Friday, October 10, 2008

Recession and Marketing (Part II)

The following comments was made by a friend on Linkedin, Mr. Paul Syrysko. I found is useful and right from the books of the expert. Sharing with everyone here.

For 2009, most companies will be cutting back to a very basic marketing plan, getting rid of anything they can. In a recession environment, it’s inevitable. Many marketers will feel it’s the last thing that should be cut but try convincing the board of the company and you won’t get very far. The reality is that investments in brand marketing will decline. So what should you do? Be careful of blowing all the budget on price promotions. Innovation is the key.

Understanding how consumer behaviour will adapt to a recession will give you an innovative marketing plan, product or service idea. And understanding how the supply side of media will change will give you substantial increases in campaign efficiency.

Price promotions for products and services will increase hugely; everything will be ‘on sale’ and it will be a noisy space that any player has to navigate carefully. There may be better ways of marketing than simply slashing your prices like everyone else. For example, why not focus efforts on your most profitable customers instead? Understanding the changes in consumer mindsets is critical. People will be much more careful in selecting the right product or service for them. Impulsive behaviour will drop. Marketing strategies that lower perceived risk will thrive. For example, rather than giving 10% off, deliver extended guarantees to your consumer. Large luxuries will be jettisoned in favour of smaller ones. Instead of going to an expensive tropical island, people will take day trips to their local seaside. Instead of buying a new car, they’ll keep the old one going. Instead of going to the cinema and eating out, they’ll stay in with a dvd.

The shifts in media budgets are going to be huge. Part of this will be contractual - big media deals will stay for a while but short term buying can easily be chopped. There’s also a natural tendency to keep the backbone of a communications plan and get rid of anything secondary. So, the big communication vehicles like tv will stay, albeit in reduced form. Secondary media will drop in price more dramatically, so there will be bargains there.

Moreover, clutter in these secondary vehicles will drop rapidly. So your communication will stand out much more in them. Consider focusing efforts away from following your competitor’s backbone plans so that your marketing budgets work harder for you.

To make good use of heavily reduced marketing budgets, innovation in communication strategy is the key. Don’t just give away 20% on price in a desperate bid to keep up sales volume. Whether it’s consumer insights or media planning, you will need to think hard and do something different.

---- Written by Paul Syrysko

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