How to Market in Downturn

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FINANCIAL CRISIS SPOTLIGHT

How to Market in a
Downturn
by John A. Quelch and Katherine E. Jocz


Included with this full-text Harvard Business Review article: 1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 How to Market in a Downturn
12 Further Reading
A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

Reprint R0904D

FINANCIAL CRISIS SPOTLIGHT

How to Market in a Downturn

The Idea in Brief

The Idea in Practice

No two recessions are alike, so you’re in
poorly charted waters every time. How
should you market in this downturn?
Resegment consumers according to their
emotional responses to the recession:

Additional suggestions for tailoring your marketing strategies to consumers’ recession psychology:

• Slam-on-the-brakes consumers feel
hardest hit and reduce all spending.
• Pained-but-patients economize, but less
aggressively.
• Comfortably well-offs keep buying, but
more selectively.
• Live-for-todays carry on as usual,
though delaying major purchases.
Also identify how members within each
segment categorize purchases:
• Essentials are necessary for survival.
• Treats are justifiable indulgences.
• Postponables are desired items that can
be bought later.

COPYRIGHT © 2009 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

• Expendables are unjustifiable.
Tune your marketing strategies accordingly.
For example, for slam-on-the-brakes consumers buying treats: shrink packaging sizes, hold prices down, and advertise
your products as “you deserve it” small
indulgences.

MANAGE YOUR MARKETING INVESTMENTS

MARKET THROUGHOUT A RECESSION

To get the biggest returns from your marketing budgets:

To pare costs and shore up sales while
preserving your brands’ long-term health:

• Assess opportunities. Determine which of
the four segments (slam-on-the-brakes,
pained-but-patient, comfortably-well-off,
live-for-today) your core customers belong
to and into which consumption category
(essentials, treats, postponables, expendables) they assign your products or services. Then tailor your marketing strategy accordingly.

• Fine-tune your product portfolios based
on shifts in customers’ buying habits. For
example, with durables purchases that
can’t be postponed, pained-but-patient
consumers will trade down to models that
stress good value rather than enhanced
features.

Example:
Prospects are reasonably good for generic
products and store brands sold to slamon-the-brakes consumers who’ll forgo familiar brands in favor of lower prices.
• Plan for the long term. Don’t panic and
alter your brand’s fundamental value
proposition. You may attract a few new
customers. But you’ll confuse and alienate
your loyal customers, weakening your
position once recovery begins. Instead,
keep investing in market research to
discern what consumers will want when
the recession eases.
• Balance your communications budget.
Invest in Internet advertising: It’s targeted
and relatively cheap, and its returns are
easily measured. But don’t ignore broadcast
media: It’s vital for building and sustaining
mass-market consumer brands.

• I mprove affordability; for instance, by
reducing thresholds for quantity discounts,
reducing serving sizes (and pricing), and
lowering consumers’ upfront adoption costs.
• Bolster trust in your brand by reinforcing
consumers’ emotional connection to the
brand and demonstrating empathy for
their plight.
Example:
D ell has crafted an array of messages
customized to resonate with each segment; for instance, “Depend on Dell for simple solutions in tough times” and
“ Weak economy, powerful you.”
• Position your brand for the inevitable
recovery by preparing now for possible
long-term shifts in consumers’ values,
attitudes, and purchasing behaviors.
Example:
The shock of the...
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