How Businesses Can Make The Most Out Of A Recession
As the world gears itself for what experts say might be the worst recession in generations, it is important for businesses to use this time to prepare for an economic fallout that seems inevitable. If it happens, this will be the first global recession in over 10 years. The results of the 2009 recession were devastating, with unemployment in the U.S increasing from 5% to 9.5%, and GDP declining by 4.3%. While the consequences of a recession cannot be completely avoided, there are a few things businesses and marketeers can do to minimize the damage and make the most out of this situation.
Firstly, it is important for marketers to realize that a recession does not necessarily mean that they need to cut down on advertising. Most businesses cut back on their spending during this time, which may seem justified given the circumstances, but this might actually be a good time to maintain your ad spending. Most competitors will minimize their marketing budget during this time which provides businesses the opportunity to capitalize on the decreased competition and make themselves heard. Maintaining an active media presence will also give customers confidence and give off an image of corporate stability. Customers will naturally gravitate towards a brand that provides them assurance in difficult times.
A recession period provides businesses the opportunity to reposition their brands or to introduce a new product. This is usually a time where most businesses are on the back foot in terms of spending, and R&D. Businesses can capitalize on this opportunity to ensure they come out on top during and after the recession.
The cost of advertising during a recession is also lower than usual. The decrease in costs and advertising creates what is known as a buyer’s market. A buyer’s market exists when supply exceeds demand. Businesses can work their way around this to increase short term sales by reducing the price of their products and services. This is beneficial for businesses as consumers have lesser spending power during a recession and they are frequently looking for the best deals. However, businesses need to be careful of the price changes they make as consumers become accustomed to the new “normal” and may look less favorably upon a substantial price increase once the recession is over.
Businesses may also use this time to streamline their portfolio. They could choose to clean up their product lines or make minor adjustments to their production lines instead of having to make large scale changes after the recession. Not every business needs to do this though as they could be causing more problems by trying to fix something that’s not broken.
All in all, despite the obvious consequences a recession will bring, businesses can use this time to restructure and revitalize their brands, build a stronger relationship with consumers by earning their trust, and gaining a larger market share by staying active in the market at a time where most businesses will be keeping a low profile.