The economy is something people have become far more aware of as a presence in their lives since the economic crisis that kicked off in 2007. While we are in a state of recovery at the moment, with UK retail spending showing healthy month on month improvement over the past couple of years, people are perhaps more in tune with the economy than they were in the past, before the hard times really hit them.
As marketers, is it therefore important to factor in the state of the economy when coming up with effective marketing messages? This is not about how much you as a business spend on marketing, which is of course affected by the economy in different ways, but about whether you change the way you position yourself and your products depending on whether the economy is in a generally positive or negative state.
As we saw during the worst parts of the recession, an economic downturn makes almost everybody reconsider how they spend and save. With concerns about how the downturn may have been caused by excessive borrowing, people became reluctant to live in any way beyond their means. This meant that it became harder to market things that may be seen as frivolous or luxurious, and easier to market things that were cheap or offered exceptional value. While people in the early 2000’s may have sneered at budget brands and ‘no frills’ products, these became more the norm. Equally, with many economists theorising that the best way to get out of a slump is to spend, thereby putting more money into the economy and creating more demand and jobs, as we recover it may make sense to market more heavily products that are slightly above essential (like holidays and premium electronics), but still keep a focus on value.
Of course, only some business have a choice about the price points of the things they market, or the affluence of their target audience. While a brand that sells all kinds of different products such as a supermarket or major online retailer can push cheaper items in some situations and more luxurious ones in others, if you are a luxury jewellers or a budget airline, your messages will always be based around the same things – either the quality and exclusivity of your expensive brand, or the great prices of your value brand. However, you may want to consider what recovery could mean to your customers. If you assume people are going to be spending more, will this make them likely to abandon your budget brand for ‘nicer’ alternatives, or will it bring people who wouldn’t previously spend on luxury items into your demographic? Should you focus on retaining customers, or winning new ones?
Economics is hugely important in marketing, and it really pays for businesses and marketing professionals to understand current economic trends and consider them in their messages.
