The 00s have not been easy on businesses. The 2009 and 2020 recessions left some of the largest (and seemingly stablest) companies in the dust. And those downturns were so destructive that they made the dot-com bubble and Brexit seem like blips on the radar.
And the fun isn’t over yet. Over 90% of CEOs are convinced that the next recession is looming, and fears of a downturn are already sparking mass layoffs.
If there’s anything good that’s come from the current millennium’s economic roller coaster, it’s that we’ve gained valuable data on how companies prepare for and respond to recessions.
Research on 2009’s Great Recession revealed that, predictably, about 1 in 7 public companies bites the dust during a recession (by going bankrupt, going private, or being acquired). However, about 1 in 10 companies actually flourish!
Fresh data from the 2020 downturn has painted an even clearer picture of how some companies grab recessions by the horns and thrive in times of instability.
We took a deep dive into three major brands’ success stories to better understand how to navigate a recession. We’ve highlighted their recession-proofing tactics for you below along with advice on how your business can weather the coming storm.
Case Studies: How Starbucks, P&G, and Toyota Turn Economic Storms into Lightning in a Bottle
Starbucks, Procter & Gamble, and Toyota came out of the past two recessions better off than before. We now know that these brands employed some of the same recession-proofing strategies despite being in very different industries.
Starbucks
Despite the closure of nearly 900 locations at the beginning of the 2009 financial crisis, the world-renowned coffee chain bounced back and thrived during both major recessions. There are several key factors that contributed to this success.
- Starbucks focused on innovation and diversification. For example, during the 2009 financial crisis, Starbucks introduced new loyalty programs and mobile payment options, which helped to drive customer engagement and sales.
- Instead of laying off baristas, Starbucks invested in its employees during both recessions. The company continued to provide generous benefits and perks, such as healthcare coverage and stock options, which helped to retain top talent and maintain a strong company culture.
- Starbucks took advantage of the recession to expand its market share. It continued to open new locations abroad (especially in China) at an astonishing rate of about 1 new location per day. This step in particular took precise localization and international marketing efforts.
Procter & Gamble
Procter & Gamble's ability to prosper during two major recessions can be attributed to a combination of innovation, marketing investment, operational efficiency, and market expansion.
Lucky for P&G, its many cleaning products helped sales soar during the pandemic. But in 2009, the company’s future was less than rosy. By the end of the year, sales had declined by 3%. P&G decided to implement an aggressive innovation strategy, and by 2010, it had recovered its losses and set the stage for even greater growth.
- P&G focused on innovation and product diversification. The company introduced new products during the 2009 financial crisis such as the Tide Pods laundry detergent, which helped drive sales and revenue growth.
- P&G invested in marketing and advertising. During both recessions, the company continued to invest in brand-building and advertising campaigns to maintain its market position and drive customer loyalty.
- P&G invested heavily in expanding into emerging markets such as Brazil and India. Coupled with innovative product offerings like its line of “basico” (basic) products in Brazil, demand for P&G’s brands soon outpaced supply internationally. Again, much like Starbucks, this step required an efficient localization and international marketing strategy.
Toyota
Toyota is known for being one of the most resilient companies in the world, and a master of recession-proofing. It managed to weather the Great Recession without laying off a single U.S. manufacturing team member, and it has reported record profits during the pandemic despite supply chain issues that had crippled automobile manufacturing.
- During the 2009 crisis, Toyota successfully anticipated demand for smaller, more fuel-efficient vehicles. It invested in research and development and continued to innovate with hybrid and fuel-efficient vehicles like the Prius, Etios, and Yaris brands.
- Toyota expanded its global reach into Latin America, Asia, and the Middle East during both recessions. This expansion helped to mitigate the impact of economic downturns in any one region and diversify revenue streams.
- Toyota reimagined its operating efficiency during the Great Recession by implementing “just-in-time” inventory management and optimizing shipping routes. These lean production methods continued to benefit the company during the pandemic recession by reducing the cost of nearly all operations.
Lessons Learned: How to Recession-proof Your Company
The brands above are among the largest companies in the world, but their recession-proofing strategies can be applied to businesses of any size.
The following are the most important steps you can take to prepare your business ahead of potential recessions:
Don’t Drop Global Marketing
Many businesses cut marketing efforts during a recession as they seek to trim operating expenses. During the recession in 2009, ad spending in the US dropped by 13%. While cutting marketing costs may seem like a smart move to shore up cash, it’s almost always a bad idea.
A reduction in marketing reduces brand recognition and awareness, which will only further erode sales as a recession drags on. This can result in a snowball effect of slowdown and decline.
Businesses with agile marketing departments are able to increase their impact at a lower cost during a recession. Due to declines in ad spending across the board, it’s often cheaper to advertise during a recession. And, there is less competition for consumer attention. This means that businesses that continue to market themselves effectively have a greater chance of standing out and being remembered when the economy eventually recovers.
This is exactly what P&G did in both 2009 and 2020. The company understood that a recession presented opportunities to gain market share from weaker competitors who may have reduced their advertising spend. By increasing its ad spend, P&G was able to gain a larger share of voice in the marketplace, and eventually, won a larger market share.
The key, especially in the American market, is to produce marketing materials that cut through the crowd and resonate with the US’ diverse internal audience on a deeper level.
Look Internationally
All of the businesses we researched continued to invest heavily in emerging markets such as China, Latin America, and India even as their core markets suffered.
While entering new markets is not without risk, it also mitigates risk by reducing reliance on any one market. By expanding into new geographic regions, businesses can tap into new customer bases and spread their risk across multiple markets.
