Why Some Brands Thrive In A Tough Economy - While Others Fail

During economic downturns consumers are more mindful of their spending habits; setting financial restrictions to reduce their bills and reset their budget. In response, many businesses look to cut costs and postpone large financial investments. While it is wise to cut certain costs, failing to examine the core shift in customer behavior may jeopardize the performance of your business over the long run.

According to Harvard Business Review, it’s more important more than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth during a recession. Therefore businesses should continue investing their marketing dollars and resources on maintaining relevance to core customers in order to sustain and even thrive during a recession.

“Persistent inflation, higher rates and an uncertain economic outlook are dampening consumers’ mood” (Business of Fashion). In a recent report presented by BoF, overall retail spending fell .4 percent in February from the month prior with sales of clothing and accessories faring even worse. However, beauty brands such as E.l.f and women’s apparel maker, Aritzia are having no trouble attracting shoppers. Researchers say that the core reason why some brands are thriving in this economic downturn is because they are able to convey a sense of value.

So how can brands better communicate their value? The primary goal with value based marketing is to put yourself in the shoes of the customer first. It’s imperative to know who your target customer is and their pain points. Once that is clear, focus on teaching instead of selling. Leverage influencers and partnerships to build a sense of community and belonging. In doing so, brands can expect to see more customer loyalty, even during a touch economy.

Cutting marketing spend all together during a economic downturn will be counterintuitive. While consumers may not be readily spending on nonessentials the same way they were, they are spending more time online. It is important to maintain awareness because when customers are ready to spend again they will have your brand in mind.