Over the past few months, many of the meetings I have attended have ended up in discussions regarding cutbacks and cost savings due to the economic downturn.
During economic downturns, marketing is often the first to be thrown out the window because it's seen as a discretionary expense that can be reduced without immediate impact on day-to-day operations.
However, this is a fine line to balance and can quickly become very unpleasant. By overdoing such reduction, businesses risk losing their position in the market – leading to decrease in sales and revenue. This is especially important for businesses operating in an intense competitive environment, such as the auto industry.
We know from previous recessions how fast certain products can turn from essentials into treats.
I dug deeper into the topic and found an interesting article called "How to Market in a Downturn" by Harvard Business Review.
This article provides a great overview of why cutting marketing during economic downturns can be detrimental to businesses, and offer insights and advice for companies looking to maintain their marketing efforts during these tough times.
Recessions come and go, and this article is actually more than 10 years old. Every recession is unique but the challenges and opportunities seem rather familiar, don’t they? These are two of my main takeaways:
- During recessions consumers set stricter priorities and reduce their spending. As sales start to drop, Marketing expenditures are often slashed across the board—but such indiscriminate cost cutting is a mistake.
- Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardize performance over the long term. Offerings in response to shifting demand are more likely than others to flourish both during and after a recession.
Business Developer, Nordics and BeNeLux