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  • April 2009
  • Article
  • Harvard Business Review

How to Market in a Downturn

By: John A. Quelch and Katherine Jocz
  • Format:Print
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Abstract

This article includes a one-page preview that quickly summarizes the key ideas and provides an overview of how the concepts work in practice along with suggestions for further reading. Because no two recessions are exactly alike, marketers find themselves in poorly charted waters every time one occurs. But guidance is available, say Quelch and Jocz, who have studied marketing successes (by Smucker, Procter & Gamble, Anheuser-Busch, and others) as well as failures throughout past recessions and identified patterns in consumer and company behavior that strongly affect performance. Understanding consumers' changing psychology and habits, the authors argue, will enable firms to hone their strategies so they can both survive the current downturn and prosper afterward. Consumers in a recession can be divided into four groups: The slam-on-the-brakes segment, which feels the hardest hit, reduces all types of spending. Pained-but-patient consumers, who constitute the largest segment, also economize in each area, though less aggressively. Comfortably well-off individuals consume at near-prerecession levels but become a little more selective (and less conspicuous) about their purchases. Live-for-today consumers pretty much carry on as usual, responding to the recession mainly by extending their timetables for making major purchases. People may switch segments if their economic situations change for the worse. All groups prioritize consumption by sorting products and services into the following categories: essentials (central to survival or well-being), treats (justifiable), postponables (can be put off), and expendables (unnecessary or unjustifiable). As firms manage their marketing investments, they must simultaneously assess their brands' opportunities, allocate resources for the long term, and balance their budgets. Many make the mistake of cutting costs indiscriminately, which can jeopardize long-term performance. Instead, firms should streamline their product portfolios, improve the affordability of their offerings, and bolster customers' trust.

Keywords

Customers; Economic Slowdown and Stagnation; Spending; Marketing Strategy; Consumer Behavior; Segmentation

Citation

Quelch, John A., and Katherine Jocz. "How to Market in a Downturn." Harvard Business Review 87, no. 4 (April 2009): 52–62.
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About The Author

John A. Quelch

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