Recessionary thinking isn't something many marketing leaders have experienced. But with the covid-induced economic recession on our doorstep, what can they do to try to come to terms with this new normal?
While the tools available to marketers to respond to previous recessions were crude, their options were also often limited by their organisation usually cutting marketing and innovation spending to rein in costs. Unfortunately, this would also restrict the only activities that had a chance of generating new revenue when traditional sources declined.
According to Melbourne Business School associate dean and director for the Centre of Business Analytics, Prof Ujwal Kayande, those organisations that cut innovation spending during a recession also find themselves with fewer new ideas to bring to market just as the economy is bouncing back and people are ready to spend once more.
“Recessions are not the time to cut back on marketing spend. But only a few firms are going to listen to this view,” Kayande says. “It is the firms that already have a strategic marketing emphasis that stand to benefit the most.”
Kayande cites numerous research that supports his perspective, including the 2005 study, Turning adversity into advantage: Does proactive marketing during a recession pay off?, which found those organisations that bounced back most strongly from recessions usually did not cut their marketing spend. A further study released in 2012 titled To launch or not to launch in recessions? found products launched during a recession generated greater sales and had better long-term survival rates, in part due to the reduced competition from other new products coming into a market.
But while marketers may find their budgets cut back, Garg agrees now is not the time for them to also curb the innovation in their thinking. “If marketers understand that a lot of behaviour is driven by uncertainty and risk aversion, they can try and capitalise on that and help consumers get out of this vicious cycle of fear and uncertainty,” he says.
Hence she says marketers should be making appeals to emotion and reminding people of happier times.
This strategy is being employed by Coles in its latest multichannel campaign, Value the Australian Way, which is designed to reflect the long history of the supermarket chain and reflect the needs and wants of Australians in 2020. Another example is the Qantas scenic flights program, which sold out quickly despite not actually taking people anywhere.
“That is a brilliant case of a marketer innovating,” Garg says. “They are using their existing infrastructure to come up with something valued by consumers who are hungry for travel and hungry for a change out of the day-to-day drudgery of the pandemic.”
What all of this suggests is that the uncertainty many marketers feel in their decision making is unlikely to lift any time soon, and the hope of reaching a new normal remains as elusive today as it ever has.
According to principal of the marketing capability development consultancy MacMorgan, David Morgan, smart marketers will begin to pay much closer attention to customer behaviour and attitudes to uncover new patterns and behaviours, and will dig deeper into the micro communities within their customer segments to better tailor their messaging.
“We are able to use our brains to explain why this strangeness has happened, but for once we are not able to use our brains to predict what is going to happen next, because the uncertainty of what has happened doesn’t give us a platform for projection,” Morgan says.
“So marketers need to rip up their plans and start again. They need to zero-base everything. And the good, the resilient and the clever will do that. They have to start with data science and micro communities.”
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