The specter of a recession still hangs over the United States. What are some of the market research recession lessons from 2008 and the recent pandemic that are worth considering if we enter into another recession in 2023 or 2024?
Lesson 1: Don’t Stop Spending
In any recession the assumption is that consumers will stop spending so company’s respond in kind. This means your competitor’s stop spending as well. Typically the cuts come in marketing as it is easier to cut payments to external vendors than it is to cut some of your loyal employees. Harvard Business Review (HBR) said “Companies that have bounced back most strongly from previous recessions usually did not cut their marketing spend, and in many cases actually increased it.”
Take the case of Reckitt Benckiser in the 2008-2009 recession. The company launched a marketing campaign aimed at persuading its consumers to continue purchasing its more expensive and better performing brands, despite the harsh economic climate. Reckitt Benckiser increased its advertising outlays by 25% and in the face of reduced marketing by the competition, Reckitt Benckiser was able to grow revenues by 8% and profits by 15% while its competitors reported 10% profit declines!
Lesson 2: New Product Launches Can be MORE Effective
In their research HBR found that products launched during a recession have both higher long-term survival chances and higher sales revenues. Huh? Of course, it is partly because they have less new products to compete with as their competition continues to reduce spending in all areas. Primarily, though it is because a recession requires laser focus on the new product prospects and that focus means companies invest only in their best potential products. Continuing to invest in R&D during recessions has been shown to have a stronger impact on long-term performance than other categories of marketing spend. It allows companies to emerge from a recession with a stronger pipeline and is one of the most important market research recession lessons.
Lesson 3: Branding can be Improved
During the recent pandemic Coca Cola and Singapore Airlines were able to use brand advertising to inject humor and emotion into consumer thoughts about their product – improving their brand’s reputation in consumer’s eyes and providing one of the market research recession lessons.
In 2020 Coca Cola showcased the work of frontline workers, creating mini stories about unsung heroes. The Coca Cola brand was subtly shown in the background of these messages. Consumers were reminded that Coca Cola “had always been and would always be there for you, in good times and bad.”
Singapore Airlines did something similar when it demonstrated how its grounded crew was redeployed to helping their communities deal with the outbreak. Cabin crew became care ambassadors. Some helped nurses take patients’ vital signs, noting meal orders and serving them. Others worked at transport hubs assisting with crowd control and ensuring compliance with safe distancing guidelines.
Increasing your spend on market research in a recession goes against instincts and standard operating norms, but remembering and implementing these three lessons can mean not only surviving a recession but profiting from it.