Should you continue to promote your business, even during a recession? In most cases, it is best to meet your marketing plan by modifying it to reflect the changing economic situation. Experience and research have shown that companies that reduced their marketing budgets in an economic downturn had typically struggle to regain their clients.
The spending habits of Canadians
Canadians continue to spend even during economic downturns. In fact, many companies even managed to increase their sales and their customers.
Many factors determine whether sales will rise or fall. Among them:
• the type of business;
• the client characteristics (demographics);
• service quality;
• economic situation of a particular community.
If some consumers refrain from buying luxury items during a recession, they continue to buy essentials such as clothing and food. Others, whether by choice or necessity, stick to basic items throughout their lives, not only during economic downturns.
The stimulus and low interest rates may also encourage spending during a recession. People who have lost their jobs or suffered reduced work week would spend less. However, people who have a steady job probably spend much if not more, than usual.
Ultimately, you should act according to your customers and behaviors they are likely to engage in a recession. First, consumers rank their spending in order of priority:
• purchases that offer reasonable comfort;
• Articles “nice to have”;
• purchases of luxury.
Second, consumers all respond differently in a recession. They have a lot or very little disposable income, consumers perceive the economic situation differently. The visions and behaviors vary greatly:
• spend more – take advantage of tax credits or low interest rates;
• spend as much as usual – live from day to day, no need to limit spending;
• spend carefully – look for the bargains, buy brands that are cheaper, compare prices from one store to another;
• spend little – buy some accessories of well-being, but not high ticket items;
• not spending – buy only the essential.