Purpose Strategy Will Future-Proof Your Brand Through Economic Downturn

Some experts predict that a recession will follow this period of inflation. An economic downturn likely sets our marketing strategy on a different course while consumers react to the market. We will make decisions to weather a temporary economic decline while protecting our long-term brand equity.

If purpose is at the core of your strategy, you’ll need to leverage brand trust when times are tough and stay the course on brand building.

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Consumer behavior during economic downturns

Consumer purchasing patterns depend on spending power and overall confidence in their financial situation. The U.S. Conference Board’s Consumer Confidence Index, a measure of how confident consumers feel about the economy, fell by 4.5 points in June 2022 and sits at the lowest level since February 2021, when the pandemic was front and center. On the flip side, years of economic growth and recent government stimulus mean that consumers have a bit more money in their pockets than is typical during a downturn.

Consumers tend to stick to their habits when times are uncertain. They may view purchases in frames such as “necessity” or “luxury,” making intentional decisions about how to spend discretionary dollars. A study from the Chronicle of Philanthropy showed that middle-income people donated more than their wealthy counterparts in the last recession, indicating empathy for social causes when making deliberate budgetary decisions.

These behaviors reinforce the value of investing in purpose: Consumers are on the side of doing good in the world.

Navigating uncertainty

While consumers often tighten spending during a downturn, so do marketing teams. Research on how companies fared during the 2008 recession shows that 9% of companies come out of it stronger.

However, a drastic reduction may not be the best action when planning long-term growth. On average, increases in marketing spend during an economic downturn immediately pay off following that downturn.

So how do companies that win post-recession achieve those results? Thriving companies invest in high-impact growth while cutting low-impact expenses. Your organization can use this evidence to prioritize core values while reducing those lower-impact marketing expenses. And attribution is key to uncovering them.

Determining ROI is important during the best of times. It is a critical lifeline during a recession. McKinsey reports that typically 15-20% of marketing budgets do not contribute to ROI. Our job is determining which 15-20% should be eliminated from the marketing mix.

As competitors scale back on consumer advertising, staying the course on high-impact brand building increases your share of voice, making those efforts more impactful. You can use that share of voice, in turn, to continue brand building, as Coca-Cola did with its “2020 Together” campaign, which harnessed the feelings of the moment, user-generated content and purpose to drive brand engagement.

Prioritizing purpose

Chipotle’s “Food with Integrity” tagline is lived daily by prioritizing purpose through food, animals, people and the environment. Purpose is baked into the operations through lofty goals such as purchasing over 35.7 million pounds of food from local farmers, creating gender and racial pay equity for employees and a 91% in-store recycling rate.

Consumers reward Chipotle with enduring loyalty. Its consistency in product, value and purpose is responsible for its remarkable double-digit growth. Even when times are tough, Chipotle stands by its purpose, as evidenced by its impressive commitment to its values in 2020 when a national lockdown significantly impacted dining out.

If your brand has invested in purpose, it’s time to future-proof to protect those values and consumer trust.

Growth protects purpose. Use attribution to determine which marketing activities promote growth and engagement. Show discipline in prioritizing high-impact, short-term strategies like advertising and promotion while relying on the enduring purpose strategy to garner trust. Use this opportunity to learn how to build a lean yet effective marketing investment.

Position for value and values and message accordingly. A McKinsey study indicates that consumers, particularly Gen Z, seek value in the products and services they choose in a recession while also seeking companies that prioritize social issues. So double down on showing value to consumers making informed choices with their dollars while committing to the social issues. Remind consumers that what matters to them also matters to your brand: In times of need, your brand stays true to its purpose and does good in the world.

Economic forces may impact our marketing strategies and consumer behavior in the coming months. Brands that future-proof through high-impact strategies like brand building and putting purpose front and center will fare better when the economy rebounds.

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