As the world continues to face unprecedented uncertainty and businesses try to navigate through challenging times, many companies are looking to cut costs and preserve cash flow. However, marketing experts suggest that this might not be the best approach. Instead, businesses should invest in their brand to emerge as winners in the long run.
According to top marketing scholars like Mark Ritson, a crisis is a catalyst for creativity. Businesses that view tough times as an opportunity to innovate and differentiate themselves from their competitors will reap the benefits in the long run. Good marketing is not just about pushing promotions but about shifting consumer behavior and creating a connection with your brand.
In fact, businesses that increase marketing spend during a recessionary period increase their market share against their main competitors. This is because they are able to reach consumers who are looking for value and are more open to trying new things. Maintaining your marketing investment year over year and treating it as a fixed cost can create a sustainable competitive advantage and increase your market share.
Even leading brands in a sector have made the mistake of becoming overly conservative when the economy starts to turn. For example, Reebok became overly conservative during a tough economic period, while Nike doubled down and tripled down on their investment. Reebok has never caught up. Pizza Hut did the same, and Domino's, the challenger brand at the time, said 'This is our time to accelerate'. Pizza Hut has never caught up.
Loyalty programs reinforce a brand’s commitment to its best customers while helping to build trust and transparency around current dynamics. According to the Antavo Customer Loyalty Report, brands that focus on their loyalty programs, especially digital loyalty programs, while also acknowledging hard times, see even more engagement from consumers. Starbucks Rewards is one of the most successful loyalty programs, with 27.4 million members driving more than half of company-operated revenue.
Innovation is also essential during tough times. For example, innovation around pricing, where a brand offers new, compelling service tiers or packages. During a downturn, consumers will often “overshop” for the best possible price as brands reduce their price points.
It can be said that tough times are the best time to build your brand. By shifting consumer behavior, creating a connection with your brand, and investing in marketing as an investment rather than as a cost, you can build a sustainable competitive advantage and increase your market share. As Seth Godin said, "Marketing is no longer about the stuff that you make, but about the stories you tell." So, tell your brand story and invest in your brand during tough times to emerge as a winner in the long run.
