Marketing Strategies During Recessions And The Credit Crunch
Marketing strategy has played a pivotal role in a firm's success during previous recessions and the current credit crunch. During economic recessions consumers spend less and lower market prices often lead to reduced profit margins. In an extremely competitive market place many businesses struggle to survive. If a business can thrive during a recession then it is likely to be successful no matter what the challenges are. This article is about common marketing strategies adopted by businesses during recessions.
The diagram below shows 5 marketing strategies firms can use during recessions and difficult trading conditions.
The price of a product or service is important to consumers during recessions as they are often dealing with reduced incomes and reduced credit facilities. Price is an important element of the marketing mix, during the current recession many businesses in the UK have used price as a way to promote their products. Prices have either been reduced, cheaper product ranges have been introduced or existing value products are used in promotional activity. For example many supermarkets in the UK have "value ranges".
- Tesco: Everyday Value
- Waitrose: Essentials Range
- Morrisons: M Savers
- Sainsburys: Sainsburys Basics
- Asda: Smart Price
In September 2008 Tesco introduced a price marketing campaign which included the strap line "Britain's Biggest Discounter" and in the latter months of 2008 Aldi's strap line of "spend a little live a lot" emerged in their marketing activities. Sainsbury's current strap line is "living well for less".
In 2008 BOGOF (buy one get one free) offers moved away from the traditional boundaries of retail stores and into other businesses such as car manufacturers. In response to falling demand from consumers some car dealers and manufacturers such as Mazda and Kia offered BOGOFS on brand new cars!!
Another common strategy is to add one day sales to the traditional retail shop sale calendar. During the one day sales most products in store are reduced by a certain percentage e.g. 20% of the current price. This strategy has proved very successful in the UK for companies like Marks and Spencers and Debenhams.
Relationship Marketing Strategies
Whilst price is crucial in attracting new customers in the current economic climate, good customer service is essential for customer retention. For example UK store John Lewis has fared well during the credit crunch, excellent customer service promoted through a good staff training programme has ensured that customers still continue to shop there. Prioritising customer service will increase customer loyalty and not only support a business during recessions but also reap long-term awards as customers continue to shop with those businesses once the credit crunch is over and consumer's disposable income has increased.
All businesses should regularly review operations and deal with inefficiencies. This will reduce costs and wastage. During recessions rationalisation such as disposing of non profitable business activities or unproductive premises and unnecessary staff are more important than ever. In the current economic slowdown many governments have reduced the number of people working for them and private companies have implemented large scale redundancies. For example in August 2012 the insurance firm Aviva announced that it plans to cut up to 800 jobs to save operational costs. This part of Aviva's programme to reduce costs by £400 million. Although not a marketing strategy, rationalisation is an important strategy if a firm wants to survive during difficult times, and focus its effort on surviving.