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Marketing in Uncertain Times (Thinks Out Loud Episode 352)

Team brainstorming ideas to illustrate the idea of marketing in uncertain times

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Inflation? Supply chain issues? Tough to find employees? Possible recession? The economy is all over the place, leading to very uncertain times for business leaders and for marketers. So, what’s a marketer to do? Should you lower your prices? Slash your budget? Give up on marketing your business altogether? In simple terms, how can you market your business — online or offline — during uncertain times?

This episode to Thinks Out Loud takes a look at how to think about marketing in uncertain times, how you can take care of your customers

Want to learn more? Here are the show notes for you.

Thinks Out Loud Episode 352: “Marketing in Uncertain Times” Headlines and Show Notes

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Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 24m 48s

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Transcript: Marketing in Uncertain Times

Well, hello again, everyone. And welcome back to Thinks Out Loud, your source for all the digital expertise your business needs. My name is Tim Peter. This is episode 352 of the big show, and I think we’ve got a really interesting show for you today. I think it’s a good show, and I think it’s going to be a really interesting discussion.

Opening: Marketing In Uncertain Times

The show is going to be a little different today. We’re not going to focus quite so much on digital. We’re going to focus a little more on products and services and the like. And the reason for this is really pretty straightforward. There has been an immense amount of discussion about the state of the economy, particularly, inflation is bad. Wages have been going up a lot, particularly if you’re hiring. And people are getting increasingly concerned that we’re heading for a recession.

We’ve Been Here Before

Now, I have talked about this plenty of times before, after everything we went through in 2020, and frankly, going back to way back. We’ve been through some tough times before, and I don’t know whether or not we’re going to have a recession. First of all, I’m not an expert on the economy. I am listening to experts. The economic indicators all suggest that maybe we won’t, probably not. I certainly don’t think so. But I also want to say despite the title of show, it doesn’t matter what I think in this specific case because "

  1. First, I could be wrong.
  2. Second, the market and the broader economy get to decide whether or not we’re going to have a recession. And let’s be fair. They could change their minds.

Many Variables at Play About the Economy

So we’re not really sure. But the reason I think we probably won’t is employment is phenomenal. And despite the fact that inflation is kind of ugly, especially gas prices, that seems to be slowing down a lot.

But there are all kinds of wild cards out there. There’s the war in Ukraine, et cetera. And what I think we are experiencing, regardless of whether or not there is a recession, is that there’s a lot of uncertainty. And that’s kind of the point. Regardless of whether we have a recession, we certainly have uncertainty that we have to deal with, which itself could become a self-fulfilling prophecy because as business and consumers worry about recessions, they might stop spending, and that could push us into one. So you never really know. There was a news story just today, Bloomberg reported that Amazon is starting to sublet its leases for warehouses because it’s concerned about a slow down in online sales. All right, so maybe we’re facing some tough times ahead, though I personally think it’s more likely to be based on uncertainty than an actual recession. But again, I could be wrong.

Now, as I mentioned a moment ago, this is a topic I’ve talked about before. We did an episode back at the beginning of 2020 called, "Is a Recession More Likely This Year? Here’s What You Don’t Want to Do." We’ve talked about "When Will the Recession End?" back in 2020. I’ve got data that I will point to of what happened in every US recession since the Great Depression, though I want to be fair, I’ve not updated the data for the 2021 downturn because the data is super complicated. There’s way too much noise in the signal. For me, anyway. I’m sure people who do this for a living probably are a little smarter about this and have better insights. But we all know the old joke that if you laid all the economists in the world end to end, they wouldn’t reach a conclusion. And I tease. Truly, I do have friends who are economists, so that’s something. Their job is really hard to kind of sort out, especially when we talk about the size of the US economy, a $20 plus trillion economy.

Assume Things Will Be "Average"

So here’s what we do know. If there’s a recession, I always tell people we should assume it’s going to be average, because we don’t know if it’s going to be a bad one or a good one or whatever. And on average, we see that the economy slows down by five points or so and that it lasts for somewhere between 12 and 15 months. That’s pretty normal. So we’ll see what happens. What I would suggest though, is there are things you can do to be ready regardless of what happens, regardless of how uncertain the economy is. And the first rule always is survive.

