This is the first of a two-part blog on marketing in a recession.
Our economy has taken a triple hit. First, we were buffeted by rising gas prices, then a wave of inflation that hadn’t been seen in 30 years, and then the current recession. For many, this “perfect economic storm” has changed our “personal rules” that anchor us and help us to simplify the tasks of managing our monthly and longer term budgets. People are thinking about what they didn’t have to think about. Just having to rethink your everyday purchasing tradeoffs will create anxiety and make life more stressful. In fact, there was a remarkable article in the NY Times that talked about the anxiety people are feeling who aren’t even directly financially impacted. It is a society-wide trauma.
People are rethinking value and making different tradeoffs that involve money and time. Private label market shares are steadily increasing. People are planning their shopping trips differently according to IRI. There is also a huge jump in traffic to websites that offer coupons and to coupon use. Bain and Company anticipates a 7% drop in worldwide luxury goods sales.
A key question is, “Will things go back to ‘normal’ when the economy improves?” I think it is impossible for three reasons, so marketers need to be at the top of their game to come out of the recession poised for growth.
1. Historically, private label brands do not give back all of their share gains after the recession ends (as documented by Prof. Jerry Tellis at the last ARF Conference.)
2. The media world, especially social media, will be so different when the economy recovers that there is no “normal” media environment to return to.
3. Consumers have been profoundly impacted by the feeling of deprivation and how they cope with that. This is the same conclusion reached in a recent article in The Economist. For example, those who have switched from national to store brands and are concluding that performance is acceptable, will be harder to switch back to national brands even when the economy rebounds. Those of us in our 50s or 60s, know how different our parents’ sense of frugality was because they lived through the depression.
Marketers need to use inspired research and listening methods to gain windows into the souls of today’s consumers and shoppers to position themselves for growth once the economy begins to rebound. That will be the focus of my next entry.
Next: Recession strategies for the short and long-term.