Executives | Marketing

Marketing in a recession: why now is the time for manufacturers to invest

01 September 2022 | By NBS

During an economic downturn, marketing budgets are often the first to be cut as businesses tighten their belts, but is this the best approach to take?

Earlier this year, we released the Construction Manufacturers Marketing Report, which included the views and insights of professionals from over 100 different organizations within the construction industry.

The report highlighted low marketing budgets across the manufacturing industry. More than half of the survey’s respondents told us that their marketing budget is under £100 000, while less than 10% of businesses had set their budget over £1,000,000.

We also found that close to 20% of manufacturers have reduced their marketing budgets in recent years as a response to COVID and other factors causing uncertainty in the industry. With inflation hitting new levels over recent months, even more manufacturers are likely to be thinking about cutting costs.

During an economic downturn, marketing budgets are often the first to be cut as businesses tighten their belts, but is this the best approach to take?

What does the research say?

Back in the 1980s, McGraw-Hill Research conducted analysis of 600 companies over the course of five years to gain insight into the outcomes of the 1981–82 recession on businesses and the influence their marketing activities had. The results showed that, by 1985, the number of sales for the businesses that had continued to actively market their products had risen by 275% more than those that decided to cut back.

A more recent study included a survey of over 150 senior marketing executives, and produced similar findings.

“Firms that have a proactive marketing response in a recession achieve superior business performance even during the recession. – Turning adversity into advantage: Does proactive marketing during a recession pay off?”

The marketing theory supporting these kinds of results is known as ‘Share of Voice’. The idea is that the larger your share of voice, the larger your share of the market should become.

“When marketers cut back on their ad spending, the brand loses its ‘share of mind’ with consumers, with the potential of losing current – and possibly future – sales. An increase in ‘share of voice’ typically leads to in an increase in ‘share of market’. An increase in market share results, with an increase in profits. ”
Forbes

Dr Ana Cruz is a multiple award-winning marketeer with over 20 years’ experience in marketing and in education. She is a marketing consultant and an Associate Professor at CITY College, University of York, Europe Campus. She is also a judge for the UK Construction Marketing Awards and the Global Online Marketing Academic Challenge (GOMAC). She is one of the editors of the book ‘Digital and Social Media Marketing: A Results-Driven Approach’.

When discussing the options for marketers during an economic downturn, Dr Cruz also highlighted the need for businesses to be resolute in the face of uncertainty.

“Unfortunately, in companies where marketing is perceived as a cost, they’ll see marketing as the first expenditure to cut. However, companies that are market-driven usually understand that marketing is a vital investment that generates profits”, she said.

“The research into the impact of cutting marketing expenditure during economic downturns suggests that companies that maintained their marketing expenditure were more likely to survive the downturns and end up in a stronger position up to two years after the recession.”

How can manufacturers make their marketing more effective?

Dr Cruz suggested one of the strategies manufacturers should adopt during a recession is to use digital tools which provide marketers with the analytics and data they need to understand how effective their efforts have been.

“You can measure many aspects digitally – but don’t focus on ‘ego metrics’. Focus on the metrics that matter, like qualified leads and conversions.”
Dr Ana Cruz

"You can also learn from the analytics by using the data to help you understand what is working, what isn’t working and how you can improve accordingly.”

Manufacturers working on a tight budget need to ensure that the channels they’re focussing their resources on are the most effective in terms of delivering optimal results, generating quality leads and ultimately having the biggest impact on return in investment (ROI).

The Construction Manufacturers’ Marketing Report found that only 18% of manufacturers make use of industry-specific channels such as CPD, BIM libraries and project lead services, while more general digital (53%) and traditional (29%) channels were more prevalent among business’s marketing strategies.

Nearly half of the manufacturers surveyed said that their inability to demonstrate ROI is a significant barrier to effectively marketing their business, while a third of respondents see managing their product information as a barrier to effective marketing.

The construction product platform NBS Source provides unique solutions to each of these problems.

Hundreds of thousands of products are specified through NBS every year – meaning that NBS Source gives manufacturers a direct route to specifiers when they’re looking for the best and most suitable products for their projects.

There is an increasing demand for manufacturers to provide detailed, high-quality, and enhanced product data. By listing their products on Source, manufacturers create a unified source of product data – giving specifiers all the information they need to make an informed decision.

NBS Source also provides a range of insights and analytics to manufacturers so that they can monitor how well their products are performing on Source, which makes it easier to report on ROI. ‘Competitor Analysis’ is one of a number of new features coming soon to Source, which will provide information based on specifiers’ behaviour which illustrates how a manufacturer’s products are performing from a project, sector and competitor perspective.

Manufacturers listed on NBS Source can collaborate with specifiers through our cloud-based specification writing platform NBS Chorus. This allows the manufacturer to have full visibility of the specification as it is being written, so that they can provide guidance to the specifier, ensure that the product is being specified correctly and give the product the best possible chance of making it into the build.

“In economic downturns, it is important for companies to be ‘top of mind’ – especially when your target audience is in the decision-making/purchasing stage.”
Dr Ana Cruz

This extremely targeted approach not only helps manufacturers to create awareness of their products but also facilitates lasting working relationships with specifiers in a way that can’t be replicated with other product selection tools.

Other new features coming to Source include the ‘Manufacturer Verified Indicator’ – giving specifiers more confidence in your product data by letting them know when it was last updated – and integration with project lead service Glenigan, which means that you’ll be able to learn more about projects in need of products like yours, or projects that you’ve already been specified for.

For more expert advice on marketing in a recession, check out our recent webinar ‘How to make your budget go further’ and take a look at the rest of our Marketing Masterclass for Manufacturers webinar series here.