Global uncertainty, economic slowdown and other socio-political factors will be accompanying businesses as they enter the new year. According to the IMF, the global growth forecast stands at 2.7% for 2023, and output for most countries is likely to contract. Invariably, businesses, established and startups, are becoming cautious of the growth potential that the year will bring along. Undoubtedly, the impact of the economic slowdown is likely to be felt by all businesses, small or big. However, it is extremely important for businesses to become prudent in their outlook and make strategic decisions.
Invariably, in such a situation, accessory expenditure on marketing, etc. is often seen to be a liability. But, in today’s digital age, businesses need to focus on RoI driven marketing to survive and thrive the uncertainty and slowdown and treat marketing efforts as assets for growth. Through this article, we will focus on how businesses can tackle and survive economic slowdown by leveraging their marketing potential.
Does economic slowdown impact businesses?
An economic slowdown comes with a decline in real income for consumers along with a felt or realised sense of reduced purchasing power. This is coupled with an overall tightened economic ecosystem and reduced propensity for risks. Thus, businesses tend to see an overall slump impacting investments across all verticals due to:
- Reduced profits when sales are low
- More stringent credit conditions with reduced access to capital, loans or credit lines
- Growing liabilities and slow pace of ensuring receivables
- Decline in stock prices
These are just a few factors of how an economic slowdown can impact businesses.
Should you stop marketing?
With reduced profits, declining stock prices and lack of access to free flowing capital, businesses often adopt a prudent approach to their budgets with each vertical facing a budget cut. While some cuts might be necessary, investments and allocations towards marketing must be retained as they have the potential to help businesses make a 360-degree turn. Let’s look at why businesses should not stop their marketing efforts during an economic slowdown. Before illustrating the reasons, it is important to note that any investments made during such a time must be strategic and output oriented.
Garner market intelligence to understand what the customer wants
Marketing isn’t simply about highlighting your business to potential customers, it begins way before with garnering market intelligence. Abandoning marketing during an economic slowdown will prevent you from understanding the changing nature of customer demands. While there is an apparent decrease in purchasing power, customers are still out there in markets, seeking value driven or value oriented offerings.
During an economic slowdown, your marketing investments can be focused on market research to understand customer sentiment to customise your business offerings and model accordingly. You need to learn how consumers are spending with market research.
Don’t lose your market share to competitors
If you stop your marketing efforts, your brand will slowly be wiped off from your customer’s memories. Eventually, other competitors will take over your market share, leading to an adverse impact on sales. The space you leave will be captured by others, and once the situation normalises, you will not have any market share. Many global brands have seen this in action.
Marketing requires sustained efforts, not one time investment
Marketing isn’t something that can be put on hold and be re-picked whenever the situation is conducive. It requires sustained efforts. If you abandon marketing during an economic slowdown, not only will you lose your customers and market share, but you will also have to start from scratch when the situation normalizes. While you might want to become strategic and prudent with marketing investments, letting them go altogether is not advisable.
How to increase RoI of marketing during economic slowdown in 2023?
Finally, let’s look at some tips and tricks you can leverage to increase the RoI of marketing during economic slowdown to gain a competitive edge and use marketing to your benefit.
Focus on customer loyalty
Therefore, when your budgets are stretched, focus your marketing efforts on building customer loyalty. Understand the changing behaviour of your existing customers and create campaigns that align with their new priorities. Market new solutions that come at lower prices or start a loyalty program to prevent your customers from going to your competitors.
Engage in content marketing
A very effective low-cost marketing strategy involves leveraging content marketing. When budgets are stretched, focus on creating valuable content for your customers. Content marketing is instrumental in generating inbound queries via blogs, social media posts, etc. Use content marketing to engage with your customers to educate your customers and provide them with insights.
Market tiered offerings
Based on changing consumer behaviour, you need to calibrate the offerings you are marketing. For instance, if your customers are expecting services at a lower price, you can market tiered pricing with limited capabilities at a lower price with an option to upgrade. This way you will hit the sweet spot of getting sales and meeting customer expectations.
Understand new markets
As economic slowdown becomes a reality, customer preferences change, which can significantly change the markets you should target. Since the purchasing power of consumers alters, you should focus on market research to understand a new segment of customers that might enter your target audience and focus on building a market share there.
Rethink your positioning based on market scenario
Marketing is all about catching the pulse of your customers. The best way to do so is by rethinking your position and USP. It might be a good idea to rethink your audience, what you wish to market, the appropriate channels, etc.
Focus on value-based marketing
Finally, during an economic slowdown, everything becomes value driven. This suggests that if you are marketing the features of your business, chances are less that customers will get attracted. However, if you turn the tables towards value-based marketing and illustrate the value or the impact your product can bring for customers, you will definitely get more traction.
Understand what your competitor is doing
When it comes to marketing, market research isn’t simply about understanding changing customer behaviour, it is equally about competitor mapping to understand what your competition is up to. If your competitors are cutting back on their marketing efforts, consider it a golden chance to capture more market share. The objective is to use market research as a way to navigate your own marketing strategy and investments.
Way forward: Marketing in 2023
Thus, it is very clear that completely abandoning marketing in 2023 can be a big mistake for businesses. Rather, if you look closely, strategic focus on marketing can help businesses survive and even thrive to capture a greater market share and gain a competitive edge.
Stay tuned to StrategINK Startup Pulse to learn more about how marketing can facilitate growth for startups and established businesses in the face of economic slowdown.