Posted by 360 Market Reach ● Aug 16, 2022 9:00:00 AM
Planning is the essential first step to any successful market research project. But when it comes to times of recession, careful and accurate planning can play a pivotal role in a company’s ability to make it through hard economic times.
While some businesses may be cautiously saving money, it’s still possible for businesses to maintain control, confidence, and profit during recessions — you just need the right investment at the right time.
This is why market research is such a powerful asset during a recession. It may sound counterintuitive at first, but companies can truly maximize their profitability during a recession by more thoroughly understanding the changes that a recession causes in their target market.
Here are three reasons why market research is a great idea, especially during a recession.
1. Your Competitors Aren’t Spending
When it comes to decision-making in times of economic hardship, it’s always a challenge to determine what steps to take next.
Sometimes, when companies are brainstorming, stakeholders can arrive at a common question: What are our competitors doing?
But when it comes to a recession, this isn’t always the best question to ask.
Instead, companies can ask: What aren’t our competitors doing?
According to Harvard Business Review, spending on market research dipped for four straight quarters during the Great Recession by May 2009. Larger companies sought to specifically cut research spending by as much as 20%.
This meant that companies throughout the world were clamping down on spending, especially when it came to market research.
In another article published in 2010, HBR discovered that about 9% of businesses didn’t just survive the Great Recession — they thrived. Beating out competitors by more than 10% in sales growth, these were the companies with concerted plans for how to handle a recession and where they would invest.
This included market research.
The companies with a budget for market research were able to perform critical, foundational work that showed them how their audience was reacting to economic hardship —and how that audience could find enough value in a product to still spend, even when money was tight.
But because so many companies slowed their research initiatives in that time, they left the door wide open for the few companies who chose to invest in research instead.
These companies that chose to pursue market research made a bold choice — they decided to do what their competitors weren’t.
For this small group of companies, their options were nearly limitless as their competitors chose to drop their innovation work.
Research-oriented companies could discover how customers have been impacted by recession. They could see which products consumers have started to use and which they’ve stopped using. They could’ve even tested whether brand loyalty was affected by their audience’s financial hardships.
You can discover what kinds of claims will resonate with your target audience. Has price become their primary concern, or can you still leverage claims of sustainability and corporate responsibility to encourage purchases?
And the best part is that it’s truly possible for the company that chooses to keep moving forward during a recession instead of clamping down.
2. You Can Understand the Impact on Your Customers
During recessions, it’s easy to make the assumption that consumers stop spending on products and services that your company offers.
However, as discovered by Chicago Booth Review, whole industries can see growth as others see decline. During the Great Recession, “mid-tier brands” and retail food purchases surged as a variety of others struggled to keep pace.
The most adept companies were able to understand that the recession didn’t make people stop spending but encouraged them to spend elsewhere. It wasn’t necessarily the amount of money that changed — it was the values and concerns of the consumers themselves.
Major events like an economic downturn can cause consumer values to shift in any number of ways, whether that means gravitating toward your brand or drifting away from it.
But it’s not possible to guess what’s happening with your primary audience based on the events that impact them. To truly understand what they’re doing in the present, it’s essential to ask them, collect their responses, and develop insights into their sentiment.
This is the core reason why market research is so valuable during recessions. It lets you hear the voice of your customer so that you can determine where to invest your company’s existing cash for the maximum profit potential.
Without it, you can only guess at what your customers want and — as a result — what will help your business in hard economic times.
3. You Can Commit to Precise Pivots (instead of Sweeping Change)
In theory, the benefits of market research during a recession are the same as the benefits of market research during a period of growth.
But during a recession, you almost definitely have fewer resources with which to work than you have during a period of growth.
This means any pivot in strategy or tactics is a bigger risk. If you don’t earn an ROI on a certain initiative, then you can’t be sure that another initiative will pick up the slack.
With market research, you can identify the precise area of a business that needs to pivot and — more importantly — what change(s) to make.
Unlike a blind guess, you can make these decisions with a stronger degree of confidence because you have the research to show that it’s a viable idea.
That confidence extends to both the part of your business that you pivot and the change that you introduce.
Fortunately, there are agencies and tools that exist for this exact purpose. One is 360IDEAvate, a proprietary process from 360 Market Reach that engages consumers and influencers to validate product ideas.
With it, you can cruise through an enormous list of preliminary product ideas you have to see which ones are smart to pursue now, in the future, or not at all.
While your competitors spend months talking about cutbacks and layoffs, you can charge to the forefront of your industry by releasing new products that have a maximized chance to succeed based on real consumer and influencer feedback.
As a result, tools like 360IDEAvate are some of the most intelligent and cost-effective investments a company can make — even when the rest of the business world is making cutbacks.
Regardless of the specific agency or tool with which you partner, market research arms you with the ability to make sound decisions with predictable results during a time of economic uncertainty.
That alone is valuable for any business, especially during recession.
Understand the Right Market Research Run by an Expert
At 360 Market Reach, we understand that every dollar becomes precious whenever a recession strikes.
We also know that companies don’t want to sacrifice quality just to make market research more affordable. Our elite team of researchers combine both qualitative and quantitative research methods to discover what’s happening in your industry, what changes may be occurring, and how your business may be able to act next.
Schedule time with our team to discuss how custom market research can guide your decision path forward.
Topics: Market Research