The Importance of Marketing in an Economic Downturn

Our economy fluctuates between four points, expansion, peak, contraction, and trough, known as the economic cycle. Let’s break that down:

  • Expansion: Rapid growth, low-interest rates, increased production

  • Peak: The point when growth is at its maximum, creating imbalances

  • Contraction: Correction of imbalances through slow growth, a decline in employment, and stagnant prices

  • Trough: A low point when growth starts to recover

A contraction may force a crisis mode, where the lifeline of your business becomes completely shut off. Then, there are others who will be affected in smaller ways. Regardless, with the right strategy, you and your business will get through these tough times. Here’s how to stay on top.

When a downturn occurs in the economy, there is a general decline in economic activity, including a widespread drop in spending. While some businesses have contingencies for slow moments, many are unprepared for when the economic cycle hits a contraction. More than 400,000 small businesses, with less than 100 employees, went bankrupt or permanently closed in the 2008 recession.

The best way for your business to survive an economic contraction is to create a pivoted marketing strategy.


Typically, a company’s top expenses are wages and benefits, rent or mortgage, equipment, utilities and office supplies, theft, miscellaneous losses, professional fees, marketing and advertising, professional memberships, travel, dining, and entertainment.

During a contraction, businesses look to cut unnecessary spending to help cash flow. While marketing is higher on the ‘cut’ list, here are the highlights of why this is the time to be actually investing in digital marketing.

  1. Marketing during an economic downturn reflects a stable image. Therefore, customers are more likely to trust your business.

  2. As your competitors may decide to cut back on their marketing spend, the noise in your industry will drop. This will open an opportunity for your business to be a voice that customers can turn to in trying times.

  3. You’ll know exactly where and how to reach potential customers. In this specific time, people will stay at home for long hours, and they will increase their time on email, social media, and the internet.

Now, let’s take a closer look at why it is most beneficial to market during an economic downturn.


If you’re thinking long-term for your business, don’t be so quick to cancel your marketing. While it may provide relief for the immediate future, it could end up hurting you long-term. Companies that increase their marketing spend during a contraction or trough can improve their return on investment.

While McDonald’s decided to drop its marketing budget in the 1990-91 recession, consequently seeing a 28% decline in sales, Pizza Hut and Taco Bell increased sales by 61% and 40%, respectively. During the “great recession,” Amazon continued to release new, innovative products at low prices, granting them a 25% growth in sales. At the same time, Groupon launched its platform for companies to provide customers with deals and promotions; they saw nearly 1 million customers by the end of the following year.

A downturn is a time to establish or enhance your business’s voice as a recognizable, reliable, and trusted source for customers. Keep in mind that customers are going to be more hesitant to spend their money. They will need the reassurance that the business they are looking to purchase from can deliver and meet expectations. The reason that companies come out on top after a trough is because they maintained their marketing presence.

When looking at your budget, determine what the return on investment is on your spending. Then, you can decide what will continue to help your business through these tough times. And if you feel your current marketing plan isn’t working, it may be time to switch strategies.


It is not enough to just reach customers but provide them with content they find valuable. Here’s how you can stay in front of your target customers:

  • Implement competitive pricing. While many people will be limiting and restricting their spending, it is crucial to present the best deals. Promotions, discounts, and credit will go a long way in customer purchase decision making.

  • Introduce new, relevant products. A decline in the economy will affect more than just spending habits. As people adjust to a changing lifestyle, create products that address this while emphasizing its unmatched price.

  • Give back to the community in need. A contraction is not the time to be so focused on sales. Doing something charitable and helpful to those in real economic crisis may be the best way to stay relevant and on top of your target audience’s mind.

  • Reforecast product demand. As customers are looking to save money and downgrade, you, too, must evaluate what product of yours will be viewed as multi-purposed, well-valued, reliable, durable, safe, and high performing.


We are in a digital age, making consumer behavior drastically different now, more than any previous downturn. When people put a halt to outsourced entertainment, they will turn to their personal devices for content.

Creating a voice through digital content is just the start. Here are three marketing tactics that will make sure you are in front of your target audience:

  1. Search Engines: SEM includes organic search, paid search, and YouTube (the 2nd largest search engine behind only Google!). It is crucial to show up organically and through paid outlets for the keywords that will best generate leads for your products or services.

  2. Social Media: These platforms allow your brand to engage with your customers and target audience while building brand awareness.

  3. Email: This historically proves to have the highest conversion rates, and mobile open rates have steadily increased year after year.

Click Here For The Full Article Courtesy of Kraus Marketing

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