The impact of COVID-19 on marketing policies

Updated: Aug 30, 2021

As the inevitable impacts of Covid-19, companies are adapting their goals and so the policies need to be changed respectively. In this section, we will get knowledge of some suggestions for modifying marketing policies in terms of assortment, private labels, price and price promotion, communication.

1. Assortment

Many companies are using Covid-19 crisis to critically evaluate the size (breadth and depth) of their range to increase profitability. A study in 2006 shows that offering a substantial number of products does not contribute to profitability. The authors assessed the short-term and long-term effects of a 25% reduction in items on category sales. They found that a major range reduction may lead to substantial short-term category sales but has a weakly negative impact on long-term sales. Hence, it maybe very useful to reconsider the range of products that companies are offering. Covid-19 indicates the need for critically evaluating the supply of products in the assortment. This is also caused by possible changes in how people reconsider their use of products and services in the post Covid-19 period of time. For example, are people still wearing costumes and suits cause now are they so much accustomed to wearing casual clothes.

2. Private labels

The share taken by private companies increases during downturns at the expense of national brands and shrinks when the economy is flourishing. Even after a downturn, the share taken by branded product is generally lower than it was before the downturn. As such, it is necessary to invest in branded products.

3. Price and price promotions

Price must be used with great care as a marketing instrument in this crisis. The price sensitivity of consumers increases during a contraction. The extent to which price sensitivity increases is dependent on various factors. How unique is the product? How important is the product to customers? Does company focus on a mass market or a niche one. Brands that focus on a mass market and that are less unique are more sensitive to price compared to unique brands that focus on niches. Now more than ever, it is all about creating products that offer consumers value of money. Consumers will be displeased is they have to pay more without a concurrent increase in products/ services quality.

Temporary discount offers can be used to respond to price sensitivity. At the same time, price promotion can lead to a price war and a lower reference price ( the price that consumers expect to pay for a product). Companies that want to reduce the risks of such effects may make the use of other types of promotion other than price promotion, for example by offering gifts and possibly additional services.

4. Communication

During the crisis, companies tend to reduce spending on communication/advertising. Advertising expenditure is considerably more sensitive to business fluctuations then the economy as a whole. Companies that maintain communication spending during a contraction can win a greater ‘share of voice’ in the market if competitors communicate less (or not at all) during the same period.

Supporting brands with communication during a period of contraction shows that:

- In such cases, consumers are less likely to switch from national brands to private labels;

- Following a period of contraction, these brands can regain the market position they had before the contraction/crisis more rapidly and at a lower cost

The content of communication must be adapted to the current situation. This specific crisis also demands the use of different media: less outdoor advertising, more online, possibly more television and radio advertising. E-mails are more effective than messages on social media. Some managers use highly target unique direct mailing (direct mailing marketing: the activity of marketing products and services by advertising through the mail) to reach their customers.

Companies that feel the need to reduce their advertising costs can make greater use of ‘contact advertising’ (blogs, vlogs, articles, press releases, newsletters, updating the website, writing books). Communications in which a brand demonstrates concern for victims of the coronavirus, or responds to the regulations imposed to tackle the crisis, will only have a positive effect on the brand image if they are authentic and connect with the brand identity.

By: VSHR Digital Media

Source: 1. NCBI, November 2020

2. Cambridge dictionary

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