Can an Economic Downturn Present Opportunities for Business Growth?

Economic Downturn-Business Growth-Randall Huft-opinion-CBD-CBDToday
Image: Mopic / Shutterstock.com

I am not the world’s biggest optimist. I just take comfort in facts over fiction. And the facts are that these crazy times offer businesses a unique opportunity to analyze their sales and marketing processes, recharge their brand, and attract new customers.

During economic downturns, consumers set stricter priorities and reduce their spending. As sales start to drop, businesses typically cut costs, reduce prices, and postpone new investments. Furthermore, marketing expenditures often are slashed across the board—but this type of cost-cutting is a big mistake.

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“Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardize performance over the long term,” according to a recent article in Harvard Business Review. In fact, research confirms companies that continue to advertise and build their brands during economic downturns will far outperform their competition, with results that remain long after the recessionary period is over.

“During recessions, it’s more important than ever to remember loyal customers are the primary, enduring source of cash flow and organic growth,” the article stated. “Marketing isn’t optional—it’s essential.”

Forbes commented, “When times are good, you should advertise. When times are bad, you must advertise.”

The magazine also stated there are several reasons to advertise during a slowdown:

  • The “noise level” in a brand’s product category will drop when competitors cut back on their marketing. This provides companies and brands with a “louder voice” than usual.
  • Brands can project an image of corporate stability during challenging times.
  • The cost of advertising usually drops during economic downturns. The lower rates create a buyer’s market and allow companies to get a bigger bang for their ad buck.
  • When companies cut back on their marketing, their brand loses its “share of mind” with consumers. Conversely, companies that continue marketing activities experience an increase in market share and profits.

McGraw-Hill Research conducted a study of United States recessions and found of the 600 business-to-business companies analyzed, the ones that continued to advertise during the recessions achieved 256-percent growth over competitors that eliminated or decreased spending on marketing.

Additionally, American Business Press analyzed 143 companies during an economic downturn and found companies that marketed during those periods saw the highest growth in sales and net income not only during the recession, but also in the two years that followed.

Those numbers cannot be ignored. They prove there’s a reward for companies that are aggressive with their marketing efforts during turbulent times.

But how can hemp companies market their services when opportunities to advertise are so limited? The answer to this question unveils one of the biggest secrets to marketing success: packaging and public relations.

Creative and unique packaging drives sales, especially in industries where advertising opportunities are limited. According to IPSOS, an international data provider and marketing research firm, 72 percent of Americans say the design of a product’s packaging influences their purchasing decisions. Package design is seen to be even more important when buying a gift, with 81 percent saying packaging design can influence their selection.

Public relations (PR) offers brands the opportunity to gain publicity and provide information about their products in the form of articles, interviews, and announcements. PR assists companies in gaining visibility, making an impact, and leaving a positive impression on their target audience. PR helps build brands, deepen loyalty, and create lasting relationships with consumers. In fact, many marketers say PR is their most compelling marketing tool because it drives growth in a very cost-effective manner.

In another survey, marketing executives were asked to compare the effectiveness of public relations to that of consumer advertising and other forms of marketing. From the perspective of these executives, public relations is the most effective tool for launching a new product or service, for building awareness, and for building a brand’s reputation.

In their book The Fall of Advertising and the Rise of PR, branding experts Al and Laura Ries argue public relations is the best way to launch new brands. In fact, they recommend any new marketing program start by generating publicity and then shift to advertising after the public relations objectives have been achieved. They cite a study of almost 100 new product launches that showed highly successful launches are more likely to use public relations than less successful ones.

These lessons are especially important for the hemp industry, where consumer advertising can be challenging and expensive. Moreover, the strategies are vitally important in today’s business and social environment.

This is not a time to stick your head in the sand. It is a time to be bold, creative, and proactive. The pandemic will pass, but we may never return to the old ways. There may be a “new normal” in many areas of life.

The question is, where will your company be when the next chapter begins?


Randall Huft-Innovation Agency-CBDTodayRandall Huft is president and creative director at Innovation Agency, an advertising, branding, and public relations firm specializing in the cannabis industry. While working with blue-chip companies including AT&T, United Airlines, IBM, Walgreen’s, American Express, Toyota, and Disney, he discovered what works, what doesn’t, and how to gain market share.

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