Content Summary

Learn From History: How Winning Brands Kept Winning During a Recession

Netflix, Starbucks, Amazon, and Airbnb have thrived during economic downturns, history tells us that downturns are not just about survival but can also be growth opportunities in certain areas of your strategy. On today's podcast, we’ll learn from these companies and what history tells us about how to adapt our strategies alongside changing consumer behaviours. We’ll look at becoming customer-centric, and flexible and focusing on creating unique value propositions while demonstrating the importance of adaptability and innovation with your current marketing strategy. And by adapting your strategy through understanding and meeting consumer needs during tough times, you could emerge stronger when the economy recovers.
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Listen to the podcast or read the edited, short transcript below:

 

“I was asked what I thought about the recession. I thought about it and decided not to take part.” 

These are the famous words of Sam Walton, the founder of Walmart, who instinctively knew what every successful business owner and leader will know and understand – that market booms and market recessions are an inevitable part of life and running a business. 

It can all look like doom and gloom if we look back into the history books, from the stock market crash of 1929, which then kicked off the Great Depression to the aftermath of World War II, there was again financial turbulence of the 1980s, the bursting of the dot-com bubble in 2000, and the 2008 recession, one constant remain — economic storms are inevitable. 

But the one thing that history will tell us marketers is that this can be a time to not only survive but actually thrive. 

It can be a critical time for us to dissect the maneuvers, tactics, and strategies employed by brands that not only weathered previous storms, but actually came out stronger.

So let’s take a look back and see what we can learn that history is telling us about these difficult economic times. How did businesses and brands work through the 2008 financial crisis and what can we learn from for our businesses today?

 

How Netflix Adapted

We’ve all seen the stories of how Netflix obliterated Blockbuster in the States, and in the 2008 recession, Netflix demonstrated a masterclass in meeting consumer needs. 

At the time, they knew that wallets were being tightened, so they reviewed the value they offered their customers.

Netflix thrived by offering affordable home entertainment but adding to the value that they offered customers by building a new streaming service to sit alongside their existing DVD rental business – so they were able to add more services, more value for their customers – all while being priced more economically than competitors. 

So essentially, by meeting their customers where they were, they were able to see earnings rise by 24%, and subscriptions hit 9 million in 2009.

 

How Starbucks Adapted

Starbucks also faced a potential meltdown. 

At the time, consumers deemed it too pricey compared to rivals like McDonald’s, who at the time was really upping their coffee game. They were starting to offer lower-priced, fast coffee for their customers. 

So Starbucks took a tactic of going back and focusing on their customers and the customer experience. 

“My Starbucks Idea” was an online space that was built where coffee lovers could share their visions for the ultimate Starbucks experience.

And that turned out to be an ingenious move, as they doubled down on focusing on their core customer while also turning their cafes into cozy community hubs, which in turn, brewed a potent mix of brand loyalty and consumer engagement.

They also flipped their marketing strategy at the time and looked at ways on how they could become a brand seen as”pricey” to a brand that was seen more as “trendy and worth it.” 

By focusing on customer experience and retention, they were able to see some solid growth.

 

How Amazon Adapted

How about Amazon? They tackled it with innovation.

The Amazon Kindle, launched in late 2007, became an overnight sensation, with the first edition selling out in 5.5 hours! 

By Christmas 2009, e-books started to eclipse print sales for the first time.

So Amazon’s recipe for recession resilience was a relentless drive for innovation, diversification, and connecting with consumer needs.

 

How AirBNB Adapted

We can’t look back in history without looking at AirBNB – which made waves during the 2008 recession. 

The company itself was born during the 2008 recession and with a strong focus on the solid pain point of the high cost of accommodation.

AirBNB began modestly by offering air mattresses in a loft for $80/night during a San Francisco conference. They had a core market, the conference attendees and a value-based offer that solved a valid paint point – expensive beds.

By 2012, Airbnb was valued at $2.5 billion

 

So What Can We Learn?

From each of these brands above, what can we learn from and use in our businesses now? 

