Marketing in an Economic Downturn

Marketing in an Economic Downturn
By: Tony Fannin - President, BE Branded

Category: Marketing and Brand Development

In a down or tight economy the most rational thing for a business to do is conserve cash, cut costs, and invest less. Just hang on tight and hope your customers remember you and how wonderful you've been to them in the past. It happens time and again that I see the first thing to go is marketing budgets. Many believe that the best time to market is during the boom times.

The counterintuitive thing to do, and the most strategic, is to market as aggressive as you would if the economy is doing well. Here are several points why:

1. The chatter is down – what I mean by that is "everyone" is pulling back their marketing dollar, including your competitors. This opens up opportunity to be one of the minority of voices heard in the market space or your market niche.

2. The cost goes down – many media vehicles, including web, are ready to make deals. With the same marketing dollar you'll be able to garner more value from your investment because of simple supply and demand. With more supply, you'll be able to demand greater value.

3. Consumers find refuge in brands – this gets a little tricky because you'll need to have established your brand during the good times. When the economy tightens, research has shown many consumers fall back to brands they are familiar with and trust. Of course, there are always exceptions in various industry categories such as food (price is king here, but brands still dominate. i.e. McDonalds, Spam, Campbell's). But, if you've established your brand when the times are good, you've helped insulate yourself some when times are not so good.

4. You'll be stronger when the economy changes – because you've stayed visible while everyone else went dormant, your brand awareness and value will have given you an established platform to launch from when the economy gets going again. Plus, it will take less because your marketing machine is already in motion and hasn't stopped. Others will have to re-establish their brand and market value from a dead stop which means spending even more money and paying premium rates across the board because their will be less supply and more demand from magazines to web banners and everything in between.

Here are a few examples and comments from other marketers:

P&G, Colgate-Palmolive, Kraft Foods, Kellogg Co.

In a testament to how important advertising has become to their businesses, Procter & Gamble Co., Colgate-Palmolive Co., Kraft Foods and Kellogg Co. all have boosted or at least maintained their marketing budgets, even as they've had to implement cost controls elsewhere. And that trend looks set to continue as these giants are forced to hike prices in response to rising commodities costs – a move that will require them to continue pitching consumers on the merits of their brands.

P&G and Colgate last week reported stronger-than-expected organic sales growth, at least in the U.S., along with strong earnings growth. Both said private-label market shares were flat to down in their categories. The spending hike appears to have helped P&G pull out a surprising 6% sales increase in the U.S. last quarter, more than double the 2%-3% growth in retail sales it tracked in its categories and ahead of its 5% organic sales growth globally."

Bounty paper towels. It may reside in a commodity category where private label has been making big gains, yet Bounty has been gaining share throughout the downturn. Parent Procter & Gamble reported in January that Bounty's U.S. value share grew 1.5 points to more than 44%. The brand has continued to innovate within its premium product line without ignoring its lower-priced Bounty Basics line. Bounty has also maintained a strong marketing presence and honed its value messaging."

Anne Bologna – CEO, Toy

"In the Great Depression, Kellogg continued to market its cereals while rivals cut budgets. Kellogg pulled ahead of Post in sales, a change that has never been reversed. Point is, what you sacrifice now, you pay for later. Every thinking business person knows that, but few have the courage to invest. Be brave. You'll never regret it."

Joe Tripodi, CMO – Coca-Cola Co.

"Don't waste this opportunity to enhance brand love. This is the time to engage people and deliver experiences that excite them in unexpected ways. As an example, we recently introduced a new global marketing campaign around the idea of 'Open Happiness.' We are bringing it to life not only through traditional advertising but through the release of a music single, online experiences, social media, impactful point-of-purchase materials and the integration of the core creative idea into all of our existing properties, like the upcoming Winter Olympics in Vancouver. This is not the time to stop talking with consumers. If you use this opportunity to broaden your dialogue with the people who love your brands, you will come out of this period with a much stronger and deeper relationship with them."

In the end, it's about keeping your value and uniqueness out there, regardless of the conditions. In every downturn, there's opportunity. Being brave, bold, and unwavering in your brand and value your company brings is the only way to take advantage of the situation and not just trying to react to it.