Rule #1: Stay Alive

For the next five, 10 minutes or what have you, I’m going to offer an array of ideas of what you can do to put yourself in a really great position during uncertain times, during down times. And happily, they work really well if times get good too. But all of these ideas only help you if you manage to stay in business. So do what you’ve got to do first. Just because I said don’t discount, doesn’t mean you should discount in your specific case. There may be a reason why it’s so. I’m just going to try to make the case for why you probably can get away with not discounting in a recession and still do well. And if you’re going to discount, there’s a way to do it. I’m going to talk about how you handle value for your customers, and that’s a really important topic. But again, the point is survive first. If you’ve got a rent payment to make at the end of the month, you have a note to pay on equipment, you have salaries to pay every two weeks, obviously do what you’ve got to do to get through. And then we’ll figure out how to make it better on the other side.

What we do know to be true, and there’s data upon data upon data about this, that the more you do to continue focusing on your marketing and continue focusing on value to your customers before a recession and during a recession, or before economic tough times and during economic tough times, or before uncertainty and during uncertainty, the better you will be after each of those things relative to your competition. That’s consistently true across industry, after industry, after industry. It’s been true from recession to recession, to recession, regardless of whether it was a big one or a little one. It always comes back to what you do during sets you up for greater success later.

Focus on Your Customers

And the first thing you have to start with is start with your customers and what they care about. Your customers by definition, during any economic uncertainty, it doesn’t matter if you’re B2B or B2C, they start to watch where their money goes much more closely. They have to, right? They’re thinking about what matters most to them. You need to look at whether you are a discretionary purchase or non-discretionary, meaning, are you something that people spend extra money on, or are you something that they need to have to survive? Think Maslow’s hierarchy, food, rent, things like that. At the same time, don’t delude yourself about which of those you are. You’re always safer assuming that you’re a layer lower on that hierarchy than you may actually be.

You also… and this is when things get really tough — hopefully that won’t be the case this time around — but also, it’s pretty safe to assume that you are always discretionary if things get really tough. There are very few things that are entirely recession proof.

What Do Your Customers Need?

And you need to start asking your questions about what do your customers really care about. There’s an old Jeff Bezos story I’ve told many, many times, that people ask him what’s going to change in the next 10 years. And he says it’s far more interesting to think about what won’t change. He always talks about people want a broad selection of products. They want them delivered quickly, and they want them at low prices. Those always, always, always stay the same.

So think about where are you competing. Are you competing on variety? Are you competing on saving people time? Are you competing on saving people money?

Customers Make Value Decisions

Remember though, in all of these cases, these are value decisions. What the customer is actually asking is, am I getting good value for my money? Am I getting the right selection so I know I’m getting the best deal? Am I getting the right selection so that I know that I’m getting exactly the thing that I need, as opposed to just something that kind of matches my need? And in good times, I might be willing to pay a little more for that. But in tough times, I’m willing to sacrifice some of those things potentially if it saves me some money. And that’s one of the things you really need to think about is what substitutions are customers looking to make.

Are Customers Substituting Quantity, Quality, or Both?

Are they substituting quantity, or are they substituting quality, or are they substituting both? When I was a kid, we were middle class and sometimes just squeaking by middle class. But sometimes my mom would buy a half pound of meat instead of a pound of meat and then stretch it with beans or potatoes or mac and cheese or something to make a meal stretch because the meat cost more than the beans did or cost more than the potatoes did. We see this all the time.

Substituting Quantity

I do a lot of work in travel, as you know. We see it all the time with hotel guests who choose to stay for shorter periods. Maybe I won’t go for a week, but I’ll go for a long weekend. Maybe I won’t go for the whole weekend, but I’ll go for Friday night or Saturday night. Maybe I’ll drive someplace instead fly someplace. And the same can be true for a B2B purchase, where I’ll sign up for a shorter duration because I don’t know what’s going to happen a year down the road. Can I go on a month to month contract? Even if it costs me a little bit more in the short term, maybe that’s better because I can always cancel in a month’s time if it doesn’t make sense.

