When times are lean, it’s a natural human instinct to hoard what you have and cut down on what you don’t need.
That impulse stretches to the corporate world. Marketing, in particular, has often found itself on the front line of cuts. Yet, experience has also taught us that creativity is a crucial growth driver, especially in straitened circumstances.
Experience has also taught us that creativity is a crucial growth driver, especially in straitened circumstances.
Throughout history, indeed up to and including the cataclysmic events of very recent times, periods of intense pressure and change have also been those that have seen the greatest innovation and technological advancement. Alexander Field, the respected economic historian, noted that The Great Depression was “the most technologically progressive decade of the twentieth century.” While there is no doubt that populations struggled, the period also saw the introduction of the telephone, the car, train networks, washing machines, cake mixers and the television.
Above: Continuing to invest can be beneficial even in tough economic times.
Most recently, the pandemic saw companies flip the switch on innovations that had, until that point, been making slow progress, or were still stuck in ‘development hell'. In the early months, there was no timeline or certainty about how long the pandemic might last. Staff being furloughed and bricks and mortar stores closing projected the very real possibility that revenues would be immediately throttled. And yet, companies forged ahead with digital transformation, delivered new products and service formats – many of which are proving to be market-beating strategies in a post-pandemic world.
There is still opportunity, though that sits alongside the threat that, if companies sacrifice marketing budget in this critical period, they could yet deal themselves a fatal blow.
The current cost of living crisis and recessionary climate can, in part, be traced back to the pandemic but also a range of other global shocks (the energy crisis, the war in Ukraine) that are conspiring to create challenging economic conditions. But there is still opportunity, though that sits alongside the threat that, if companies sacrifice marketing budget in this critical period, they could yet deal themselves a fatal blow.
Brands need to maintain marketing momentum
This is not hyperbole from someone who clearly has skin in the marketing game. As the world was reeling from end of the financial crises of 2008/9, Harvard Business Review made a firm statement about the value of marketing in 2010: “Successful businesses out of a recession reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D and new assets.”
Even the biggest companies weren’t immune. During the 2000 downturn, Sony cut its workforce by 11%, its R&D by 12% and capital expenditure by 23%. Its profit margin did rise four percentage points to 12% by 2002, but sales growth fell from an average of 11% before the recession to 1% afterwards. It has never regained its pre-recession momentum, and lost ground to relentless marketers like Samsung.
Conversely, DuPont’s scientists created the first synthetic rubber – neoprene – just as The Great Depression began. Even though the company’s prices and sales had necessarily fallen, DuPont actually increased R&D spend on the new technology. While keeping a close eye on expenditure and benefiting from relatively low-cost raw materials, the company continued to develop despite the challenging economy and, by 1939, every car and airplane manufactured in the United States contained DuPont’s neoprene.
Above: Beelivery capitalised on how people's behaviour altered post-pandemic.
Straitened circumstances spur creativity and innovation
In economically choppy waters, everything is turned upside down. No-one, however well established, really knows how to navigate the new normal. While it’s true that this is when many great brands have been born, it is not generally by accident. First, these innovators have been able to identify the prevailing trends that surfaced or were amplified by the changing conditions. Curry’s ShopLive responded to customers who were stuck at home, needed new technology but lacked the expertise to make the right choice or set up without help.
This was also an example of design thinking, the mentality that is key to adapting to new consumer behaviours. Focusing on user needs helps companies come up with creative solutions that stand out from the competition. Research is vital, with the emphasis on human behaviour and observation; everything must be from the perspective of the customer. This is a time that will defy assumptions, so maintain that ‘beginner’s mind’, so stay curious.
Research is vital, with the emphasis on human behaviour and observation; everything must be from the perspective of the customer.
Above all, act. Design thinking is solution-focused and action-oriented. Prototypes are rapidly created and being perfect is not an expectation, from the organisation or the consumer. Iterate and refine, highlighting new audiences and opportunities as you go. The need for rapid food delivery during the pandemic was born out of a trend for takeaways and then extended to everyday groceries.
The one-hour outdoor exercise limit imposed by the UK government over lockdown made it difficult to pop out for nappies later in the day if you’d forgotten them. And yet, that challenge wasn’t limited to pandemic times, something Beelivery capitalised on in its post-pandemic ads as new parents discovered, mid-change that the cupboard was bare. Since the pandemic, non-food brands have also realised the power of the rapid delivery trend, even in B2B, as Screwfix launched Sprint in 2021, a 60 minute or less service to get tools to tradespeople on site.
Challenging times are fertile ground for knee-jerk reactions but marketers have to help their companies resist and make their case for continued investment. Economic downturns, if navigated correctly, can set your business on a path to even greater innovation and future security.