How Can the Period of Recession Affect Marketing a Product?

An organization's success or failure depends on how well it markets its products and services. This depends on various factors among them, such as economic and political climates. In times of recession, firms find it difficult to market their products. Recession is a temporary economic downturn that leads to reduced trade and industrial productivity. Other effects include increased inflation, reduction in consumer spending power, job losses and rising unemployment rates.

Budget Cuts

Many organizations cut down their budgets and reduce the scale of their operations in order to minimize costs. The operations of the marketing department depend on whether goods are being produced within the firm. The reduced demand for such goods during recession results in slowdown in production. This results in budget cuts for the marketing department. Funds meant for the marketing activities are therefore redirected to other crucial departments.

Customer Value Seeking

During recession, the amount of disposable income available to consumers is low. This in turn leads to reduced spending power. At this point, consumers buy only those products that offer them real value for their money. This means that consumers will only buy what is necessary at a time. Therefore, firms are forced to produce quality goods. At this time, marketing efforts will be geared toward highlighting features of a product that offer customer value.

Commodity Prices

During recession, product prices tend to increase. This is brought about by high cost of the factors of production. The additional cost is then passed on to the final consumer. Some consumers will look for cheaper substitute products. For example, a rise in price of coffee will lead to increased demand for tea. Others will stop buying the products completely. Therefore, the marketing team will need to convince their customers to stick with their brand.

Reduced Production Capacity

During recession, the production capacity reduces. This is brought about by reduced market for their goods. Also, as prices of goods increase, so do those of the raw materials. As a result, the firm scales down the amount of raw materials it purchases. This means that fewer products are available to be marketed to a rather smaller market base. At this point, the firm relies on the marketing department for survival.

References

• International Monetary Fund; What Is a Recession?; Stijn Claessens, et al.; March 2009
• Guy Consterdine Associates; Advertising in a Recession: It Pays to Maintain Marketing Pressure; Guy Consterdine; February 2004
• "Managing in Turbulent Times"; Peter F. Drucker; 1980
• "Coping with Recession"; P. Gregg, et al; 1997
• "Marketing Management, 12th Edition"; P. Kotler, et al; 2006

Resources

• "Counterturbulence Marketing"; Coskun Samli; 1993
• "BusinessWeek"; Innovating During a Recession; November 2008