John, thank you for these excellent points. I’d like to add a few of my own.

1. Spend smarter

You may spend less on marketing. Not because marketing should be cut first or most (it most certainly should not), but rather because your company may cut budgets across the board. In fact, by showing how you intend to spend smarter you will make it easier to fight for your resources (see below). By “spend smarter”, I mean create a clear-cut justification for the investment. While you won’t always be able to measure the ROI (this is marketing after all), you can have your people create a compelling business case for each investment. Then, when it comes time to justify the investment, you will have established sound business reasoning behind it. And that’s what the CEO and CFO need to see in a recession.

2. Double-down on your current customers

Sure it’s more fun to get new customers, but it’s more practical in a downturn to provide more value (and get more in return) from your current customers. When customers make decisions in a downturn, they’re more likely to go with a more trusted source. If they’re more likely to go with you, then you want to make it easier and more obvious to them to go with you. Market to them. Enable your sales teams to be more effective with them. Ask current customers what they need from you. Care for them and they will be even more likely to stick with you if the going gets tough.

3. Outsmart your competitors

You have an opportunity to win market share from your competitors in a downturn. If you pay close attention to what’s happening in your target markets and how customers are reacting to a recession, you can act early and often with changes in product (if you can change it quickly), price, and positioning (especially as perceived needs change). For example, in the last technology downturn, software companies became very creative in their pricing schema, creating many variations of software as a service (SaaS) that enabled them to sell when their competitors were stuck in an old paradigm.

4. Invest in Growing Market Segments

In every downturn there are market segments that grow faster than others. It’s your job as a marketer to help your company see and understand these market segments, and determine if you can quickly win business in these fast-growing market segments. These may be segments you’re already selling to, but not particularly focused on, or they may represent new segments – and new opportunities for your company. At the same time, you want to reduce your investments in the segments that will get hit the most in the downturn.

5. Fight for Your Resources

As I’ve argued before (see "CMOs as True Leaders" http://www.achievemarketleadership.com/?p=198) it’s marketing’s responsibility to drive strategic issues. In a recession, this becomes even more important. Knee-jerk reactions of companies where the CMO is not deeply involved in strategy, are often to cut budgets and people in marketing disproportionately. This results in marketing playing a less important role, and an extremely inefficient pendulum-swing of dollars and people that result in being caught flat-footed and losing out to competitors very shortly after the cuts are made. It’s marketing’s responsibility to fight for it’s resources, and doing the four items above will help you win that battle.

I'd like to know if Prof. Quelch has a similar set of recommendations for business-to-business marketers. Thank you.

Since my business is in the professional services arena I had a similar question. Re-reading and considering each of the key points in the context of my own business I believe I can translate each of these to actionable marketing tactics going forward. The same applies to the additions by Glenn Gow. I suggest the fundamental ideas presented are broadly applicable. Thank you for making me think a little outside the box today.

Tony Raymond
President, New Harbor SQA

The marketing strategy, along with all general business strategy, can undoubtedly surprise decision makers in harsh ways. As recession talks begin and progress, the formulas used by the US Government to mediate our economic status are often paralleled on a smaller scale by businesses and corporations.

While "recession" does carry negative connotations it is essential to focus on what we can all learn from in these times of financial crisis.

The main element of a recession as it relates to business is that it dramatically decreases the consumers’' spending, often decreasing (or eliminating) many of the "want" products. Although a financial crisis seems to trigger an increase in tobacco and alcohol spending, it generally forces consumers to cut down on their leisure spending as they conserve funds for food, gas, and living expenses (including cigarettes and beer).

In times of chaos, strategic business focus usually narrows its sights on efficient spending (and saving), stronger management, and deeper research. All of these variables are tied with one common theme: doing more with less money.

Whether it be letting go of unneeded workers or tightening company travel expenses, all signs of recession seem to be the best reminder that businesses get out of hand when we are NOT in times of financial crisis.

My conclusion is that businesses need to relate with consumers on a united level - people on both ends of the spectrum are experiencing the effects of a recession. Uniting consumer and the producer may go against typical marketing rules but in times of recession it can improve credibility and increase business revenue once the recession is in the distant past.

Survival may be a victory in itself during a time of recession. I truly encourage all executives to think about how a recession can be used as a tool to promote survival and post-recession growth rather than thinking about how to beat a financial crisis that not even the world's most powerful country can even defeat.

John I read your article last night and it got me thinking about how I could apply this to my field in Online Marketing. I added it to my blog on http://www.marcporcelli.com

I look forward to feedback!

Marketing Your Way Through a (Online) Recession
March 4, 2008 – 2:11 pm

Cruising here at 35,000 feet, the recession continues to loom in my mind. I feel fortunate to be in a vertical that it is fairly recession proof. That being said, I will still feel the recession’s effects, especially as consumers continuously feel the pinch. As a reader of this blog you know that I have been focusing much of my time on articles about advertising online during a recession Recession and Depression Proof Advertising and Recession Proof Online Advertising: Best Practices both tackle this topic and provide perspective.

