After languishing in coronavirus purgatory for the past three months, the U.S. economy is coming back to life. All fifty U.S. states have now begun the process of reopening their economies, and there are early signs that economic activity is beginning to pick up.
Data from Apple indicates that people are beginning to move around again, and the volume of debit and credit card transactions has been increasing for the past several weeks. Even the beleaguered air travel industry is showing early signs of recovery. On May 22nd, TSA screened 348,673 passengers, up from the low 87,534 passengers on April 14th.
The Economy - First Contraction, Then Growth
Most economists are still predicting that the U.S. economy will contract significantly in the second quarter of this year. For example, the Congressional Budget Office recently estimated that second quarter real GDP will shrink by 37.7% on an annualized basis.
Most economists also believe, however, that economic growth will return in the second half of 2020. The CBO is forecasting that real GDP will grow by 21.5% in the third quarter on an annualized basis, and by 10.4% in the fourth quarter on an annualized basis.
The Pandemic Impact on Marketing
The COVID-19 pandemic has been wreaking havoc on marketing activities for the past several weeks. Numerous surveys have shown that many marketers took dramatic actions in response to the economic lockdowns and the resulting collapse in revenues. For example:
- Eighty-nine percent of senior marketers said they had deferred marketing campaigns. (World Federation of Advertisers)
- Ninety percent of surveyed marketers said their budget commitments had been delayed or were under review. (Econsultancy and Marketing Week)
- Forty-two percent of surveyed advertisers said they had stopped all new advertising until later in the year. (Advertiser Perceptions)
Time for a Marketing "Reset"
As we enter the last month of the second quarter, the task now facing marketing leaders is to develop a marketing plan for the second half of 2020. This is a challenging task for two reasons.
First, there is still a huge amount of uncertainty about what the economy will be like in the second half of the year. While most economists believe that the economy will begin growing again in the third quarter, there is little agreement about the shape and pace of the economic recovery. In an earlier post, I discussed how marketing leaders can use scenario planning to address this uncertainty.
Marketing planning for the second half of 2020 is also challenging because it's likely that customer needs and behaviors have changed as a result of the pandemic. Many customers will be dealing with the same issues that your company is facing - unpredictable revenues, budgetary constraints, etc. A go-to-market strategy that was working well before the pandemic may not be nearly as effective over the next few months. Therefore, it may be necessary to "reset" your marketing strategy for the balance of 2020.
Under these circumstances, the first step in your planning process should be an assessment of the core attributes of your company's go-to-market strategy. Start by asking yourself a series of questions about how your customers may have changed:
- Have the needs of our potential buyers - existing customers and prospects - changed? If so, how?
- Have the spending patterns of our potential buyers changed? If so, how?
- Have the buying processes used by our potential buyers changed? If so, how?
- Have the research, learning, and communication preferences of our potential buyers changed? If so, how?
Once you have answered these customer-related questions, you should assess how those answers should affect your business and marketing strategy and tactics. Again, ask yourself a series of questions:
- Are our current value propositions still compelling?
- Are the configurations of our products and services still appealing to potential buyers?
- Has our competitive landscape changed? Have any of our traditional competitors become stronger or weaker during the pandemic? Are we facing new competitors?
- Do the marketing methods and channels we were using pre-pandemic still make sense?
- Is our existing go-to-market model still valid?
Many marketing thought leaders are now arguing that the COVID-19 pandemic will result in substantial, long-lasting changes in the behaviors and preferences of both consumers and business buyers. Time will tell whether this view is accurate. There is little doubt, however, that economic realities will require many companies to "reset" their approach to marketing for the balance of 2020.
Image courtesy of Ged Carroll via Flickr CC.
Image courtesy of Ged Carroll via Flickr CC.