5 Ways to Gain Market Share During a Downturn

No two economic downturns are alike. The Great Depression was caused by the crash of the 1929 stock market. OPEC’s oil embargo resulted in the 1970s recession. The Great Recession of 2008 came about from the subprime mortgage crisis. The 2020 recession was caused by the Coronavirus pandemic. And now in 2022, we’re seeing some of that fallout.

To say the least, the causes and consequences of each downturn can differ significantly.

But they all share similar patterns and behaviors. Which means we can learn from past recessions to overcome current downturns and prepare better for future ones. Not only that, but it is also possible to grow and grow big during (and especially after) a recession.

No matter when or why a recession occurs, there are ways to keep revenue flowing to dominate a downturn.

Keeping revenue flowing is one thing. Growing and gaining market share during an economic downturn is another. Because eventually, every recession will end, and the economy will rebound. Those who took the offensive before and during will come out the other side big winners.

Winners vs. Losers: Who Gains Market Share During a Recession?

During the Great Recession of 2008, we not only saw a clear delineation of winners and losers but in the ensuing expansion that followed those same winners continued to widen the profit gap. That’s because their ability to gain market share during a recession springboarded them to grow even more prominent during better times.

Some of these big winners included:

By looking for new opportunities and providing services that address customer concerns, these companies were able to thrive in the downturn. Granted, they were established companies with more brand recognition and a larger spend cap than most (both of which can go a long way during a recession), but back then, they certainly weren’t the blue chips they are today.

They owe much of that success to their forward-thinking recession strategies.

Even more impressive, and encouraging, are the early-stage businesses and startups that launched smack dab in the middle of the recession, yet came out big winners. These include:

  • Groupon (founded 2008)
  • WhatsApp (founded 2009)
  • Venmo (founded 2009)
  • Uber (founded 2009)
  • Snapchat (founded 2011)

Unlike the previous list, these businesses couldn’t rely on brand familiarity or big budgets to succeed. Instead, they took advantage of cost-effective solutions and targeting recession-proof audiences.

For example, many of these early-stage recession winners banked on millennials. During 2008 this demographic was least impacted by the economic downturn.

In examining disparities between winners and losers after recessions, those who came out on top outperformed their peers in early cost restructuring, balance sheet discipline, aggressive commercial growth strategies, and proactive mergers and acquisitions before and during the recession. As a result, the downtown completely rearranged the market, citing:

 

The number of US companies that substantially increased profits was 47% higher during the last downturn than during stable periods. And 89% more US companies lost profitability in the last downturn vs. stable periods. No question, recessions can swing the future market capitalization of a company by billions of dollars.

 

In other words, those who did not find ways to increase revenue through innovation and branding pivots during a recession compared to their competitors severely lost market share when things got better.

The takeaway?

No matter what budget your business is operating with or the industry you are operating in, companies that succeed during a downturn do so using a specific set of similar creative tactics.

Tactics that you can take advantage of to ensure you capture market share during an economic crisis.

5 Tactics to Help You Gain Market Share During a Downturn

1.  Identify How Your Customers React to Economic Crises

 

Sophisticated marketers segment their audience according to demographics, technographics, sociographics, and firmographics. However, in an economic crisis, consumer behavior should, in many cases, be leveraged to drive your decisions.

A good marketing strategy during a recession is to identify which of the following your audience fall into:

 

  • The Hardest Hit – The most affected financially by an economic downturn. In response, they reduce spending across the board. They are typically low-income consumers and unemployed, but can include any level.
  • The Planners – The largest segment, economizing to maintain their current standard of living but concerned that things could take a turn for the worst at any moment. In response, they reduce spending, but less so than the hardest hit. As the crisis prolongs, many will turn into the hardest hit.
  • The Well-Off – This group feels secure about their ability to ride out the crisis. They make few changes in their spending habits other than being a little more selective. They typically include higher-income consumers, avid investors, and cash-positive businesses.
  • The Unphased – This group is unconcerned and acts as if immune to the impacts of the crisis. It’s business as usual for them as far as their spending habits are concerned. They typically consist of younger audiences.

 

Another good strategy during a recession is to use generational shifts as an indicator. For instance, while Millennials were the least impacted during the 2008 recession, they were the most negatively affected by the 2020 Coronavirus recession, supplanted by Gen Zer’s (born between 1995-2010) as The Unphased.

Shifting your targets during a recession could help keep revenue flowing. or help you tap into a new market entirely.

 

2. Identify What Your Consumers Buy During an Economic Crisis

 

In studying how to market in a downturn, experts John Quelch and Katherine Jocz posited that there are four categories of products and services during an economic crisis.

