The Ultimate Guide To Maintaining Market Share In A Recession
By Senior Account Executive, Abby Simpson
In times of economic uncertainty brands face the daunting challenge of maintaining and growing their market share in unfavourable circumstances; consumer interest becomes much harder to perceive, and spending habits can change dramatically. However, while recessions can be intimidating, they also present unique opportunities for smart brands to stand out from the competition and secure a larger piece of the ‘market pie’.
What is market share and why is it important?
Market share is an important indicator for businesses to measure success and competitiveness. It refers to the company’s portion of overall sales in its dedicated sector. For example, if there are 100,000 units sold in Company X’s industry and they are responsible for 20,000 of those units, they have a 20% share in that market.
It’s an important metric to keep track of because it can provide a high-level view of an organisation’s performance and track that performance against key competitors. Additionally, it allows businesses to gain the ability to compare market share over time, assess success, and adjust their marketing and sales strategy if they begin to lose it.
In a recession, sales drop and market shares are much less defined and set in stone than they are during economic prosperity. Therefore, while many businesses will struggle during an economic downturn, recessions also open up opportunities for well-positioned businesses to greatly increase their market share. For example, during the 2008 financial crisis, Starbucks went from a 28% drop in profits at the beginning of the year, to the largest coffee retailer with a 40% market share in 2019.
Place customer-centricity at the helm
One of the things Starbucks got right from 2008 onwards was thinking in a customer-centric way. The brand focused on building strong relationships with its customers and embracing new technologies, like mobile apps, that allowed customers to gain rewards and build brand loyalty. Smart brands actively listen to their customers’ needs; for example, employing tactics such as social listening (or social media listening). This refers to monitoring social media platforms for feedback from customers on their company, product or service. By identifying and assessing customers’ preferences and pain points, businesses can then tailor their service accordingly.
While many organisations may not have access to the funds that can allow for focused customer research during recessions, being strategic during downturn periods by digging into customer feedback and surveys will help to gain valuable insights that’ll inform succinct recession strategies.
Lay out your value proposition and differentiate it from key competitors
In a recession, it isn’t just businesses that become more discerning about their spending habits and look to save wherever possible – consumers do as well. Customers begin taking fewer holidays, opting for cheaper goods and services, and dining out less. In this environment, it can very quickly become a survival of the fittest business.
During these times, smart brands are able to articulate a strong value proposition, that convincingly lays out why a customer should pick their product or service and demonstrates what the company has to offer that no other competitor has.
For example, Nike (who are a great example of a business that repeatedly hits the mark with its messaging and marketing) ran a campaign during the COVID-19 pandemic that both captivated the public and promoted its brand. Nike is known for its emotional messaging and in April 2020, the company released its new ‘Play for the World’ campaign championing the phrase: “If you ever dreamed of playing for millions around the world, now is your chance.” Nike also subsequently released images of people working out wherever they could – kitchens, bedrooms, gardens etc.
The campaign was heartfelt, relatable, and promoted a great message. But, if that wasn’t enough, Nike also then went on to put their money where their mouth was and made their subscription Nike Training Club app available for free, allowing people all around the world to access tips and advice for free, from their own home.
Adopt an agile approach to marketing and communication
Agility is paramount in a successful marketing strategy, especially during an economic downturn. Again, let’s take Nike’s ‘Play for the World’ campaign. They understood that consumer behaviour had been changed drastically and as such they promoted a completely new way to work out. Gone were the adverts depicting team sports and, while they did utilise celebrity endorsement, they also heavily featured normal people, in their homes, working out how they best could. It couldn’t have been more different to Nike’s usual advertising, but it was exactly what was needed.
Smart brands don’t stay static, they adapt to changing situations, trends and consumer sentiments. In 2019, Nike’s market share stood at approximately 27.4%, but post-pandemic it’s being reported the company’s share now stands at 38.23%.
Invest in innovation and product evolution
No one has an easy time during a recession. However, they can also act as a catalyst for innovation and smart brands recognise this opportunity to evolve their products or services. A key component to this evolution is detailed research and development to meet changing consumer demands and leverage technology to enhance offerings. Airbnb is now a household name, but before the company entered the market it was facing an uphill battle. Prior to going to market, Airbnb used detailed analytics to analyse and identify competitors and launched a campaign that focused heavily on social marketing, display and search ads, and partnerships.
Research and strategic partnerships can be a powerful way for brands to expand their reach, tap into new customer segments, enhance market presence and foster growth. This is only enhanced through an effective PR strategy. A good PR campaign builds on this market presence by cultivating and maintaining excellent media relationships and, crucially, promoting a positive brand image.
Recessions may present challenges, but they also provide an opportunity for smart brands to demonstrate their resilience and creativity. By prioritising customer-centricity, differentiation, agility, innovation, strategic partnerships and empathetic brand storytelling, brands can win market share and emerge stronger from economic downturns.