John Quelch, Marketing Professor at Harvard Business School discussed how to market during a recession in his HBS Working Knowledge blog. He generally takes the point of view that this is a time to strengthen your advantage rather than cut back as it pays tremendous dividends in market share, customer and employee loyalty when the market turns around.
Amongst his points, the following reasonated with me:
Research your customer: since customers will be redefining their value equation, you need to learn more about which features are considered must-haves and the price elasticity curve.
Maintain marketing spending: this is a time where an advertiser can greater value for their marketing dollar. Customers are looking for reassurance during this time and the company that markets will appear even more solid before. In industries where brand value is high, this is a time to increase durable market share. If marketing spend must be cut, substitute less expensive forms of marketing - radio vs. TV, direct marketing over pure branding.
Adjust pricing tactics: rather than cutting list prices which create a new threshold that is difficult to raise during an upturn have more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers, and price smaller pack sizes more aggressively.
Emphasize core values: rather than cutting back on employees or services, this is a time to focus more energy on existing customers and retaining the best employees. This buys incredible loyalty for when the economy turns around.
Quelch also discussed finding ways to add the distribution channel, adjusting product portfolios and focusing on market shares. Most of these are strategies when you have a strong cash balances and favorable profit margins. It would be interesting to hear what he would cut if it was necessary, but I suspect it has a lot of do with researching the products value proposition and adjusting accordingly.