How can we adapt our marketing strategies? Our value propositions and our focus – even while facing tighter budgets? 

 

Customer-Centric Approach

Adopting a customer-centric marketing approach during tough economic times should be a big focus.

Ensure you truly understand your customer, their pain points or their desires. What they value, and how the economic crunch may be affecting THEM right now.

In the 2008 recession, Starbucks created “My Starbucks Idea,”. It was basically a suggestion box – but it was also so much more than that. 

It gave existing and new customers a voice in shaping the Starbucks experience, when they were facing increased pressure from the recession and the innovations of other businesses like Mcdonald’s.

‘My Starbucks Idea’ blended open innovation, customer co-creation, and community. It was a mix of brand loyalty and consumer engagement – putting the customers first.

They had a clear strategy for who they wanted to target (their existing customers first, then new customer second) and found new innovative ways how to reach them.

Airbnb was founded on the concept of providing an alternative to expensive travel accommodation – again, they saw a gap in the accommodation market, found a particular audience (at the time, people looking for accommodation for one specific conference) and were able to grow a multi-million dollar business from it.

Amazon’s Kindle met the consumer’s evolving preference for digital reading. They understood what their customers wanted, found some specific pain points and created a product that satisfied their customers, even during a time when wallets were thinner.

 

Adaptability

Remaining adaptable during a recession is a key lesson we can learn from past businesses thriving in tough economic times. 

Let’s go back to Starbucks, which went right back to its brand and marketing strategy and shifted its focus back to customers. 

They adapted and took feedback direct from customers and re-found their voice and rebranded themselves from being “pricey” (when compared to competitors like Mcdonald’s) to “trendy and worth it.” 

They adapted and built value for their target consumer. The value was building cozy community hubs instead of a cafe or fast food joints.

During the 2088 recession, they showed a flexible approach in their strategies, which allowed them to adapt their focus and meet where their customers were at that time, and provide value to what their customer’s needs.


Unique Value Proposition

As I studied how these brands reacted to recessions in the past, I found so many similarities between brands that truly focused on their nique value proposition and how it spoke to their core audience. 

Some either focused on reducing the cost to the consumer as their unique value, while some looked at how they increased the perceived value of their product and service.

Knowing your customer and where they are at is key here.

And you also don’t need to purely focus on reducing how much you sell your product of service for, instead focus on building and marketing the best value product, that your core audience can’t ignore.

You can show your adaptability by considering bundling products or services together as a way to increase perceived value.

Add new features to your existing services that offer added value to your target market’s pain points or simply improve and better re-position the existing features that you have now.

Let’s take Netflix for example – they continued to offer affordable home entertainment as their core value proposition, however, changed their value proposition to online streaming at a time when their core business was sending DVD’s via the mail. 

This showed a better value to consumers, who were sick of waiting for a DVD to arrive in the mail.

Community Building and Engagement

Building a community during tougher times is also key.

It’s a theme that’s stuck out as a tactic that was very successful and affordable in past recessions—building a real community and engagement with your brand.

Take Starbucks in the 2008 recession, turned its cafes into community hubs and engaged with customers through its online portal ‘My Starbucks Idea’. 

I know I’ve covered this already – but it’s important.

They learnt about what their core customers wanted and then reflected that back into their marketing strategy to attract MORE customers who share similar to those people..

They built and focused on a retention strategy with the customers that they ALREADY had. 

They fostered those relationships and community,  to build on the customers that already had already retained, and then used what they learnt from those existing customers to generate awareness to find new ones.

 

Key Takeaway

At the end of the day, from past recessions, we can clearly see that the brands that have succeeded are those that have been adaptable, innovative, focused on their customers, providing true value to what their customers need and desire, and building a community of them.

Being able to pivot and align with consumer needs and preferences during challenging times can position a company for success when the economy does eventually recover.

It can be a lot to take in, however building these strategies is what we do best. Focusing on finding your key customers and building your community – so if you need any advice, direction or your strategy adapted – get in touch with me an the team.

 

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