In every recession business owner’s find themselves in poorly charted waters because no two downturns are exactly alike. There are patterns, however, that drive or undercut performance. What are those patterns?
First, business owners need to understand the evolving consumption patterns and accordingly, fine-tune their strategies. As a rule, during recessions consumers establish stricter priorities and reduce their spending. In turn, as sales start to drop, businesses respond by cutting costs, reducing prices, and postponing new investments. As part of these reductions, marketing expenditures in areas from communications to research are also slashed across the board—but such indiscriminate cost cutting is a fatal mistake. While it’s wise to contain costs, failing to support brands or examine core customers’ changing needs will cripple performance over the long term. Businesses that put customer needs under the microscope, use a scalpel rather than a cleaver on the marketing budget, and quickly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than their competitors to flourish both during and after a recession.