Government Services for Entrepreneurs
Should you continue to promote your business during a recession? In most cases, it is wise to carry on with your marketing plan with modifications that reflect the changing economic conditions. History and research shows that businesses that cut back on their marketing during slumps tend to fall short in regaining their customers.
Canadians still spend money during economic downturns. In fact, many businesses manage to increase their sales, as well as their client-base.
Several factors determine whether sales increase or decrease, including:
Some consumers refrain from purchasing luxury items during a recession, but they continue to buy essential items such as clothes and food. Some consumers, whether through choice or necessity, stick to such basics throughout their lives, not just in economic downturns.
Economic stimulus packages and low interest rates may also encourage spending during a recession. So, while people who have lost their jobs or have seen their hours cut back may be spending less, other people who still have stable jobs may be spending just as much or more than they would have previously.
The bottom line is that you should think about your clientele and your client's recession psychology.
First of all, consumers classify their spending into prioritized groups:
Secondly, each consumer reacts differently to a recession. Consumers may have plenty of disposable income or very little, they perceive the economic situation differently. Philosophies range as do behaviours:
If you feel a need to cut back on marketing, think of focusing your efforts instead. Your efforts should support your strong brands, customer loyalty and competitive prices.
Offer lower thresholds for quantity discounts. For example:
a) Encourage clients to come in larger groups in order to get a lower price. Since most people would prefer paying $60 rather than $80 for a given activity, you may end up bringing in more money overall. Let's say you make five sales at $60 for a total of $300 - you will bring $60 more than if you make three sales at $80 for a total of $240;
b) Quantity discounts can also encourage clients to buy more of a product, right away. Although a lower per-item price tag translates into a lower per-item profit, more items sold could increase your profit overall.
If you can appeal to customers with a discounted group rate, they'll do the marketing for you by getting others to come along for a given activity. If we are talking household items and food, let consumers pay the price of storage - they'd rather do that, if it comes with a lower price tag.
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