Three global recessions in review Difficult business review the data is clear: 17% of companies have gone bankrupt. Of the remaining companies, the vast majority did not recover pre-recession growth and earnings for another three years after the economic recovery. Conversely, 9% of companies have been successful, growing and earning at least 10% more than their average competitors after the recession. So what exactly was the success factor of these 9% companies? The short answer is a balanced relationship between long-term investment and short-term cost optimization.
Stopping marketing and communication activities during a crisis will not be the right solution, as it will reduce the competitiveness of the brand in the post-crisis period.
A crisis is always a time for market redistribution. The most progressive and courageous companies exploit the opportunities offered by the crisis. Especially since some competitors have decided to cut costs in the short term and have stopped marketing activities. In addition, in the so-called difficult times, a much stronger loyalty is formed for those brands that offer their audience a special solution suitable for this moment. So the brand’s ability to empathize becomes even more important.
In conditions of rising prices, it is important that brands of everyday goods and services show attention to their audience in their communication, explaining, of course, also the reasons for the price increase. The worst case scenario would be to stop talking to your audience, which sooner or later leads to the brand being blamed for the price hike. It will then be too late to begin explaining the pricing conditions, because in people’s eyes it will only be a justification.
Another factor that makes marketing particularly important in crises is its social role. Communication activates business and society in general, as it offers many a vision of the common vector of future development. At the same time, brand communication also educates the public. For example, responsible financial brands have communicated savings as value in a timely manner. Such communication is beneficial both for the public, who will prepare in time for a whitish day, and for the brand, which has created an emotional attachment as a sober consultant.
The growth of the advertising market in Latvia for the first half of 2022 was around 19%. Studies confirm that, when advertising activities are disrupted, most brands do not suffer significantly for the first six weeks, but are followed by a sharp decline in the so-called advertising energy effect. Therefore, it is absolutely rational for retail companies to continue advertising activities at all times – they guarantee a continuous effect.
In general, brand owners and managers are currently faced with an important decision: save or keep investing in marketing, creating a better position for themselves when the economy picks up again.
