Marketing could be the shining star in recession

by gatekeeper on 11.08.2019

The world economy has cycles of progress increasing the GDP and prosperity, and moments of strong down moves, leading to decreasing consumer spending and even fears of existence. 

The first sign of recessions is a steady decline in industrial orders, decreasing exports and investments. Some industries are sensitive to the business cycle, meaning revenues are higher in periods of economic prosperity, and lower in periods of economic decline. For example, the car industry is cyclical, it belongs to the early birds, meaning this is a business indicating quite quickly that the economy is going into the wrong direction. Telecom industry suffers also in times of an economic downturn and not that much because of consumers motivated to switch for a cheaper mobile contract or internet service but because of the margin war between competitors, huge investments at risk like the 5G infrastructure or even default chance of core suppliers. In general, the major telecom companies and car producers are too big to fail, therefore the implications of upcoming economic crises could be limited, managed in a good way.

Despite the individual threats of each industry during a recession, the main risks to the global economy could be enormous depending on the extent and duration of the financial market crisis and its consequential effects on the real economy as well as on consumer and investment propensity. This uncertainty would lead to downsizing of non-core investments, cost-cutting, de-risking and refocusing measures to secure the cash flow of a company.

Marketing programs could be also impacted by cost-cutting. However, it should be clear that such measures can lead to financial vitality in the short-term, but also with a risk to lead to a downward spiral of revenues in the mid-term. Companies looking at the marketing functions as a chance, could be the winners in a crisis. 

Here is why:

  • Marketing experts understand the customer. This knowledge could be the core of a strategy characterized by customer centricity. It can play an essential role, when existing or new products are about to enter new customer segments. As a result new revenues will reinforce the financial position of the business.
  • A successful brand has unforgettable personality created by advertising. Consumers adopt new products and repurchase them because they love the inspiring brand images. Loyal customers even internalize some brand qualities corresponding to their own personality. In recession, the brand equity shows the true value of all marketing efforts — the customer base is stable, especially among brand advocates. Harley Davidson e.g. is the best motorcycle for Americans. 
  • Marketing is optimizable and can provide an accurate answer to the old question: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”. In the digital age marketing analytics manager, digital and even classic campaign managers are aware of the outcome resulting from their media mix decisions. Attribution and media mix models are providing insights about functional links in the relationship between advertising pressure, channel contribution and sales performance. So, the marketing effort could be easily expressed in clear figures.

The list of arguments could be far longer. From outside it looks like marketing is a magic. In reality, it isn’t. Marketing experts are enablers, they work together with other departments (sales, product, customer care) just in order to serve the customer in a better way than the competition. During economic downturns this function could be the shining star in a corporate strategy determining the best routes to sustained growth.

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