Best time to spend on marketing is at the recession’s mid-point.

Companies that have bounced back most strongly from previous recessions usually did not cut their marketing spend, and in many cases actually increased it. Researchers from UT, Austin and Penn State, University Park, say:
Recessions can severely affect the performance of firms, and even their very survival. However, all firms are not equally
affected by a recession. Some firms view recessions as opportunities to strengthen their businesses, invest aggressively and
establish their advantage over their weaker competitors, whereas others cut back, waiting for the recession to pass.

Just this week by Nirmalya Kumar and Koen Pauwels writing in the Harvard Business review say “Don’t Cut Your Marketing Budget in a Recession“

See how their advice applies to the home improvement businesses.:

• Products launched during a recession have both higher long-term survival chances and higher sales revenues. That’s partly because there are fewer new products to compete with, and products introduced during recessions have been shown to be of higher quality.
  • The last recession gave a rise to a lot of new products and different ways to do business.
    • Aging in place packages for remodeling homes so people can stay home when they age instead of downsizing or moving to an apartment or condo
    • Bath remodel in a day or even half-day when successful remodeling contractors
    • Exterior remodeling contractors offering financing options which were taboo before the previous recession
• The best period to launch a new product is just after a recession’s mid-point. This is when consumers start to think about non-necessities, even expensive products they don’t want to buy yet
  • The marketing spend on creating a brand and building a brand will help homeowners make the choice right from the research stage
• As recessions make consumers more price-sensitive, any increase in price will further reduce the likelihood of making a sale, which is why firms that have raised prices soon turn to price promotions to reverse the effect.  But the research shows that this see-sawing on price backfires: Firms that engage in it lose more market share than those that don’t.
  • Innovative packages, building new pricing models where your salespeople can add or modify the good, better, best packages inline with the customer’s needs
• During recessions, when most firms are cutting back on their brand advertising, a firm’s share of voice increases if it can maintain or increase its advertising budget. 
  • From our customers, we have heard that those who have increased their ad spend are seeing better results than in previous years.
• The content of advertising during recessions must reflect the challenges that consumers are encountering. Consumers in a downturn want to see brands show solidarity. Successful brand advertising during a recession not only injects humor and emotion but also answers for consumers the question: How can we help?
  • We have seen the contractors educate homeowners on the precautions they should take when a contractor visits a house.
  • See our Social Distancing Guide for contractors
  • When the pandemic hit we created a “Home Contractors Guide to Preparing for a Great Comeback“
• Smart negotiators can often get price concessions from suppliers in a recession.
  • In order to keep prices low, you can negotiate with ad companies, media, and other suppliers who will want to keep your business.
• This is a time not to stop spending on your marketing but use it as an opportunity, because firms who are willing to be what customers need in a recession get to keep many of the new customers they get — and cement the loyalty of those they already had.

We agree with the authors of the article.

"Marketing in a recession will never be easy, largely because it often involves going against instincts and standard operating norms. Customers’ behavior undergoes profound changes – reflecting changes in their circumstances and needs, which may even be traumatic. In this environment you must accompany your customers on their new, different journey, shifting your message and even re-engineering your value proposition"

Our team of sales consultants can tell you what technology and tactics Leap’s customers are using to do better business than years past. If you want copies of our resources that you can download, let us know as well.

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This blog post reflects the opinions of the author and may or may not reflect the opinion of Leap (Leaptodigital.com).