 

  • Essentials – Items necessary for survival or perceived vital to well-being (like food, shelter, clothing, healthcare, transportation, and of course, toilet paper).
  • Treats – Indulgences whose purchase is considered justifiable (like iced matcha lattes).
  • Postponables – Items whose purchase can be put off (like new cars or home improvements).
  • Expendables – Items that are perceived as unnecessary or unjustifiable (like dog overalls).

 

What products and services comprise each category are characteristic to each consumer. So once you identify how your consumers react to a crisis, you will want to identify what items they consider as relevant to each product category.

For B2B, you’ll want to consider the buying habits of your customers’ customers.

3. Reallocate Funds to Recession Resilient Strategies

 

Stabilization, not stifling, is the best way to endure during a recession. In past downturns, many companies that increased advertising spend captured market share from more conservative rivals. They did so at a lower cost than typical and were rewarded by continued growth following the recession’s end.

But understandably, it can be hard to justify increasing budgets in times of uncertainty. So an effective, less risky strategy during a downturn is to find that “extra cash” in other, less vital business operations.

 

4.  Innovate and Pivot into New Mediums

 

During a recession, the best way to grow is to adapt. Likely, the needs of your customers will have shifted during a recession, and you will need to follow suit.

Spot new trends before your competitors do. (Using Google Trends to monitor search behavior is a great place to start.) Once you understand where your customers are and how your industry is evolving, innovate your offering to capitalize. Likely, this will involve pivoting your distribution methods, service features, marketing channels, and or brand messaging.

 

In 2008, Starbucks was an early adopter of a personalized mobile app with a rewards program, while Dominos was one of the first to use the Internet to order food. In 2020, Zoom went from being a business conferencing platform to connecting grandparents with their grandkids.

How you innovate will be different for every business, but one thing is certain: you must innovate. Then find the best ways to market that innovation and reallocate any stagnate budgets to bolster its effectiveness.

For instance, during the Coronavirus outbreak and 2020 recession, video played a key role in business success. As did digital marketing, in particular, SEO and paid media, in response to the influx of homebound consumers going online. Businesses that did not have an online presence of some kind lost market share to more digital-savvy competitors.

So the process becomes:

 

  • Find new opportunities to provide value to customers
  • Make data-driven decisions on which to choose
  • Innovate new offerings accordingly
  • Rely on cost-effective marketing channels to spread awareness

 

5. Position Yourself for Recovery by Building Trust as Well as Revenue

 

Generating revenue during a recession is about keeping your business stable and secure against economic uncertainty. Capturing market share during a recession, on the other hand, is about positioning your business to dominate when things return to normal.

So make sure you’re not just reacting to current conditions, but planning for the recovery as well. For instance, during the COVID-19 outbreak, companies have had to walk a tightrope between selling and insensitivity. This sometimes means pulling back direct selling and replacing it with helpful, recession-sensitive marketing that still benefits your brand.

Brand trust campaigns might not result in an immediate sale, but they still position brands to capture market share during the inevitable recovery.

Avoid Making These Mistakes During a Downturn

Just as important as taking advantage of tactics to ensure you capture market share during an economic crisis are avoiding ones that cause you to lose it.

Typically the losing companies fall prey to several different recession pitfalls. Such as:

 

  • Extreme cost-cutting to ride out the downturn
  • Letting unused funds sit stagnant instead of reallocating
  • Halting research and development, and product development
  • Reducing marketing and ad spend
  • Pursuing trends too far outside their core business
  • Being reactive instead of proactive to economic changes

 

Avoid making these recession mistakes. Those who don’t may end up falling behind, and by the time they realize, it will be too late to recover. Those who follow the 5 winning tactics above will be in a great spot to capture market share and grow, even during an economic crisis.

Currently, we are offering a complimentary analysis for brands that are looking to expand market share. Our opportunity analysis will include market insights and competitor insights so you can see how your competitors are faring. Fill out the short form and we’ll be in touch!

 

Marketing Spend & Recession Outcome: The Science Behind Spending Your Way to Success

Summer is waning and that means school is nearly back in session. If you’re a parent, that means tapping back into your own elementary school education – which goes something like this:

Kid: What’s a synonym?

Me: Uhhh… a spice?

Seriously, who knew helping six-year-olds with their math homework could be so unnecessarily complicated. (Thanks for nothing, Common Core.)  And while most of us will never have to find the diameter of a circle again, there is one area of learning that we can still apply today.

That’s right; we’re talking about the scientific method.

Although useful, this post isn’t another list of ways to keep revenue flowing during a downturn. Today, we’re going back to school for a more scientific-based approach to overcoming the current economic slump.

Starting with something every student loves…

A POP QUIZ!

Which of the following companies do you think would fare better during a recession?

