Coronavirus: Mitigating the longer-term Sales Impact
There’s a lot of coverage about Coronavirus (COVID-19) in the media at the moment. At Carfeine, our priority is the health and safety of our customers and employees. Our team are now working remotely and remain available to help. We are actively monitoring the advice from the appropriate sources for accurate and up-to-date information.
As the situation continues to develop, there are still several things we don’t know, and this has created a range of responses ranging from uncertainty to panic. This uncertainty has driven people in markets across the globe to stock up on essentials such as toilet paper; companies are encouraging employees to work from home; schools are being shut down; and sporting events, concerts, festivals, and even movie premieres are being canceled.
Arguably it’s been a short-term boon for manufacturers of certain consumer products and terrible for other industries. But what about industries that are more considered purchases like a new car?
With more people staying home and global supply chains being shut down, the first reaction might suggest that car sales may struggle during the lockdown and the period immediately afterwards.
However, the answer is likely more complex than that.
Previous periods of market downturn, such as the Global Financial Crisis of 2007-08, were caused by a series of issues sustained over a longer period of time. The outcome of COVID-19 may mirror some of the things we’ve seen in the past like people starting to reevaluate purchases until they feel more secure in the future… but the current situation is unique in the sense that the cause is largely singular and relatively sudden; and with people actively encouraged to create social distance, we expect that people will be spending more time at home… and online.
In 2020, almost 90% of the US population and 96.8% of the Canadian population will have access to the internet.
So, is there an opportunity for your marketing amidst the current situation?
We expect that social distancing activities will lead to even more consumption of TV and Online media as a key source of entertainment during the current period. With fewer choices of recreational activities, consumers become a more captive audience at home that brands can increase their “share of mind” with.
There are studies that date as far back to the 1920’s that show companies that continue to either maintain or increase their marketing and advertising during a weaker economy, significantly increase sales and build market share afterwards.
It may seem counter intuitive to not cut back on marketing expenses but Harvard Business Review, counters that failing to support brands can “jeopardize performance over the long term.” Maintaining your marketing budget will be as important as recognizing the changing consumer mindset at the moment and adapting your messaging accordingly. Using short-term incentives to stimulate sales is just one tactic but there may also be opportunities to highlight other features like home delivery in your marketing messaging.
Forbes sums it up as those brands that maintain their ad budgets and / or change their messaging can get a long-lasting boost in sales and market share.