In today’s business world, expanding internationally during a recession is much simpler than most business owners imagine. For businesses offering products and services online, expansion may be as simple as investing in localization services and marketing translation and updating your payment gateway for international transactions.
Investing in website localization and international SEO can open the doors to massive new markets in a few weeks (and at a low cost).
Invest in New Technology
Customer needs change quickly during a recession. Agile companies can meet those needs by developing new products and technology. For example, P&G’s “basics” line allowed customers to engage with a trusted brand (Tide) at a lower price.
And Toyota began to produce more fuel-efficient vehicles as customers became more frugal.
R&D shouldn’t be limited to just product development, though. New tech can also help companies improve their operational efficiency, reduce costs, and boost productivity. During production lulls, employees at individual Toyota plants made minor upgrades to their technology such as improving certain manufacturing techniques and switching to energy-efficient lighting. In the end, these changes helped save one US plant over $1 million per year.
Invest in Your Employees
Brands like Starbucks and Toyota maintained most of their staff during both major recessions. Employee satisfaction and well-being are a big part of the company culture at both brands, and maintaining company culture is critical during a recession.
Starbucks continued to provide stock options and healthcare coverage to employees during each recession. This had an ancillary effect of improving the brand’s image as a company that cares. Toyota continued to pay its employees even when there were no cars to manufacture. Instead, it invested in training, improving problem-solving skills, and refining standardized work. It even offered employees paid time off to volunteer in their communities. This resulted in improved productivity in the long term.
Investing in your staff also builds loyalty and improves retention, which can help you bounce back quickly after a recession. The airline industry in the US did the opposite of this when they laid off tens of thousands of staff during the pandemic. As a result, labor shortages continue to plague the industry in 2023.
Key Takeaway: Don't "Wait and See"
The economic downturns of the past two decades have taught us many lessons on how to recession-proof a company with a moderate degree of confidence.
But if there’s one overarching lesson, it’s this: companies that adapt quickly to change and take risks are much more likely to succeed during a recession than brands that take a more conservative approach.
Agility is necessary when customer behavior and market conditions are in constant flux. This doesn’t mean you should take massive risks, like betting your entire marketing budget on influencer marketing (for example). What it means is keeping numerous avenues open for expansion, international marketing, R&D, optimizing operational efficiency, and managing employee relations.
Now, before the next recession officially begins, is the time to develop these avenues. With a bit of planning and creativity, you’ll be prepared to pivot when a recession rears its head.
Where Language Solutions Can Play Their Part
At Wolfestone Group, we specialize in language solutions for businesses. From localization strategies to international marketing campaigns, our role is to enhance your communications so you can diversify your operations and succeed during a recession.
Our range of localization services covers translation, localization, transcreation, multilingual SEO, subtitles, voiceovers, corporate language training, and more.
Increasing Reach and Engagement:
Regarding international marketing, the importance of reaching and engaging with audiences in their native language cannot be overstated.
By utilizing language solutions like translation and localization, businesses can create content that is tailored to the specific cultural and linguistic nuances of their target markets. This can help to improve engagement rates, build trust, and ultimately lead to increased brand awareness and sales.
Of course, this concept also remains true when marketing in the US’ diverse linguistic landscape. For example, US Latino consumers represent a $1 trillion market, with their purchasing power also increasing at an amazing rate.
Building Trust and Credibility:
For businesses looking to expand and diversify in new or emerging markets, building trust and credibility with local consumers is crucial. By investing in high-quality language solutions, brands can ensure that their messaging is clear, accurate, and culturally appropriate, helping to establish themselves as trustworthy and credible sources within their target markets.
To expand on this, services such as document translation and multilingual label compliance, can also help your break down language barriers and get past trading regulations in new regions.
Enhancing Customer Experience:
In today's global marketplace, providing an exceptional customer experience is essential to staying competitive. Language solutions can play a key role in enhancing the customer experience by ensuring that products, services, and communications are tailored to the specific needs and preferences of local audiences.
By offering a seamless and personalized journey to customers across the globe, businesses can improve customer satisfaction and loyalty.
Maximizing ROI:
When it comes to marketing and growth, especially during a recession, maximizing ROI is always top of mind.
By utilizing language solutions to create targeted and culturally relevant content, businesses can increase their chances of success in new markets while minimizing the risk of costly miscommunications or cultural missteps.
This can help to maximize ROI and ensure that organizations are able to achieve their growth goals in a sustainable and profitable way.
How Language Solutions Help Enhance Marketing Content:
Voiceovers: With creative multilingual voiceovers, businesses can create audio content in different languages to promote products or services. This can help to reach a wider audience and make their content more accessible to non-native speakers.
Subtitles: Subtitles are another effective way to add multilingual support to marketing content. They can be used in videos, webinars, and other types of online content to make them more accessible to people who speak different languages.
Subtitles can also be used to translate product descriptions, marketing materials, and other types of written content.
Marketing Translation: From websites and marketing materials to product descriptions and exporting labels, translation is crucial to international trade and business.
By transforming content into different languages, brands can create a more inclusive and welcoming environment for non-native speakers, helping to build trust and establish a stronger connection with customers and clients around the world.
Localization: Localization is the process of adapting content to the cultural and linguistic norms of a specific region or market. This can involve making changes to the content, such as using different colors, images, or phrasing, to make it more appealing and relevant to local audiences.
By localizing content, brands can make it more engaging and appealing to potential customers in different parts of the world!
Want to learn more about how you can diversify your global operations and enhance your international marketing efforts? Contact us today for a free quote.
