Using “Recession Psychology” to Your Business Advantage

Notice any changes in the marketing you’re seeing these days?

There’s a good reason behind the shift. The way people think and react changes when we’re in a recession – so much so that there’s a term for it: “recession psychology.”

What is recession psychology?

For obvious reasons, recession takes a psychological toll on people. Financial strain, unemployment and chronic uncertainty impact the way consumers think, make decisions and ultimately buy (or don’t buy) products and services.

As a result, traditional market segmentation (i.e., by age, income or other demographics) may be less relevant during downturns than a psychological segmentation that considers consumers’ emotional reactions to the economy:

  • Slam-on-the-brakes: This type of consumer reduces all types of spending by eliminating, postponing, decreasing or substituting purchases.
  • Pained-but-patient: These individuals are optimistic about the long-term, but less confident about the near term, so they also economize (less aggressively) in all areas.
  • Comfortably well-off: These are people who feel secure about their ability to ride out bumps in the economy and consume at near-prerecession levels.
  • Live-for-today: This group carries on as usual and remains largely unconcerned about savings.

How can you use recession psychology to market effectively in this downturn?

First, here’s what you shouldn’t do: Use fear or panic as a marketing tactic. Trying to capitalize on a crisis by preying on customers’ anxieties will only damage your brand.

So skip the hyperbole and fear-mongering. Instead, consider how each of the types of buyers above views your products or services in our current economy:

  • Essential: Something they cannot do without.
  • Indulgences: Desirable items or services whose immediate purchase is considered justifiable.
  • Postponables: Needed or desired products or services whose purchase can reasonably be put off.
  • Expendables: Unnecessary or unjustifiable items or services.


  • Consider what impact the recession will have on your business. Which category (or categories) will your ideal customers and prospects fall into during this recession? How will they view your products/services? The answers to these questions will determine how you can use recession psychology to your advantage.
  • Make adjustments where warranted. Depending on your needs, you may want to focus your marketing on: becoming more essential; offering lower-cost versions of indulgences; increasing the urgency of postponables; and showing how expendables are actually necessities.
  • Hit the right tone in your messaging. In this earlier post, we shared ways to adjust the tone of your communications during tough times:
    • Educate and inform. Be the voice of reason, using news-centric content to communicate policy changes, closures, new offerings, etc.
    • Be humble. If your company is thriving right now, be sensitive to the fact that many people are out of work.
    • Be positive, but realistic. Things will return to a new normal, though, and your campaigns should include elements of optimism and hope.

How can BARQAR help?

Whether you need cost-effective marketing solutions to get through this recession or just want a little friendly advice, please give us a call.

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