Sent: 17-03-2009 10:26:01
In this issue:
Return to full article list
HomeFree weekly newsletterSelf Managed Super Fund ArticlesContact usLogin
The Current Climate, a Threat or an Opportunity -- Part 2
Last time I discussed the notion of maintaining advertising and/or marketing budgets during a downturn such as we are witnessing today. I explained that there is excellent empirical evidence to indicate that this is a very sound business strategy that invariably pays dividends once the economy recovers. I also gave the example of Hyundai in the US and how it has taken a lead by modifying its advertising to reflect the times and the concerns of potential customers.
As the authors of the Wharton article note, companies that do maintain their advertising during a downturn or even increase their promotional activities, it is not enough to merely emphasise price. Such an approach may work for a discount shop that already has a strategy based on price. In the US Wal-Mart is a large retail outlet (like a very large cheaper Aussie Kmart) that has always used price as a core ingredient of their marketing strategy. But even they have adapted their basic approach and now use the slogan "Save Money. Live Better".
For companies that do not normally focus on price as a core strategy, the key is to craft messages that reflect the times and describe how their product or service benefits the consumer. As the chief executive of a major advertising firm notes, companies should not dwell on the downturn as that is likely to scare consumers away from their product (not exactly a great marketing approach). However, as she says, some products, such as financial services, require a more straight forward approach. Needless to say it would not be an intelligent approach to merely use the same marketing strategy today that was in place a before the downturn. However, many consumers have probably had enough of negative news and are likely to be receptive to a message that is a little more upbeat. As the advertising CEO points out "If you can put a positive spin on how you can genuinely help without invoking doom and gloom, I think that's going to be more compelling."
One of the marketing professors from Wharton comments that when advertising it is important to be extremely careful about the terminology you use. The downturn has affected people in many ways but particularly financially and as I have stated on many occasions, anything to do with money stirs up all sorts of emotions. As Williams (the marketing professor) points out "Along with this economic downturn comes a lot of emotional response, such as anxiety. It is characterized by a sense that you lack control that you don't know what's coming and you are at the whim of circumstance. To the extent that advertisers feel their clients or consumers are experiencing anxiety, ads should try to empower consumers and help them think of ways to be in control in a world where they feel out of control."
Another area to emphasise, especially in an economic downturn, is where you are providing value. A marketing campaign that merely justifies the price being charged may satisfy the needs of the company but does little (or nothing) to satisfy the needs of the customer. It is a typical company looking out approach rather than the customer looking in perspective (more about that in a forthcoming series article). The real key is to think about what is important to the potential customer. Value for money will be a high priority, particular when times are tough.
Increased negative advertising/marketing is usually symptomatic in a downturn. I must admit I have seen plenty of evidence of that lately. As one of the Wharton folk comments, marketing campaigns tend to become more aggressive at such times and often companies can respond to each other in a deadly cycle. The problem is that this can backfire badly. By focusing on your competitor and by definition illustrating their faults/shortcomings, you are highlighting negative aspects of the product/service. They will probably respond by highlighting your weaknesses. The resultant image portrayed to the customer is unlikely to be wholesome and they are likely to recall both the good and bad aspects of the campaigns. As the Wharton guru notes, even in a downturn, if you want to create loyal customers, you don't want to be overly competitive. You want to highlight what you do best and be sensitive to the needs of your customers rather than bashing the competition.
Another idea is to change the mix of media used in marketing your business. Change how much you allocate to traditional media and digital or what ever else you use. It does not require huge amounts of money to draw attention to what you do in such times. For example, banners, street signs or direct mailing might merit some attention. Remember when the good times roll again, it is easy to pay a premium for more expensive established media.
In sum, don't stop marketing, just get clever about it and use the current economic climate as an opportunity to make yourself stand out from the crowd.
For those that want to read the original article it is called "When the Going Gets Tough, the Tough Don't Skimp on Their Ad Budgets" and can be found at http://knowledge.wharton.upenn.edu/article.cfm?articleid=2101
This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.