  • Company A: Reallocated spending; increased marketing investment
  • Company B: Pulled back spending; downsized marketing investment
  • Company C: Did nothing and the marketing team re-binge watched Yellowstone instead

Did you answer Company A? We hope so.

Although it is very important that we’re up-to-date with the Duttons before Season 5, it is far more beneficial to your business that it keeps investing in marketing during this economic downturn.

To understand why, we recently looked at some of the biggest winners from the 2008 Great Recession to see if their experiences could likewise guide us on how to come out on top after a recession.

 

But that analysis lacked one very important thing: SCIENCE!

How a Scientific Study Shows We Can Beat a Recession

While researching the best ways to help our clients come out ahead during a recession, we came across a very interesting study from Cornell University. You might have seen it. But on the off chance you didn’t happen to catch volume 56 of Cornell Hospitality Quarterly, it’s well worth the read.

The study looked into the specifics of why some hotel groups during the 2008 downturn came out financially ahead of others. The question (step 2 of the scientific method if you’re keeping track at home) was whether there was a consistent factor that separated the winners from the losers.

 

Spoiler: There was.

 

Aptly titled, Winners and Losers during the Great Recession: The Positive Impact of Marketing Expenditure, this study used the scientific method in all its glory to conclude:

“….firms that ‘invest’ in marketing, especially in tough times, can achieve a payoff via various revenue drivers and will realize gains beyond just the short term.”

There you go. Science has spoken.

It’s an insightful read, filled with fancy performance indicators like “TRevPAR,” some nifty charts, statistical jargon like “coefficient” and “univariate,” as well as lots and lots of citations — all marks of a truly good study. Though in case you don’t have time to scan through it, here are some of the key takeaways:

 

  • Losers heavily discounted prices; winners did not
  • Losers reduced expenses across the board, including marketing
  • Winners specifically increased advertising and marketing expenses
  • During the recession low point, marketing was a primary driver of revenue for winners

 

In summary, these findings reaffirm what we’ve previously seen, which is that companies that continue to invest in marketing throughout a recession come out very, very well.

But understandably, you might be wondering how a study about the hotel industry in 2008 holds any bearing on your business in 2022.

You might be thinking that these findings are good and well, but there’s a big difference between a financial recession years ago caused by faulty subprime mortgages and the shifting economic landscape we see right now.

You might be asking yourself, why does this matter to my business?

Why This Matters to Your Business

The first thing to note is that all economic recessions, no matter how they originate, share similar patterns and characteristics. This means the successful behavior of brands during one recession will apply to future ones. Some of these behaviors include:

 

  • Pre-emptive cost restructuring
  • Balance sheet discipline
  • Proactive mergers and acquisitions
  • Targeting recession-proof audiences
  • Pivoting product development and messaging

 

They also include, as the study concludes, aggressive commercial growth strategies like investing in marketing during a recession.

Also telling, is that during the Great Recession, hotels were one of the hardest hit. Yet of those, the ones that invested in marketing fared much better than their competitors that did not. While there is little insight to be gleaned from the performance of truly recession-proof brands during a downturn (like those in healthcare or food and beverage), far more insightful is how those businesses hardest hit cope – like hotels.

In fact, there are few industries less recession-proof than hospitality. So if hotels could beat their competitors by doubling down on marketing during a recession, it’s worth taking note.

Of course, no business would want to base its choice to boost marketing on one Cornell study, as impressive as that study might be.

But it’s not a stretch to think hotels are the only ones who fare better during a recession thanks to marketing.

So let’s test that hypothesis with some…

Other Examples of Recession Proofing via Marketing

Match.com was able to increase revenue by 25% and boost active subscribers by 30% during the 2008 recession. How? According to then CEO Greg Blatt, by investing heavily in two key areas: product development and marketing.

Likewise, back in 2009, Amazon, not quite the behemoth it is today, grew its sales by 28% via product innovation, specifically the Kindle, and aggressive cross-promotional campaigns.

But the Great Recession isn’t our only benchmark.

Way back during the 1930’s Great Depression, Kelloggs doubled its advertising spend and invested heavily in a state-of-the-art technology known as radio to promote it’s latest creation, Rice Krispies. As a result, they grew profits by 30% and outshined competitor Post, who significantly cut back marketing during the same time. And the rest is Snap, Crackle, Pop history.

During the 80s, McGraw-Hill Research analyzed 600 companies and found that “those firms that had maintained or increased their advertising during the recession …. boasted an average sales growth of 275% over the next five years.” Comparatively, companies who cut advertising only saw a recovery growth of 19%.

 

When a recession hit the early 90s, McDonald’s decided to play it safe and cut its ad budget. Smelling fast food blood, Pizza Hut, and Taco Bell ramped theirs up and, as a result, grew sales by 61% and 40%, respectively. On the flip side, McDonald’s saw a 28% drop. Yo quiero Marketing.

