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The current economic situation is unusual, and much of the advice executives receive today is similar to that from the [2000 recession](https://en.wikipedia.org/wiki/Early_2000s_recession). Common remedies such as risk assessment, cost-cutting, and preparing for unforeseen events are aimed at survival or market share maintenance. But these approaches may not work anymore due to changes like deregulation, technological advancements, population shifts, and urbanization. 

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In previous recessions, established firms typically outperformed start-ups due to their economies of scale and customer relationships. With businesses from emerging markets overtaking western companies, that's no longer the case. Studies show that many top performers during the 2000 downturn lost their places within five years. Only 10% were able to reclaim their spot five years later, while 15% of today's market leaders emerged during that recession.

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Companies must be prepared to grow despite challenges, to succeed in a recession. Great Depression successes General Electric, Kelloggs, and Procter & Gamble made it through by providing value-for-money strategies helping customers use resources more efficiently or economize. This applies to developed and developing countries alike - they need to develop cost-innovation capabilities rather than focusing on cutting costs. Multinationals must learn from overseas rivals; otherwise, they will only survive or stay competitive in the short-term.

## **Understanding What Customers Value**

Defining and measuring customer value is essential for suppliers to stay competitive. As customers focus on total costs, suppliers must understand what they truly value to persuade them to make smart decisions. 

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To illustrate, two car dealerships are competing for customers in a local market. One dealership advertises their cars as high-quality and reliable, while the other dealership offers a specific promotion, such as $1,500 cashback or a 0% interest rate for a limited time. Customers are more likely to be attracted to the particular promotion, as it provides a clear picture of a unique value add. Hence, the latter would be more convincing. To gain an edge, some business market suppliers are using customer value models - data-driven representations of worth in monetary terms - based on assessments of the costs and benefits of their offering. Developing such models can be challenging, but those who have created and used them recommend helpful guidelines.

## Data Collectio**n and Analysis**

As traditional marketing techniques become less effective, data science has emerged as a potent tool for growth marketers. With data science, growth marketers can scrutinize vast amounts of data and gain valuable insights into their audience's behavior and preferences. This enables them to develop tailored campaigns that resonate with their target market.

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Growth marketers have access to a wealth of data from various sources. Website analytics, social media, and customer relationship management systems can help them understand user behavior, track campaign performance, and uncover growth opportunities. For example, analyzing content engagement on social media will reveal which types of posts work best.

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Another crucial form of data that growth marketers can use to design targeted campaigns is demographic data. By scrutinizing demographic data, growth marketers can pinpoint the segments of their audience most likely to convert and create bespoke campaigns to engage with those segments.

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 ![](https://cdn.hackernoon.com/images/yU6NbNV2B0QemduWPsPBWqaGNHn2-43a3rd2.jpeg)

### **Machine Learning Algorithms**

Machine learning algorithms are a valuable tool that growth marketers can use to enhance campaign performance. These algorithms enable growth marketers to create more effective campaigns by automating marketing tasks and improving targeting accuracy. For instance, they can analyze user behavior data and detect patterns that indicate which users are most likely to convert. These insights can be used to create personalized campaigns that increase the likelihood of conversion.

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Machine learning algorithms can automate ad targeting by analyzing demographic and user behavior data, among other factors. This allows the algorithms to identify users who are most likely to respond to a particular ad and serve the ad to them, resulting in improved ad performance and reduced campaign management resources.

## **The Era of Experience Economy Is Here**

The birthday cake is a great example of economic change. Initially, moms made cakes from farm products. With the industrial era, pre-mixed ingredients like Betty Crocker became popular. The service economy saw parents paying more for store-bought cakes. Today, busy families often pay event planning companies a lot of money to host an event. This shift marked the emergence of an “experience economy”; companies create experiences around their traditional services to attract customers better. 

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To succeed in this new era, companies must create high-quality experiences that customers will pay for instead of getting commoditized. To do so, they must examine how experiences work and adhere to certain principles.

