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Derrick Daye Recession Marketing

Brand Marketing In A Recession

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Brand Strategy Recession Marketing

The world is not flat. Discontinuities characterize everything, and it is in inefficiencies and breaks in the general pattern that exceptions can always be found. This is true in both good times and bad.

Recessions are spiky. (So, too, stagnant recoveries.) Downturns hurt a lot of people, but not everybody. In fact, some people even thrive. Down economies are not all down. They are filled with peaks and valleys – more valleys than peaks, of course, but not a flatland of stagnation. As reviewed in more detail in our recent Future Perspective, Unlocking New Sources of Growth: How to Find New Value in New Places, finding peaks to climb is the way to thrive, not merely survive, during a recession.

Obviously, discount brands and retailers are ready-made to spike during downturns. But there are other peaks to climb – three in particular.

First is innovation. The well-worn list of innovative new companies that were launched successfully during downturns is proof aplenty that real breakthroughs always find a market no matter what. Adding to that are numerous academic studies confirming that innovation is the best way to protect existing brands during recessions. (The longitudinal research of Belgium marketing professor Lien Lamey, who has studied 20-30 year business cycles in Belgium, Germany, the U.K. and the U.S., is particularly instructive.)

Second are sectors. Recessions are notoriously selective in the industries they punish. People looking for jobs and companies looking for consumers with a job to sell to should look for the spiky sectors. The global recession that began in 2008 was unusual in the breadth of sectors affected, but even then, some sectors continued to grow. In the U.K., it was civil aerospace, car manufacturing and mechanical equipment. In the U.S., it was health care and education. In every developed market, it was industries exporting to China, India and other emerging markets. Additionally, some sectors recover faster than others, so while U.S. residential construction is stuck in a valley, domestic car sales are coming back.

Third are markets and target segments. Not every market is hard-hit in a recession, even during the recent global recession. Most markets slowed, but many markets continued to grow strongly, just as at reduced pace. For example, Poland is now being called “the Green Island” because it fared so well during the global downturn. Iceland hit the skids, but has made a rapid comeback and is growing again.

Similarly, within a market, not all consumers lose jobs or income. Some people are just as well off as ever, although they may be paralyzed by anxiety over what has happened to others. Taking the risk out of buying may be needed to reassure consumers.

While discretionary consumer spending in the U.S. dropped a record 6.9% during the recent global recession, Apple, Facebook, Restoration Hardware, Hyundai and McDonald’s racked up record performances, just to mention a few.

The world is spiky. Whether times are good or bad, the challenge for brand marketers is exactly the same – find peaks to climb.

Contributed to Branding Strategy Insider by: J. Walker Smith, Executive Chairman, The Futures Company

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1 Comment

Matthew Fry on July 26th, 2012 said

This is a very interesting article. One seldom thinks of opportunity in a recession but by being innovative, selecting your target market, and selecting your target consumer properly one can find opportunity. No doubt it is more difficult for most, but it is possible to make great things happen in times of economic turbulence. This is an important article for the fact that it points out that times are not always as bleak as they may seem. Great article!

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