Yesterday, I came across an article by John Quelch. John writes a blog on marketing, called Marketing KnowHow for Harvard Business online. I learned about the article from Harvard Business School’s Working Knowledge For Business Leaders email newsletter. This is a free newsletter and I encourage you to subscribe to it here.

In John’s article, Marketing Your Way Through a Recession, John pointed out eight factors that marketers should keep in mind. I found the article particularly interesting as John presents us with a quick road map coupled with low-cost suggestions that can, in most organizations, be readily implemented. Below are a few pointers that I found relevant to online marketing.

First, know your customer. Now is not the time to cut your research budget, now is the time to dig further to learn more about your users. Online marketers should earn about what their users do during a typical session. Do they log in and check their email on your site? What, as an online marketer, are you doing to provide value to keep the user intrigued? Better yet, once the user hits your site, what are you going to do to keep them there? Perhaps more importantly, what are you doing to bring them back? If you don’t have something where users have opted in to continuously pull them back, such as a newsletter and strong re-marketing efforts you are not marketing online to your full potential.

Secondly, maintain your marketing spending. John points out that “It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.” Further to this point, it is a great time to get the most competitive rates. I pointed out in a recent post that publishers are also looking to close deals and will be willing to discount their inventory. John points out the importance in maintaining frequency, which can be attained by shifting from a 30-second spot to a 15-second spot. For online advertising, this means lowering the frequency cap from say 4-per-24 to 2-per-24.

Third, you can adjust your pricing tactics. You don’t need to cut prices, but you may need to offer temporary price promotions or price more aggressively. Sweepstakes in particular will give any online campaign a lift. The further you incentivize your users to engage in your message, the bigger the lift you will see. Just be careful not to over-incentivize or mislead your users, as they will churn out at a rate higher than your current constant. Another promotion if you offer a subscription service would be to offer three months for the price of six or buy one month get one month free. Sometimes all it takes is a little incentive.

A forth point, which is arguably an extension of the third, is to create a sense of urgency. For example, use statements such as “Sign up now for this limited time offer” or “Offer valid this month only.” By conveying this message to the user, it will provide many with needed qualification to convert.

Regardless of what tactic you use as an online marketer, you need to know your users better than ever. Users are increasingly looking for you to provide better value.

Thanks, great article.

From a tactics point of view I think considering Online PR/ Social media marketing is also a way to stretch the marketing budget.
Compared to TV advertising it can reach consumers often in the 'consideration' phase of a purchase and at a much reduced price.

If you look at who is using social media marketing to their advantage and in innovative ways it is the non-profits - those that are forced to stretch their marketing dollars further every year regardless of economic conditions.

Finally, another reason to add social media to your marketing mix in a tight economy is the transparency of social media metrics (due to it being online) - and in a tight economy metrics are going to be even more critical to the marketer.

Cheers
Jenni Beattie
Online Research Manager
Network PR

Research the customer

I definitely agree with you in this regard.Change in customer and consumer behaviours in response to the recessionary environment will make us marketers be able tailor our marketing efforts which suit the target market and increase our rate of returns.

Maintain marketing spending.It would be good to mantain the spending and also maintain consistent marketing efforts in line with the positioning strategy of the company

Support distributors
Only viable and strategic distributors should be supported

Hello John - Thank you for your article which I have forward along to my colleagues. Interestingly, I started my marketing business in April 2002, during an economic downturn and shortly after 911. Despite these challenges, I was able to succeed by 'making some noise in the markeplace' while others remained silent. Approximately six months after I started my business,I published an enewsletter with 5 marketing strategies for surviving a tight economy. Like you, I advised business leaders to focus on their core competencies and changing client needs - as well as other 'survival techniques.' As Charles Darwin said, "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."

John, thanks for the insightful post. I'm currently having this very discussion with two client ceos, and your points helped reinforce the message! Keep the great posts coming.

Best regards,
- Bob London

Bob London
President
London, Ink LLC
www.londonink.com

John Thank you for your timely article. There was a white paper published by Interbrand in 2003 that supports your positions. One quote from the paper I recall, states "Consumers don't stop buying during a recession, they just buy more cleverly."
Stong brands supported by smart marketing will do better than their competitors in a down market and bounce back faster when the market picks up.
Bob Grant

A great article. Is there a great article in particular that you would recommend that makes the case that those companies that advertise in a recession emerge with increased market share?
B

Recession is an opportunity for stock taking

Like we have weekdays and holidays, businesses do have booming times (hectic weekdays) and recession times (holidays) and hence they cannot be avoided. We can claim to provide 24x7 business/service but surely businesses would prefer to have some stock taking and breathing time. If one were to find peace with this statement, then managing recession will become a child’s play.

