Introduction
Recession is a period when most firms are faced with the worst trading environment and generally, firms become victims of making critical and hard decisions in order to remain relevant in the market.
According to Jose Chao Bacardi, vice president of the American Bacardi Global Travel Retail Division, recession presents an organization with opportunity to reorganize and re-examine all the activities the organization is involved in, identifying the appropriate activities to and ways to improve them since during the recession period, an organization has to be extra cautious to the activities it takes part in (Smith, 2010, p.1).
One such re-evaluation during recession is how to influence consumers through adoption of marketing strategies that have the ability to attract or maintain customers. Therefore, this will be a critical essay analyzing the marketing strategies proposed by marketing guide article titled, ‘What to do in a Recession?’.
The Article: ‘Marketing guide: What to do in a Recession?’
The article starts by observation that recession leads to both economic downturns and numerous opportunities will result from general modification in consumer behavior. At the same time, other opportunities will arise from general reduction in the marketing activities of the rivals, which may be due to reductions in the costs for advertisements.
According to the article written by the Ehrenberg-Bass Institute, key marketing questions a firm needs in order to explore and develop its marketing strategies during recession include the following.
How much to spend on marketing advertisement, what strategies can a firm use to ensure consumer-spending change, how should pricing of products be dealt with, and will introduction of new products results into leveraging competition opportunities for the firm?
The article postulates that consumers demonstrate habitual behaviors where it becomes difficult to change their behaviors in the long run. During recession, consumers only make changes with regard to non-regular behaviors than to their almost solidified day-to-day behaviors. In such a situation, raising the price to everyday consumer goods and services is unlikely to affect demand.
With regard to pricing, the article shows that raising or lowering the price of a commodity has the effect of changing its market. For instance, James Peckham established that, if price of commodity is increased, then a brand’s market share is likely to move down to a new level.
On the other hand, when price is lowered for a brand that is not performing well in the market, chances are that sales of the brand will be boosted although there will be no altering the fundamental trend downwards (Ehrenberg-Bass Institute, n.d, p.3).
With regard to advertisement, the article observes that, studies have shown that those firms that increase their costs of advertisement tend increase their sales. Thus, drawing examples from the recession of 2003, the article confirms that those firms that increased their advertisement costs than their competitors during the recession showed slight improvements in sales as compared to their competitors (Ehrenberg-Bass Institute, n.d, p.4).
Further, the article expresses the fact that during the recession, those firms that engage in new product innovation and invention have better chances of increasing their competitive advantage in the market as compared to their rivals.
Critical Analysis of the Proposed Strategies
According to East, Wright and Vanhuele (2008), there exists close affinity between marketing and consumer behavior and marketing strategies such as use of price incentives, use of particular colors, music, and aromas in stores; while use of brand extension have the potential to influence consumer decisions about purchases.
According to the authors, before a firm adopts any of these strategies, there is need for informed-decision action that can only be generated through systematic research of the market.
Also, there is a need for the firm especially in times of, ‘tight marketing’ to identify specific groups that buy more frequently a particular category of product or service, and subsequently the firm puts in place marketing strategies that selectively target these groups (East, Wright and Vanhuele 2008, p.3).
At the same time, consumers in most cases become habitual purchasers of particular brands and this may be attributed to personality and lifestyle. Therefore, the advice may be for the firm to research more in identifying key established consumer habits and developing effective marketing strategies based on the established consumer habits (East, Wright and Vanhuele, 2008).
At the same time, research has shown that consumer loyalty increases due to pack size, price level, country of origin, flavor and formulation characteristics, which when effectively managed tend to persist for a long time.
Hence, during recession it becomes prudent for the firm to establish and estimate the likely disposable income the general population hold and in turn establish marketing strategies based on size, flavor, and other relevant formulation characteristics (East, Wright and Vanhuele 2008).
Marketing strategies during recession should also involve customer relationship management strategies since research shows that consumer habits are further reinforced as a result of effective CRM practices. What is evident during recession is that consumers will want to make appropriate but hard choices based on limited incomes and largely will want to trust any purchase decision they make.
Therefore, a firm establishing the needs of consumers and appropriately employing necessary CRM practices will win the confidence of the consumers and are likely to establish a long-term relationship with the firm, which in turn may boost the firm’s sales.
Conclusion
Although in recession most marketing strategies do not change, what is necessary is for the firms do embrace innovation in the strategies being used. Recession presents hard time for consumers to make decision and any marketing strategy that assures consumers positive results for their decision is likely to win market for the firm.
Nevertheless, during recession, consumers will still be guided by social, cultural, religious and reference group factors in making decisions (Lantos 2010). Therefore, while agreeing to the fact that advertisement, pricing levels, discounting and product innovation can be the major and perfect marketing strategies during recession.
The fact is that, without adopting qualitative elements of CRM, the strategies are likely to achieve fewer results hence there is need for firms to initiate and embrace the above outlined strategies within CRM strategies to win the confidence and trust among consumers.
Reference List
East, R., Wright, M. and Vanhuele, M., 2008. Consumer Behavior: Applications in Marketing. CA, SAGE Publications Ltd. Web.
Ehrenberg-Bass Institute. N.d. Marketing guide: what to do in a recession. (Attached notes).
Lantos, G. P., 2010. Consumer Behavior in Action: Real-Life Applications for Marketing Managers. NY, M.E. Sharpe. Web.
Smith, A., 2010. Global market review of the travel retail drinks sector: 2010 edition: Chapter 5 Sustaining investment. Web.