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 ![](https://cdn.hackernoon.com/images/yU6NbNV2B0QemduWPsPBWqaGNHn2-amb3rbq.jpeg)

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### **Providing Choice and Customization**

Customers often face high prices when seeking a wide selection of products or personalized offerings. This is because companies in developed countries focus on achieving economies of scale and worry that offering many choices will disrupt their operations. To avoid added costs and losses from old inventory, businesses in emerging markets are transforming the rules by learning how to achieve economies of scope. They can hire large teams to customize designs and handle changeovers due to lower labor costs, combine automated processes with human intervention for flexibility and quality, and tap into broader niche markets for various options.

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Innovation has been essential for progress yet it remains a major frustration for global executives: 84% __[say](https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/innovation-and-commercialization-2010-mckinsey-global-survey-results)__ it's vital, but 94% are unsatisfied with the performance. Companies have access to more customer data than ever but need help to reach innovation goals. Although firms try structured approaches and experienced professionals, success is still unpredictable. The issue lies with correlations; despite knowing correlation does not imply causation, managers rely too heavily on it. Instead, they should focus on customers' desired outcomes - what the authors call "the job to be done".

### **Enhancing Customer Experience**

Successful innovations help customers overcome problems and move forward. However, it's important to remember "job to be done" means more than just a task. It represents what someone tries to achieve in a particular situation, which involves the experience they want. For example, when people downsized from their homes to condos, developers needed to focus on the customer’s circumstances instead of product features or trends. They realized prospective buyers wanted an easier life without home ownership hassles. To address this issue, they gave them a third option that met all criteria, allowing them to become buyers. Jobs have both functional and emotional dimensions – reducing stress and creating space for dining tables are examples of addressing anxieties.

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Creating desirable products requires understanding and defining job needs as well as designing the right experiences during purchase and use. [American Girl dolls](https://www.racked.com/2015/6/29/8855683/american-girl-doll-store) exemplify this approach - with over 29 million sold and $500 million in sales annually. The dolls don't stand out but rather engage kids' imaginations through stories and enable families to connect with one another. Pleasant Rowland, the founder of American Girl, understood preteen girls were looking for something to validate their identities and navigate challenges. This insight led to dozens of diverse characters like Kaya and Kirsten Larson.

### **Characteristics of Experiences**

For companies to charge admission, they must offer an experience that customers find valuable. Designing, marketing, and delivering experiences require innovation and creativity for success and revenue growth. Experiences vary in two dimensions: customer involvement (from passive to active) and connection with the event (absorption to immersion). These categories include entertainment, education, escapism, and aesthetics - like Disney World or Las Vegas. 

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Managers must determine what specific experience their company offers as it will define their business. People spend billions of dollars each year on items that represent special memories. Tourists get postcards of places they've visited, golfers wear apparel from courses they’ve played, and music fans buy T-shirts to remember a concert. These memorabilia cost more than regular products because people attach sentimental value to them. For example, someone attending a Rolling Stones show may pay extra for an official T-shirt with the date and location of the event. Many services, like airlines or banks, don't offer mementos, but if these companies created unique experiences, customers would be willing to shell out money for keepsakes.

## **How to Market in a Downturn**

Consumers change their spending habits during recessions, and businesses often reduce costs. Many cut marketing expenses without considering customer needs, which can threaten future performance. Companies that adjust strategies, budgeting, and products to match consumer demand are better equipped to succeed through a recession and beyond.

### **Psychology of Recession**

During prosperous times, marketers may overlook the fact that sales are not solely driven by advertising and products. Their disposable income influences consumer buying, confidence in the future, trust in the economy and businesses, and a lifestyle focused on consumption. Bills have piled up, incomes have stagnated or dropped, savings have dwindled, and corporate scandals have led to skepticism of marketers' messages. This challenge requires an understanding of new customer segments during a downturn. 

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Psychologically segmenting customers based on their reactions to economic situations can be more helpful than demographic or lifestyle segmentation. 

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These four groups include: 

* slam-on-the-brakes, 
* pained-but-patient, 
* resilient optimists, and 
* confident enthusiasts. 

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The most vulnerable financially are in the first group and reduce spending overall. Pained-but-patient households remain resilient despite the impacts of the recession. Comfortably wealthy people feel secure and still buy close to pre-recession levels but with less conspicuousness. Live-for-today individuals extend timelines for major purchases until necessary.