Recession times are best times for evaluating business, products and services; markets, processes; people, practices and performances. Well. It is a complete executive master check up for business

It is time for sorting out, systematizing and standardizing. Of course, we may need a bit more of self-discipline. Only then we can ensure spic-n-span (clean) slate.

It is time for making sure that we add value through better communication with the key stakeholders. Only then we can deliver results. Investing in relationships and conducting our business with integrity are only needed in these testing times. Surely our business can gain perspective to prepare itself to handle the best of times to follow recession.

Are we ready?

John, my view base on generic economic and social trend in recession.
Recession is a phase where in corrections in normal buying patterns takes place. This happens not by voluntary choice but “a must to make choice “ to restrict or refrain from an expenditure what can be termed as” Luxury” and / or “Comfort” and focusing on “Necessities” . This leads to a complete shift in business dynamics. Concept of “true value “ been attached to all the individual perceptions / values and accordingly to products. It is in line with law of nature “cycle “ has to complete its turn. The parties if do not get accommodative to these will lose out and parties who are will sustain. Further, it gives an advantage to those who are intentionally or unintentionally gear up for this , as they may take advantage to better prices. Being a phase , eventually , it will be overcome by large, what matter is the duration and capacity to sustain.

Interesting thoughts, but I want to push back on a couple.

There is no market where 'spend smarter' or 'understand your customers better' is a bad idea. However, focusing on share and price, in some markets, can lead straight to industry price erosion.

Reducing price in a market where many competitors are focused on share is a risky proposition. Especially in a recession, price cuts are easy to match. Companies often have unused, sometimes depreciated assets standing idle, and the marginal cost of turning out additional production can be quite low -- rationalizing very low marginal prices. But the airlines are a good example (I think Southwest was mentioned above) -- with current Internet price comparisons and web-crawling pricing tools, it's very easy for all customers -- and all competitors -- to see those low prices. Usually this simply re-sets the competitive playing field at a lower price. A wave of price reductions can rapidly flow through the airline industry as each competitor matches prices, and a decade's profits flow out the door.

I'd go back to the first rule, focus on the customer. Then use that focus to better communicate the value of your offering. You, Mr. Customer, are feeling the recession. Let us communicate how our offering can help you through it. The first step should be to quantify and communicate value before triggering an industry price reduction.

A great article and obviously unlocked some strong thinking that has been going on out there! Some more variations on the theme ...

Segmentation - In more challenging times, careful and considered segmentation of the customers, the channels and the market is vital. It can use many kinds of data inputs but analysing Cost To Serve may be very powerful in finding critical 'profit pools'. Then it becomes possible to target the high value customers and prospects, so that communications (not just advertising) spend, at whatever level, becomes more efficient.

Creative treatments - in prosperous times we see more messages around personal/emotional themes, playing to the desire to enjoy life to the full. When the economy gets harder, consumers think more about survival and start to change their ideas about what they need and what constitutues real value in that context. Creative themes around the practical/functional aspects of the product and service start to carry more weight. In payment card terms, its the shift from 'this card will get you great holidays' to 'this card gives you the lowest interest rate, most protection, etc'.

Interesting article ! My only question is why restrict these factors only to recessionary periods? These should be practiced everyday, both in good economic times and bad. Otherwise, the message we would be sending out is that it is ok to expoit the customers, suppliers and distributors when times are good but when time are bad we should show these people that we really care about them, just to save our precious skins.

This article arrived right on time for me, as my wife
was asking if its a smart move to start our business.
I say, play it smart through downtime, and you be at the top
when uptime is back.
High Spirit and Motivation will pave the way for innovation
and success.

Yours,

Jack - Your Best IT Friend
Free Computing tips
for Home Business Owners
http://www.bestitfriend.com

I would offer a more simple solution:

What is required in a complete and unrelenting focus on the customer that completely permeates the firm. This is how to survive and win in the marketplace during a recession

I would offer a more simple solution:

What is required in a complete and unrelenting focus on the customer that completely permeates the firm. This is how to survive and win in the marketplace during a recession

Excellent analysis! But I still believe we can streamline the points to act more effectively.

1. Consumer Research:

Primary focus must be on three points during Recession:

a) The Buying Process: The buying process and the consumer behavior changes overnight during these turbulent times. They'd surpass the stages of 'Awareness' and 'Information Search'. The critical stages now involved are 'Evaluate the alternatives' and the actual 'Purchase Decision'. Hence, now is the time to target the buyers and satisfy the users. And also place as much positive information with "influencers" and flaunt about your product or service by brazenly bluffing just gain a competitive edge. The advertising must also aim for reducing Postpurchase dissonance at this stage just for reassuring consumers and to gain their confidence and to help them indirectly promote the product or service through word of mouth epidemic.