Substituting Quality

Now, the quality side, of course, is the other side of this, where I might buy something that’s a close enough substitute if it saves me enough money. Again, I’ll use the travel example. I might reserve a different hotel, an economy or a mid-scale hotel as opposed to an upscale hotel. Or I might say, you know what? I don’t want the ocean view. I’m fine with the parking lot view if it spares me a couple of bucks. And again, you can find other examples in lots of other industries. If I’m in B2B and I’m buying a widget, I might not want to buy the grade A. I’ll take the A minus in the places where it’s not going to affect safety, or something along those lines.

So you have to think about what are the substitutions that your customers are willing to make, and can you help them make a substitution to something else in your product set?

Discounting… Or Not

This is why I explain all the time about why you don’t necessarily want to discount and why you might not have to discount. So let’s start with the obvious. First of all, discounting is rarely a winning strategy. And I’m going to explain why, and digital is one of the big reasons.

I wrote about this years ago in a post called The Race You Can’t Win. And let me explain what that means. Today, you’ve got a problem. You’ve got soft sales. So you go ahead and you cut prices. Well, because you cut prices, you either have to cut customer experience, and we all know customer experience is queen, or you have to cut marketing, which means you have less of an opportunity to get in front of new customers to pay for this or else you start losing money. Your customers sometimes notice this right away, sometimes, not always. But you know who does notice right away, is your competition. We live in a world where because of digital, we have radical transparency. Your competitors pay close attention to your prices as well, and they often can cut prices to match. That becomes a bit of a race and a vicious cycle of where the product or the experience get worse, the marketing gets worse. Your competitors lower prices, too. Customers just keep getting lower and lower prices, but they also get poorer and poorer products, which causes them to look for other alternatives. And it becomes a vicious cycle, and it becomes a race to see who can stay in business the longest at reduced profitability. That’s why it’s a race you can’t win. The best case scenario is you survive longer than your competition. I think it’s better to not run that race at all.

Don’t Set a New Price Ceiling for Your Product

The other challenge is even if you do successfully steal a share from your competitors, it’s harder to bring your prices back up after any downturn. You’ve set a new expectation of what your offering is worth, and that’s not a great place to be in the long run. In the long run, you want to be charging a premium, not a discount. Obviously, it’s much tougher to charge a premium in a downturn, so instead we want to talk about how are we conveying value to our customers. Can you put in place value ads? I’ve done a whole podcast on this a couple years ago called "The Lost Art of Value Ads in Marketing," and I strongly encourage you to check that out. But what could you include as part of the purchase that makes it more valuable to your customers without lowering the price? Give them more for less money, and in a way that makes it more opaque as to what the price of those individual components are.

Offer Value-Adds and Value-Subtracts

Remember what do your customers value? Time, flexibility, better payment terms. Can you give them better duration of the product, like a subscription for less money up front? Can you change the brand a little and maybe offer a lower quality offering during a downturn? We see people move upmarket all the time during good times. Car brands do this consistently, Honda with Acura, Hyundai with Genesis, Toyota with Lexus. You can do the same in reverse. I’m a guitar player. I love playing guitar. Fender and Gibson are two of the biggest guitar brands, and they each have a lower end model, Squire and Epiphone respectively. We’ve seen this with Apple and the iPhone SE. What can you remove from the product to make it lower cost for you and more desirable at that price point for your customers? So think value adds and value subtractions that allow you to put a product in front of your customer that helps them understand they’re getting good value for their money.

The Role Digital Plays

And this is where digital plays a big role because then you need to look at the effectiveness with which your digital channels, all of them, the owned, the earned, the paid, all of them communicate and demonstrate that value. I mentioned before, of course, that customer experience is queen. We know that content is king. Do you have content that makes the distinction between these various valued products, the value adds and the value subtracts, clear to your customers so that they know what they’re getting for their money, and they can determine whether or not it’s the right solution for them?