 

In interviewing brick-and-mortar retailers about their recession performance, the management consulting firm Mckinsey & Company found that “all the resilient players we spoke to maintained or increased their marketing spending during the downturn.” In particular, when T.J. Maxx saw its core audience affected, the department store increased advertising spend by 15% so they could reach a new consumer base.

We think that data speaks for itself.

Summary and Conclusion

As the adage goes, “When times are good you should advertise. When times are bad, you MUST advertise.”

We’re not sure who came up with that, but they definitely know their stuff. Based on the findings above it’s hard to argue with that sentiment.

If you’re looking for the ammo to overcome a recession, look no further than your marketing efforts. By continuing to invest in marketing during economic slumps and uncertainty, you’ll come out a winner.

So to recap what we’ve learned today:

 

  • We all need to brush up on our elementary school studies
  • Season 5 of Yellowstone is going to be epic
  • Cornell puts out some pretty nifty studies
  • Winning businesses invest in marketing during recessions
  • Science rules!

 

We can’t guarantee knowing all this will help you figure out how to help your five-year-old with their trigonometry homework, but it will help your business thrive in a downturn.

Because you know what they say about knowing….

The other half?

Acting on that knowledge.

If you need help, we’re providing a free opportunity analysis to help brands find their best avenues for growth, no matter what the economic climate. Together we’ll find where investing your marketing spend will benefit your business the most, and the best ways to implement. This includes figuring out which of your competitors are decreasing or increasing their ad spend. That way, just like the companies above, you can grab some of that sweet, sweet market share.

Recession or Opportunity?

With plunging stocks, rising oil prices and mounting fear of a recession, what should most businesses be doing to protect themselves?

Be fearful when others are greedy and greedy when others are fearful.”

Billionaire mogul Warren Buffet said that. And right now, in the market, there is a lot of fear. It may seem counterintuitive to continue spending on sales and marketing when everyone else is pulling back. With the market uncertainty and the economy on shaky ground, it is the natural inclination to reserve assets and pull back spending – but should you?

Don’t Stifle Spending – Here’s Why

Cutting spending on marketing is harmful for two reasons:

1) It pulls money out of circulation, lowers your revenue, and further deepens the economic chasm and

2) In the name of self-interest, it prevents you from capitalizing on gained market-share.

Letting fear, instead of logic, dictate decisions is one of the reasons recessions happen in the first place. Unfortunately, many people adopt the former mentality.

But as Winston Churchill once said, “never waste a good crisis.” A recession offers an opportunity to gain market share when your competitors are pulling back.

Now, I am not an economist, and don’t advise any business decisions without much due-diligence; however, what I can tell you is as a company, we have been through this before. And, lived to tell the tale! I want to share our experience with you, so if there is a recession, you can come out afterward, not only intact but on top.

Hindsight is 2020

From war tactics to economic predictions, looking back at past events can help us understand how to better prepare for future events.

In Titan’s lifetime, we had never seen anything like the 2008 Great Recession. But fortunately, now, we have that perspective. And now, we also have global pandemic under our belts.

In both instances, after the initial shake-up, there is always a recovery period. And here is what we saw during those recoveries:

  1. The companies that continued to invest in marketing throughout the recession came out very, very well.
  2. As we continued to invest in our own marketing initiatives, our business thrived – while our competitors did not. In fact, some of our best years of businesses followed the 2008 “Great Recession” – and we’re currently growing rapidly following the 2020 pandemic because we didn’t let off the gas.

Inevitably Some Will Rise, Some Will Fall

A recession isn’t something we take lightly, and certainly not something we hope for. In fact, it saddens us to advise taking advantage of a downtrodden economy. Some businesses will suffer tremendously.

But at the end of the day, we want our clients to succeed. We want YOU to succeed. And if your company is in the position to continue spending, that alone helps fuel the economy. That alone, can make the difference between your company coming out of a downturn stronger than ever, or not at all.

Following any recession, the businesses that continued to invest in marketing made successful recoveries – some, stronger than ever. We still retain many clients who have been through the 2008 recession with us. We rode it out together, and today, those companies are flourishing.

Practicing What We Preach

It is scary to continue investing when the economy is shaky. At the same time, we are not willing to risk losing ground and market-share by pulling back spending. This is why, recession or not, we will continue to invest in our own marketing efforts and outreach.

After having been through a similar scenario, and witnessing the devastation it can cause for some, and also the immense opportunity it can bring for others, we maintain a firm stance on how we will proceed through a recession. We’re going to be doing exactly what we’re suggesting you consider – continue spending on marketing channels during a recession. Because in a time when you can’t afford to lose any ground, you double down.