ever to remember that loyal customers are the holy grail of cash flow and business growth. Marketing should not be considered as optional, but as a crucial cost to bringing in revenue from your loyal consumer base.
Building and maintaining a strong sense of trust in your brand remains the best way to minimise risk to your business. If you’re an entrant looking to break into the market, this is the opportunity to highlight your value proposition.
Plan for the long term
When sales start to drop, companies shouldn’t panic and change their established target audience. Your best course of action is to stabilise your brand and remain top-of-mind, emphasising your reliability and trust.
For established brands and new entrants alike it’s vital to respond quickly to sudden demand changes. Price conscious consumers will be eager to try new suppliers, so take advantage of the first mover opportunity to acquire new customers. Post-lockdown consumers that have weathered the storm may be keen to splurge once their financial situation improves.
Focus on cost effective marketing
If you are under pressure to do more with less and wield high returns on investment, consider moving more budget to Digital and Performance based advertising.
Managed correctly these channels are hyper-targeted , performance centric and cost effective.
Now more than ever consumers are online, frequenting social media platforms and websites to keep themselves occupied, to look for advice and for emotional support.
Marketing throughout a crisis
Worried consumers will see the brands and products they trust as a safe option in uncertain times. Authentic messaging that strengthen an emotional connection with the brand can make a huge difference to the way your brand is viewed.
The essential 3 steps you must take are to:
- Build camaraderie;
- Foster a deeper connection; and
- Reassure your consumers.
Companies should always back that message up with actions that prove their loyalty to their consumers. Retailers, for instance, can advise consumers on how to shop better and save money.
During the lockdown some supermarkets, like Woolworths, have sent out newsletters containing recipes for nutritious, low-cost meals. Another example is ConsumerRewards who send out tips and tricks on how people can keep their children occupied during the lockdown.
Preparing for recovery
Companies that make it through the crisis by focusing their attention on consumer needs will come out stronger in the sunnier days ahead.
Evidenced by past recessions and conflicts, consumer behaviour returns to normal within a year. The deeper and lengthier the economic crisis, the greater the transformation in consumers’ values and spending habits.
The current crisis is sending us into the largest global recession ever seen. According to a survey by Stats SA during the lockdown, 85.4% of respondents surveyed reported turnover below the normal range. “Respondents in the construction, real estate and other business services, and transport industries were the most affected by lower than expected turnover.”
Instead of getting caught up in the uncertainty and panic, working on being prepared for when it is over is now more important than ever before.
If you need advice on how best to build consumer loyalty and trust, contact us.
We’re experts in building brands and we are operating during the lockdown.