Plan for Various Scenarios

And then the last thing you need to do whenever we’re dealt with uncertainty is start doing some scenario planning. Start doing some contingency planning. What would you do if business declined by 5%, by 10%, by 20%, by 40%? Nobody’s suggesting that’s going to happen, but the right time to plan for it is before it does. There’s the old Eisenhower quote. Since we just had the anniversary of D-Day, I feel it’s necessary to reference Dwight Eisenhower, where he said, "Plans are useless. Planning is essential." You don’t want to learn what you would do in a 10% downturn when you’re in a 10% downturn. It’s much easier to think about it now, so that you’re better positioned.

By the way, I always suggest do the same thing for improvement. What would you do if things got 5% better, 10% better, 20% better, 40% better? Because sometimes, you are the substitution for the higher priced product. Sometimes downturns help some businesses or some industries or some geographies because that’s the way it works. So you should be prepped in the other direction too, if you suddenly had to scale up your staff or scale up production.

Conclusion: Marketing in Uncertain Times

So this is the time not to panic. It’s the time not to lose your head and get crazy and start cutting all over the place, cutting your prices, cutting your services, cutting your marketing, cutting your staff. It is the time to start thinking about how would you address them, and how can you best understand your customers, and how can you best address their needs if things do get worse. And then if they don’t, at least you’ve done the exercise for the next time. You’re prepared and you’re ready, so that whatever happens, you put yourself in a position to win, because I told you at the beginning, you always want to make sure you survive. But beyond that, in the longer run, you want to make sure you’re set up to thrive.

Show Outro

Now, looking at the clock on the wall, we are out of time for this week. I do want to remind you that you can find the show notes for today’s episode, as well as an archive of all Thinks Out Loud episodes, by going to timpeter.com/podcast. That’s timpeter.com/podcast. This episode is episode 352. You can just look for that. Or you can look at any of the 350 plus episodes we’ve recorded.

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Don’t forget that you can click on the subscribe link in any of the 352 episodes you find to have Thinks Out Loud delivered to your favorite pod catcher every single week. You can also find Thinks Out Loud on Google Podcasts, Apple Podcasts, Stitcher Radio, Spotify, Overcast, wherever fine podcasts are found.

Leave a Review for Thinks Out Loud

While you’re there, I would also very much appreciate it if you could provide the show a positive rating or review. If you like what you hear each week, if you like the community we’re building here at Thinks Out Loud, if you want to help others to learn about the show, please say something nice about us on whichever service you like the best. It helps new listeners find the podcast. It helps them understand what Thinks Out Loud is all about. It helps to build our community, and it just means the world to me. I very, very much appreciate it.

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Sponsor Message: SoloSegment

As I do each week, I’d like to thank our sponsor. Thinks Out Loud is brought to you by SoloSegment. SoloSegment provides search as a service to help customers of large enterprises find the content that they need. SoloSegment powers your search result and focuses on business results to help customers find what matters to them and directs business results for you. SoloSegment uses an amazing suite of artificial intelligence, machine learning, natural language processing, and a whole host of other really cool, but most importantly, business focused tech that protects customer privacy and leads to results. You can learn more about SoloSegment and all the wonderful work that they do by going to solosegment.com. Again, that’s solosegment.com.

Show Outro

Finally, and I know I say this just about every week, but I cannot tell you how much it means to be that you listen to the show. This is our 352nd episode. I would not do 352 episodes of something if you didn’t appreciate it and send me great emails, send me tweets, send me messages on LinkedIn. And it just means the world to me that you take time out of your busy life to spend a little time with us every single week. I opened the show by talking about the fact that we are in uncertain times. I get that people have to be really smart about where they’re spending their time, where they’re spending their effort. And it just means so much to me that you choose to spend some of that with me and with the show.

So with that said, I hope you have a great rest of the week. I hope you have a wonderful weekend. And I will look forward to catching up with here on Thinks Out Loud next time. Until then, please be well, be safe, and as ever, take care, everybody.

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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