How important is marketing for companies during an economic slowdown?

How important IS marketing and promotions during an economic slowdown?
Marketing is perceived as the task of creating, promoting and delivering goods and services to consumers and businesses and is thus an essential part of managing a company. During an economic slowdown, demand by consumers declines and companies are faced with higher levels of competition amongst themselves for this lower demand/sales. Therefore, it is important to continue to market and promote your products to at least retain marketshare. The trick is being close to your target customers and knowing how to reach them. In today’s modern economies, there are various marketing tools that can be used. Some of these tools can be used cleverly but may not necessarily involve high costs for the company.		Having a strong brand is much more important. When you have a strong brand, people buy your products or services even during the bad times, because they still want to identify with you. The reason is mathematical – revenue equals purchasing frequency multiplied by average purchase price. The purchasing frequency is higher for strong brand companies. Secondly, the companies with high brand value are less pressured to discount their prices during an economic downturn (in fact, they can even increase prices since certain segments always have buying power). This helps them to maintain a higher average purchase price than competitors. Marketing and promotions are not decisions based on an economic situation but a function of the return on investment.
Should companies invest in capacity expansion, manpower upgradation or cut back on their spends during a downturn?
In a period of economic slowdown, the outlook tends to be uncertain. Demand is lower and this leads to lower revenues and profits. Small and medium sized companies will find it difficult to access finance for an expansion in such circumstances. So it is a time to be cautious and cut expenses as much as possible. Large companies, however, with deep pockets or the ability to access finance may proceed with their expansion plans and continue spending in line with allocated budgets.		Concentrate on what you do best and where the profits are. Companies should also get rid of their costly bureaucratic layers comprising of multiple divisions and managers. There are two positive outcomes of a downturn: Firstly, due to lowered costs you can get more out of your investments. Secondly, in case of quieter times, it is a good time for human resources development activities, which typically get prioritised lower during the busy times.
Is it essential to offer freebies and discounts to sell products during a recession?
It depends on the company in question. If freebies and discounts works well then they should do so to enhance sales. Customers will be shopping for best value and companies while not cutting prices, could instead offer temporary price promotions. Other ideas may be to form alliances and network with partners. Some companies may now focus on customer retention rather than customer acquisition. It would be a time to support distributors. In uncertain times, no one wants to tie up working capital in excess inventories. Early-buy allowances, extended financing and generous return policies motivate distributors to stock your full product line.		No, as it may lead to a downgrading of your product and the value of such discounts is never equal to the returns. Have you ever seen Louis Vuitton offering freebies?

 
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