2. Focus on Family Values:
It's important at this stage not to promote the physical attributes of a product directly but to connect the product to a high-involvement issue, use value-expressive advertising, heighten an obscure benefit of the product and also introduce a totally new "assuring and risk-reducing" characteristic to the product. The whole magic can be achieved by turning a low-involvement product into a high-involvement product and thus boost the sales.

3. Marketing spending:
It's not the time to cut the spending. It is time to review the segmentation of the market and change the permutations and combination for targeting them more profitably. These should be done after a very strong SWOT analysis of the competitors and self. Utilize the power of context in advertising.

4. Adjust Product Portfolios:
Use the brand loyalty to increase breadth and depth of the product line to oust the competition and standout.

5,6. Support Distributors, Adjust pricing tactics:
Support distributors ONLY not to lose trade relations with them in the future. But adopt a backdoor strategy. Use direct distribution to reach the consumers (such as mail and online orders etc.) by taking a detour from all distribution channel intermediaries. Pricing can be changed as there are no "leeches" to suck the "markups" on selling prices in the distribution channels. Portray this reduction in price as a handsome discount and make consumers feel the difference - change the packaging etc.

7. Stress Market share:
Identify the "relevant" market share for each category of the product and also pinpoint its position in the product life cycle. Based on these, tweak the marketing plans.

8. Emphasize core values:
DO NOT deviate from the core values no matter what. Use tactics and strategies to make the values "contagious" and introduce "stickiness" factors.

Great Article.

Thanks to all for their thought provoking views.

Request if some examples could also be shared on how one can use them in the Online Marketing as well as the general B2B arena.

Thanks
Manoj Onkar
Mumbai, India

During economic recessions , businesses are faced with hard facts on customer loyalty versus patronage of convenience. loyal customers enjoy (additional) value for various reasons including appropriate pricing, availability etc with each business interaction.
Organisational systems should be enhanced to see through the "optics" ie fanciful interpretation of marketing reports based on figures be they facts or fiction.Attention should be focused on making more money from incremental businesses and this is a definite fall out of customer loyalty and satisfaction.
Companies in the habit of delivering great products and services, are assured of profitability during good times and deferred better times otherwise referred to as " Recession"

Marketing to a bear or a bull determines the mix and style of the marketing stratergy. Expected outcomes determines the business stratergy in resourcing this outcome.
If your bear or bull is in a China shop or a Mining pit it makes little difference to the levers. The 4 P's are still as pervasive as ever.

How to Market in a Recession.
John Quelch
Companies should bear eight factors in mind when making their marketing plans for 2008 and 2009:
Research the customer.
2. Focus on family values.
3. Maintain marketing spending.
4. Adjust product portfolios.
5. Support distributors.
6. Adjust pricing tactics.
7. Stress market share
8. Emphasise core values.
Now I comment. The signs of an imminent recession are all around us. The spillover from the subprime mortgage crisis is weakening both consumer confidence and the consumer spending--much of it on credit--that has been buoying the US economy.
John. I salute for the article. Don’t you think the article has come a wee late?
Let us look at what we have at the moment. No, I do not have anything against what you say. I agree. It is meant to amend the laws and profits, when we have the time to think to apply. At the moment, we lack the luxury of thinking. Man lack bread and the cash are now in the envelopes instead of the usual wallets as the currency is very thin. In other words, we cannot think straight as we have the houses waiting to be auctioned and we watch these on the TV. The price of foods have gone up by 25%, the wars accelerate the prices higher. There are elections fevers in Zimbabwe, Tibet hammering of the monks, ice melting; the big bosses cannot sign .Kyoto Protocol.
What I am saying is WE NEED CASH NOW not ideas. We will give these to the younger generations who can turn the wheels of economy and politics the way you say. In the meantime, we have the water in the boat, passengers in the boat and few leaking bucket to get the water out the boat.
I personally have nothing to offer as my thinking is in the cobwebs.
I thank you
Firozali A. Mulla MBA PhD
P.O.Box 6044
Dar-Es-Salaam
Tanzania
East Africa

John,

Thank you for your insights. In managing customer acqusition your comments clearly apply to the paid search and SEO arena. Based on your article I haver asked my team to review key words, phrases and landing page content to ensure that we are effectively communicating with our customers during this recessionary period.

During economic recession, it's not only the business being hurt but as well the consumers. That is why most of the businesses today are always keeping abreast on market, supplier, priduction and financial information in order to draw a comprehensive strategic ideas to combat competetion

Consumers are very keen in buying products, most of them considered the value of price over product quality, there were also some who considered so much about the durabiility and quality than the price itself. One strategic idea is to produce a different brands that fit to the the core value of the market consumers without sacrificing so much of the production cost and the market share.