In the April 2009 edition of the Harvard Business Review, author’s John A. Quelch and Katherine E. Jocz identified patterns in consumer and company behavior during a recession and how this affects market performance.  They argue that understanding consumers’ changing habits will enable companies to hone their strategies so they can safely charter these unstable waters and position themselves for growth once the economy begins its recovery.

They categorize consumers into 4 groups:
•    Slam-on-the-brakes: the hardest hit category that reduce all types of purchases.
•    Pained-but-patient: the largest segment who economizes in all areas, but less aggressively.
•    Comfortably-well-off: consume at the same pre-recession levels but are a bit more selective and conspicuous about their purchases.
•    Live-for-today: carry on as usual but push back major purchases.
(It should be noted that people might switch segments if their economic situation changes.)

Individuals in each group prioritize their purchases by sorting products and services into the following categories:
•    Essentials
•    Treats
•    Postponables
•    Expendables (unnecessary or unjustified)

Understanding this, companies can manage their marketing investments and assess their brands’ opportunities.  They should allocate resources for the long-term and balance their budgets accordingly.  Many companies make the mistake of cutting costs indiscriminately, which can jeopardize long-term brand performance.  Instead, companies should understand where they achieve the maximum ROI and stick with it.  They should also look to streamline their product portfolios, improve the affordability of their offerings, and bolster customers’ trust by keeping their brand top of mind.  Maintaining momentum is paramount to success and more cost effective in the long run!

Sure, you can cut your marketing expenses, but don’t sink the ship!  Decreasing your expenditures is fine, but you must continue to maintain your brand presence and awareness at all costs.  Stay top-of-mind with your customers, because we all know it costs much more to find a customer than it does to keep one.