Many economists are predicting a recession in the near term. Chief among them is Michael Yoshikami, founder and CEO of Destination Wealth Management, who predicts a shallow recession in the third quarter is a “virtual certainty,” per CNBC.
Not everyone agrees. President Biden is a notable optimist. In an interview with The Associated Press last week, Biden said a recession “is not inevitable,” and that “we’re in a stronger position than any nation in the world to overcome this inflation.”
Assuming the pessimists are correct, here are a few suggestions for marketing in a recession:
Realize there are 4 segments in a downturn:
In a Harvard Business Review post about “How to Market in a Downturn,” authors John Quelch and Katherine E. Jocz advocate breaking down the buying public into four segments:
The slam-on-the-brakes segment is on the cutting edge of economic disruption. Slam-on-the-brakes includes low-income consumers, who now put off purchases or decrease them. Anxious high-income consumers can also fall into this group, particularly if their health or incomes suffer during the downturn.
The pained-but-patient group is confident in the long term, but pessimistic about the near term. Like the above group, they economize in all areas, but less aggressively than the slam-on-the-brakes group. This is the largest group and may migrate to the slam-on-the-brakes segment if the economy gets worse.
The comfortably well-off group is people in the top 5% of income brackets. Some may have gotten out of the market early or had their money in low-risk investments, like CDs.
The live-for-today segment isn’t worried about savings. They cope with a recession by extending timetables for making major purchases. Typically, this group is urban and younger.
For marketers, the idea of looking at consumers as four smaller groups rather than one big one may make their job somewhat easier.