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What does Kellogg’s, Toyota, Taco Bell and Pizza Hut have in common?

In recent weeks, with the world facing a global pandemic due to COVID-19 most economists have been quick to predict an economic downturn at what is hopefully the tail-end of the global pandemic. With the possibility of not only a downturn but a full-blown recession at hand, it is important for any small to medium sized businesses to understand the basics of traversing through the rocky waters of a recession.

Oftentimes when a recession does hit, businesses are quick to analyze and in most cases over-analyze the situation. Most business owners who are facing the first recession during the lifespan of their business think logically and cut back on spending to match the decrease in revenue. First to be cut, in the case of most business owners, is their marketing budget. That however, is arguably one of the gravest mistakes any small business with a hope to survive the recession can make. An article from the Harvard Business Review recommends businesses to invest in their growth to prepare for the next recession. If your marketing budget is an expense to your business and not an investment for growth then by all means, fire your marketing personnel because marketing (carried out efficiently) for any business is an investment.

So, what do Kellogg’s, Toyota, Taco Bell and Pizza Hut have in common?

All of these companies emerged at the end of a recession with a significantly higher market share than what they had going in. These companies relied heavily on marketing during a recession, when most of their competitors pulled back, to establish authority over the market.

Let us take a look at the specifics of each company:

Kellogg’s: In the 1920’s, Post was the category leader in the ready-to-eat cereal category. During the Great Depression, Post cut back significantly on its advertising budget and rival Kellogg’s doubled its advertising spend, investing heavily in radio and introducing a new cereal called Rice Krispies, featuring “Snap,” “Crackle” and “Pop.” Kellogg’s profits grew by 30% and the company became the category leader, a position it has maintained for decades.

Toyota: The recession of 1973-75 was triggered by the energy crisis. In late 1973, the U.S. government issued its first miles-per-gallon report in which Toyota Corolla was second to Honda Civic in fuel efficiency. Since Toyota was experiencing strong sales, when the economic downturn hit, the temptation was to drop their ad budget, which they resisted. By adhering to its long-term strategy, Toyota surpassed Volkswagen as the top imported carmaker in the U.S. by 1976.

Pizza Hut & Taco Bell: In the 1990-91 recession, Pizza Hut and Taco Bell took advantage of McDonald’s decision to drop its advertising and promotion budget. As a result, Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28%.

In every recession marketers find themselves in poorly charted waters because no two downturns are exactly alike. This means that the successes these companies received are not something all companies can replicate. For many small businesses the reasoning put forth by Frank Knight about risk and uncertainty is very apt. Risk describes a situation where you have a sense of the range and likelihood of possible outcomes. Uncertainty describes a situation where it’s not even clear what might happen, let alone how likely the possible outcomes are. Uncertainty is always a part of business, but in a recession it dominates everything else: no one’s sure how long the downturn will last, how shoppers will react, whether we’ll go back to the way things were before or see permanent changes in consumer behavior. So it’s natural to focus on what you can control: minimizing losses and improving short-term results. And cutting spending is a good way of doing this. The nuance lies however in whether the business has intentions of growing and scaling its operations during such troubled times or merely surviving the recession with the bare minimum and struggle to grow in an overcrowded bull market.

In the case of the predicted upcoming recession too, many economists have varied theories. Some suggest that since the recession has been primarily because of the market shutdown caused by the Covid-19 pandemic, there are no underlying faults in the market which will significantly dampen the losses. Others suggest that the pandemic has only accelerated the recession that has been building up since 2008 and will be disastrous to most businesses because of the complete lack of preparation. Even at the best of times, economic predictions are an inexact science.

However, industry analysts have reviewed the successes and failures of businesses that have gone through multiple recessions since the 70’s and identified patterns in consumers’ behavior and firms’ strategies that either propel or undermine performance. Companies need to understand the evolving consumption patterns and fine-tune their strategies accordingly. During recessions consumers set stricter priorities and reduce their spending. As sales start to drop, businesses typically cut costs, reduce prices, and postpone new investments. Marketing expenditures in areas from communications to research are often slashed across the board—but such indiscriminate cost cutting is a mistake. Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardize performance over the long term.

This may be the first time you’ve had to keep a business afloat during an economic downturn. So, to help you out, we dove into the most successful recession marketing strategies and distilled them into five main rules for you to follow:

  • Don’t arbitrarily cut your marketing budget

When a recession hits, marketing is typically one of the first places business owners are tempted to cut. This is a mistake. It’s well documented that slashing the marketing budget in a downturn will only help defend profits in the very short term. Ultimately the brand will emerge from the downturn weaker and much less profitable, if it emerges at all. This is because your advertising and your marketing is an investment into your business for potential returns.

Instead of making deep reactionary cuts, objectively look at where you’re spending money and what kind of return you’re getting on that money. The key word here is objectively.