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Consumers often prioritize their consumption during downturns by sorting products and services into four categories: essentials, treats, postponables, and expendables. Basics like food, clothing, and shelter are always considered essentials, but individual preferences determine the other classifications. In a recession, people usually reassess their spending priorities, such as downgrading an item from essential to treat or vice versa. They may also opt for cheaper product versions or seek deals for their favorite brands. As a result, shoppers become more price-conscious and less brand loyal in tough economic times.

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 ![](https://cdn.hackernoon.com/images/yU6NbNV2B0QemduWPsPBWqaGNHn2-g6c3r86.jpeg)

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### **Making Marketing Investments Work**

During a recession, it's important to remember that loyal customers are your primary source of revenue and growth. Investing in marketing should not be seen as optional; instead, it helps you bring money from current and new customers. Companies often reduce their marketing costs more than production ones since they can cut back on communication expenses without letting go of staff. When managing the budget, businesses must distinguish between necessary and unnecessary. 

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Creating strong brands with which customers associate and trust is one of the best ways to reduce risk during recessions. Companies like Colgate-Palmolive or Johnson & Johnson usually have better stock prices compared to those with lesser-known brands. During tough times, companies must cut ties with underperforming staff and low-yielding tactics to gain company-wide approval for re-evaluating marketing strategies and restructuring resources. The difficulty lies in making decisions that are well-defended regarding where to reduce spending, remain the same, or even increase it. To identify potential, companies should examine their brands, products, or services and decide which ones are doomed, need support, or will thrive during and after the recession. 

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Companies should prioritize maintaining relevance to core customers to keep their brand afloat in the downturn and recovery. It all depends on the segment of core customers they belong to and how they view the company's goods or services. Value brands can efficiently target pained-but-patient consumers/prospects by offering reduced prices on essential items. Additionally, businesses can advertise repair services to this same group seeking to prolong existing appliances' life rather than buying new ones. When faced with a dwindling business prospect, it may be time to bid farewell to pre-pandemic failing brands or products that are merely surviving now.

### **Planning for the Long Run**

Companies shouldn't panic and change their brand's core proposition or positioning if sales start to drop. By doing so, brands may end up confusing and angering loyal customers, provoking competition, and ultimately weakening their positions when the recession comes to an end. Instead, businesses should keep their brand steady and spend marketing resources reinforcing their core offering. This aids in preserving any buffer resulting from past investments made in establishing the brand and ensuring customer satisfaction. When opportunities are either stable or uncertain, companies must take advantage of them.

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Spending more on advertising during a recession can grab market share from struggling rivals - and research has shown it generally boosts financial performance for at least one year afterward. Monitoring how shoppers are reallocating budgets, changing priorities, shifting between brands/product categories, and redefining value is essential. Market research is vital to see if people will return to familiar items/brands, use substitute products, or accept innovations. Companies must remain adaptable, adjusting strategies and tactics, expecting a prolonged hard slump but ready to respond swiftly if things improve. That means having innovation pipelines prepared to roll out quickly.

### **Build Trust**

During times of economic uncertainty, customers tend to rely on familiar and trusted brands for comfort. To address this, companies must use reassuring messages that strengthen emotional connections and demonstrate empathy, conveying solidarity and support during difficult times. This must be backed up by actions, such as loyalty programs and helpful information on how to save money. Engaging customers in activities that convey care and support is also important.

Reiterating to customers that purchasing the brand is a wise choice can be an effective way to strengthen trust.

## **Strategizing for Recovery**

Companies that prioritize customer needs and core brands will have the edge when the recession ends. It's key to understand how consumers' behavior may change after the recession so they can offer relevant products and communicate messages that meet new consumer segments’ needs. After most recessions, attitudes and behaviors return to pre-crisis levels within a year or two. But more extreme downturns could cause lasting changes in values and attitudes. 

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Following the current recession, it's likely that post-recession attitudes and behavior will remain changed for some time. Marketers should be prepared for this shift, staying disciplined with their strategies and research, and ready to act on any changes in demand. They should also watch for trends towards less materialism, sustainability commitment, higher expectations of corporate social responsibility, and an aversion to gimmicky marketing. Consumers expect businesses to work for them and society - making decisions about what companies to support based on their practices. Companies must pay attention to these changing demands to stay successful.

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