Whispers, rumors, hushed and hurried utterances, a knowing nod across the conference table. In late-summer, talk of recession seemed to reach a fever pitch. In fact, according to data from the 2019 Gartner Global Labor Market Survey, 80% of employees within enterprises were bracing for tough economic times ahead. While tensions have simmered more recently, thanks to rate cuts from the Fed and President Trump’s attention turning away from China toward fending off impeachment, underlying concerns about the strength of the economy remain. With a less-than-sterling September jobs report, an inverted yield curve, overnight repo-market bailouts and a contracting manufacturing sector, leading economic indicators aren’t exactly signaling confidence.
But despite the warning signs of things to come, marketing leaders aren’t worrying just yet. According to the recently released Gartner CMO Survey, 86% of CMOs believe that economic impacts and business climates over the next 18 to 24 months will be positive in helping meet performance goals.
Optimism is essential for marketers. But when the next recession does eventually arrive, with a global economy that hinges disproportionately on U.S. consumers, it will be critical for marketing leaders to have the right strategy in place to quickly pivot. Tactics must meet consumers amid a new downturn with unknown depth and breadth.
As marketers work through these contingency plans, consider several key insights:
Lead With Empathy and Recognize That Most Consumers Are Still Living in a Recessionary Mindset From the Last Downturn
While the last recession technically ended in 2009, the impact of that downturn on consumers’ attitudes and behaviors persists. Millions have continued to struggle in the decade-plus since the Great Recession ended, particularly when considered through the lens of how the majority of consumers engage with the broader economy (employment, wages, debt, retirement savings and the housing market).
Perhaps ironically, this is particularly true for Millennial and Gen Z consumers, who, despite being largely too young to experience the Great Recession firsthand, came of age during the (uneven) recovery that followed. This solidified a new-normal outlook characterized by elevated levels of financial anxiety and uncertainty, even at higher socioeconomic levels. And this is the mindset with which consumers will be entering a new phase of financial uncertainty during a recession. As such, it’s critical for marketers to lead everything from campaign strategy to promotionals with an active understanding of consumers’ plight.
Avoid the Race to the Bottom and Market Instead Toward a Broader Set of Purchasing Variables
Consumer spending power and behavior will change in a recession. The inherent uncertainty and added financial anxiety will invariably lead to a paradox of thrift as consumers without access to new credit tighten their financial belts and work to make do with less. Within an economy built on consumer spending, this increased savings will exacerbate the downturn, at least to some extent, regardless of which sectors are hardest hit.
Lowering prices is a quick tactic that may yield only short-term results. While pricing strategy is important, it must be paired with a marketing effort that reflects the broader consideration set that consumers will utilize to justify spend during a downturn. Millennial consumers already employ this strategy, but marketers should expect a larger percentage of consumers to also consider the time-savings, social/relational benefits, and net global impact of products and services alongside purely financial value. These additional factors matter and can help give your marketing an edge in what will be an increasingly noisy marketplace.
Plan for Additional Communication Challenges and Spend to Effectively Reach Consumers During an Election Year
Should a recession occur within the next year, it will happen in the midst of what will be an unprecedented and polarizing election season, even compared to 2016. The conflicting political spin surrounding a downturn (who’s to blame, what’s the best course of action to encourage the economy back to growth) will be landing on consumers at a furious pace. Marketing in such an environment will be tricky enough, but marketers can also anticipate additional costs to arise from the increased competition for ad space.
To reach your target consumers in such an environment, lean into rising and differentiated consumer values. Such tools will help marketers maximize their efforts to more efficiently and effectively cut through the additional noise.
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