  • Do a deep dive of your target audience’s recession behaviour

People change as the world around them changes. What your target audience needs in one decade may not be true in the next one. Keep the same thing from happening to you by really diving into your target audience and finding out their motivations and behavior trends during an economic downturn.

To get started, follow this model by Harvard Business Review:


Think of your customers as falling into four groups:

Slam-on-the-Brakes Consumers: Feels most vulnerable and hardest hit financially. This group reduces all types of spending by eliminating, postponing, decreasing, or substituting purchases. Although lower-income consumers typically fall into this segment, anxious higher-income consumers can as well.

Pained-But-Patient Consumers: Tend to be resilient and optimistic about the long term but less confident about the prospects for recovery in the near term. Like slam-on-the-brakes consumers, they economize in all areas, though less aggressively. They constitute the largest segment and include the great majority of households unscathed by unemployment, representing a wide range of income levels.

Comfortably Well-Off Consumers: Feel secure about their ability to ride out current and future bumps in the economy. They consume at near-pre recession levels, though now they tend to be a little more selective (and less conspicuous) about their purchases. The segment consists primarily of people in the top 5% income bracket. It also includes those who are less wealthy but feel confident about the stability of their finances.

Live-for-Today Consumers: Carries on as usual and for the most part remains unconcerned about savings. The consumers in this group respond to the recession mainly by extending their timetables for making major purchases. Typically urban and younger, they are more likely to spend on experiences rather than stuff (with the exception of consumer electronics). They’re unlikely to change their consumption behavior unless they become unemployed.

Regardless of which group consumers belong to, they prioritize consumption by sorting products and services into four categories:

  • Essentials are necessary for survival or perceived as central to well-being.

  • Treats are indulgences whose immediate purchase is considered justifiable.

  • Postponables are needed or desired items whose purchase can be reasonably put off.

  • Expendables are perceived as unnecessary or unjustifiable.


The trick to successful advertising during a recession lies in consumer psychology and emotion. A recession is a trying time for most consumers, and there’s an undercurrent of fear, worry, and stress beneath the surface. By tapping into and appealing to the emotional side of consumers you have a better chance of connecting with and persuading them.

  • Analyze and track everything

To track things accurately, digital marketing, especially Facebook and its ad platform allows superior capabilities of tracking data and usage of this data to target and retarget specific audiences. That way, you can identify the best-performing marketing strategies and ones that you can cut without seeing any real dip in branding or sales.

During a recession, knowing exactly what return each marketing investment is providing and why will be your key to not just survival, but growth. Digital marketing has long been accepted as the best low-cost, high-return marketing strategy, largely due to measurability and targeting capabilities.

As ad targeting capabilities mature and AI and machine learning advance, you’ll have an easier time reaching the audiences you want and delivering meaningful ad campaigns that can be directly tied to your bottom line.

  • Focus on existing customers

Regardless of your industry, your brand’s biggest asset during a recession will be your existing customer base.

Make sure your marketing strategies are focused on your most valuable, happy, loyal customers. Bend over backward to keep them happy, and be sure to reward their loyalty. These happy customers will repay you in the form of recommendations and reviews, especially if you can use analytics and data to show how you’re benefiting them during rough times.

  • Increase conversion rates by testing, tweaking and repeating

You can’t make people alter their spending habits. The best you can do is figure out the formula that nudges them further and further along the buyer’s journey. The only way to do this is by tracking your efforts, tweaking your campaigns, pivoting your strategy when necessary, and repeating the process.

Everything you do on the web can and should be tracked. You can’t win the game if you don’t know the score. Tracking and capturing more accurate and granular information about the performance of each of your marketing strategies allows you to see opportunities and problem areas your competitors cannot.

Once you’ve gathered enough data, test different tweaks to your strategies. You can’t get better results if you don’t test new strategies and evaluate old ones. Run tests to find the most cost-effective strategies you can dial up and leverage. Once you’ve got your results, repeat the process.

What you’re doing is refining your recession marketing strategy and distilling it to only include the very best-performing campaigns. Sometimes you’ll find you need to drop everything and pivot—and that’s okay. The business owners and marketing managers that thrive in recessions are the ones who are adaptive and able to pivot easily.

Our conclusion throughout all this is for you to keep investing in marketing during a recession because not only will it place you ahead of your competition in many respects and help you traverse the rocky waves of the recession with relative ease, it will also allow you an opportunity to stand out among your audience in a sparse market as most companies do what is instinctual and cut back on their advertising. Invest appropriately and you can reap the returns of quick growth and larger market share as you emerge from the recession - a stronger company.

If you’re worried about your business strategy during a recession or need help getting all your ducks in a row, we are more than happy to help you figure it out. I do recommend you contact us ASAP—once the recession actually hits you’re going to have a lot on your plate. Shore up your recession marketing strategy now so when the time comes you’re prepared. Book in a discovery call NOW!

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