In uncertain economic times, it’s crucial for business owners to stay proactive and adapt their strategies accordingly. While the “R” word, recession, has been floating about in recent months, it’s important to remember that opportunities can still arise amidst challenging circumstances.
According to the recent Real Economy Canada report published by consulting company RSM, there is a 60% chance of a recession hitting Canada in 2023. While the economy has shown strong indicators so far, it’s essential to start planning and strategizing for potential shifts in the market. By analyzing how the economy may affect your industry and business, you can identify threats and opportunities, laying the groundwork for success ensuring you can not only maintain your business but grow your business if a recession indeed comes. There are two important factors when trying to thrive during hard economic times. Strategic preparation and maintaining your marketing investments.
Strategic Preparation: Anticipating and Adapting to Changing Economic Tides
- Identify Threats and Opportunities: Evaluate the potential impacts of a recession on your industry and business. Are there certain segments that might be more affected than others? Are there new trends or emerging markets that could present opportunities? Understanding these dynamics will help you position your business to leverage the changing landscape.
- Focus on Opportunities: Instead of dwelling on the potential risks, direct your efforts towards the identified opportunities. Develop strategies to tap into new markets, diversify your offerings, or enhance existing products and services. By being proactive, you can position your business to thrive even in challenging times.
Maintaining Marketing Investments: Ensuring Brand Resilience and Market Dominance
During a recession, it becomes even more vital to maintain your marketing investments to safeguard your market share and amplify your brand’s visibility. To understand the significance of this strategy, let’s explore the concept of “share of voice” (SOV) and “share of market” (SOM).
Share of voice represents the level of visibility and presence a brand has in the marketplace. On the other hand, share of market (market share) is the portion of the total market sales or customers that a brand holds.
The relationship between share of voice and share of market is crucial for driving market share growth. When a brand’s share of voice exceeds its share of market, it has a higher probability of expanding its market share. Conversely, if a brand’s share of voice falls below its share of market, its market share is likely to decline over time.
In the context of a recession, maintaining or even increasing your marketing investment becomes a strategic advantage. While your competitors may be inclined to reduce their promotional budgets to cut costs, your steadfast marketing efforts allow you to occupy a dominant position. For example, if your industry peers slash their promotional spend by half, your budget that was previously responsible for 10% of the total share of voice suddenly doubles to 20%. This increased share of voice enables you to capture a larger portion of the market and maintain a competitive edge.
By committing to consistent marketing investments during a recession, you mitigate the risk of losing market share. Although cutting your marketing budget may provide temporary relief, the subsequent loss of market share during and after the crisis can be challenging to regain. Thus, maintaining your marketing investments ensures your brand’s visibility, fosters customer loyalty, and positions you favorably for growth when the economy rebounds.
One of the most important marketing efforts to invest in right now is SEO. In fact 88% of marketers who invest in SEO say they plan to maintain if not increase their investment this year. Search Engine Optimization may require time and effort in the beginning stages, but once it’s implemented effectively, the potential for growth and its longevity is huge. Investing in SEO during an economic downturn can be a wise choice since it provides a steady stream of organic traffic and leads. Even if your budget is forced to change, SEO will continue delivering results where other initiatives like digital ads stop working the second they are turned off.
While the possibility of a recession in Canada persists, it’s essential for business owners to approach the situation strategically. By identifying threats and opportunities, maintaining marketing investments, specifically focusing on SEO, you can position your business for growth and resilience. By adapting your strategies and seizing opportunities during challenging times, you can emerge stronger and thrive in the face of adversity. Remember, now is the time to plan, act, and position your business for success in the evolving economic landscape.