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Marketing in a Recession

Updated: Feb 21

Marketing during a recession can be tricky. Every downturn is unique and can significantly impact consumer behavior and company strategies. In the wake of the looming economic downturn, companies must be aware of consumer changes and adjust their strategy accordingly. Consumers tend to cut back on spending during a recession, leading to declining business sales. Many companies resort to cutting costs, reducing prices, and delaying new investments to counteract this. However, there are better approaches than randomly cutting marketing expenditures. Focusing on customer needs and being more strategic with the marketing budget is essential to maintain performance in the long term. Companies that can carefully adjust their strategies, tactics, and product offerings based on shifting demand are more likely to succeed during and after a recession.

Recession Psychology

During an economic recession, consumer purchasing power and confidence are greatly affected, leading to fundamental changes in the consumer. Consumers face bills, stagnant or falling incomes, and shrinking nest eggs. Meanwhile, corporate scandals, failures in various sectors, and taxpayer bailouts have also led to a lack of trust in marketers' messages. These factors create a significant challenge for businesses, not only during the downturn but also in the recovery that will eventually follow. Companies must understand the new customer segments that emerge during a recession to respond effectively. Segmentation based on demographics or lifestyle may be less relevant than a psychological segmentation that considers consumers' emotional reactions to the economic environment.

Infographic explaining the recession affects, actions taken, demographic information, and changes in consumption that different consumer groups experience in a recession. 154 Agency is a full-service marketing agency offering expertise in marketing the marketing industry.
Recession affects, actions taken, demographic information, and changes in consumption that different consumer groups experience in an economic downturn.

Products and Priorities

Consumers prioritize their consumption by dividing products and services into four categories.

  • Essentials - items that are essential for survival or considered important for well-being.

  • Treats - indulgences that are justifiable to purchase immediately.

  • Postponable - items that are needed or desired but can wait.

  • Expendables - items that are not necessary or justifiable to buy.

During an economic downturn, consumers reevaluate their consumption priorities. Products and services like restaurant dining, travel, arts and entertainment, new clothing, automobiles, appliances, and consumer electronics can shift product categories depending on the individual. Consumers may change their priorities, eliminate purchases in specific categories, or substitute one purchase for another and become more price-sensitive and less brand loyal. Being price-conscious could lead them to seek their favorite products and brands at reduced prices or settle for less-preferred alternatives.

Companies should consider responding to this by adjusting their strategies during a recession by reducing the complexity of product lines and streamlining product portfolios. Adjustment strategies include eliminating or postponing items that are not performing well and focusing on core products. They should also be flexible and forecast the demand of segments with different priorities, such as lower prices and simplicity for essentials. In contrast, others may trade down for models that offer good value over enhanced features.


In an economic downturn, consumers tend to shop for the best deals, and businesses will increasingly compete on price. Companies can offer temporary price promotions and discounts. Still, it is important to be careful not to decrease prices too much, as it can lead to price wars. They can improve affordability by reducing the thresholds for quantity discounts, extending credit to customers, or having layaway plans. Service businesses may lower adoption costs and reduce penalty charges to attract cost-conscious consumers and bundle services to offer more value for the price.

Marketing As An Investment

Marketing is essential in bringing in revenues from loyal customers and others during a downturn, but budget cuts often disproportionately affect it. Businesses must be careful to distinguish between necessary and wasteful expenses when cutting their budget. However, the downturn does provide an opportunity to eliminate low-yield tactics and focus more on customer needs. The challenge is to make well-defended, case-by-case recommendations about where to cut spending, where to hold it steady, and even where to increase it.

Image of a person holding lightbulb in front of a sunset. 154 Agency is a full-service marketing agency offering expertise in marketing the marketing industry.


Evaluating your brand and its products or service during an economic downturn is essential to determine which offerings are unlikely to survive, which may suffer but stabilize, and which are likely to flourish. It may be time to part with those brands or products with uncertain or declining business opportunities. Opportunities depend on which segment the core customers belong to and how they categorize your product or service. Companies should concentrate their marketing resources on maintaining relevance to core customers to sustain brands through the recession and recovery.

Allocating Long Term

When sales decline, companies should stabilize their brand and reinforce the core brand proposition instead of panicking and changing it. Changing a brand proposition could confuse and alienate loyal customers and provoke resistance from competitors. Even cash-poor companies should commit a substantial portion of their marketing resources to reinforce the core brand proposition. Where opportunities are stable or uncertain, firms should push their advantage. Consumer goods companies that could increase their share of voice by maintaining or increasing their advertising spending captured market share from weaker rivals. Firms with deep pockets can make cost-effective acquisitions that strengthen their brand portfolio or customer base. It is essential to continue investing in market research to explore whether consumers will return to familiar brands and products, stay with substitute products, or welcome innovations.


Businesses must stay flexible and track customer behavior during a recession by adjusting strategies and tactics for the downturn and responding quickly to an upturn. A quick response to an upturn entails having a pipeline of innovations ready to launch on short notice and balancing cost-cutting measures with investments in long-term brand health. Companies should streamline product portfolios to meet these goals, improve affordability, and increase trust. Brands can streamline portfolios by allocating funds towards efforts that have more measurable results, such as direct marketing campaigns, online ads, and point-of-purchase marketing.

Build Trust Through Messaging

In rough financial times, consumers look for familiar and trusted brands as safe choices. Companies should focus on reassurance and emotional connection with their brand by conveying empathy and messages that resonate with consumer segments. Positive messages could come through emphasizing product benefits, rewarding frequent small-time spenders, educating consumers on smart financial habits, and engaging customers in positive brand activities.

Positioning For Post-Recession

Image of "recession" with looming clouds and a man walking toward it. 154 Agency is a full-service marketing agency offering expertise in marketing the marketing industry.

During a recession, companies must focus on customer needs and core offerings to survive and be well-positioned for recovery. However, it is crucial to understand that consumer behavior and attitudes change in a post-recession environment. Due to distrustful businesses, behaviors could shift to focus on the values of trusted brands. Communicating a high-value brand message could come from offering products and sharing messages that align with the needs of new consumer segments.

In light of a possible upturn, companies should focus on developing solid strategies, researching, and responding to changes in demand as the economy recovers. They should also prepare for a possible long-term shift in consumer values and attitudes towards sustainability, corporate social responsibility, and ethical practices. Customers will increasingly factor company practices into their brand choices, so businesses must stay aware of these changing expectations during and after the recession and respond accordingly.


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