Note: This is the first of a two-part piece that I wrote early last year for my agency and clients about marketing in a recession. Look for part 2 in the coming days.
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The current environment is one that cannot be ignored.
We are in a recession.
People, businesses and consumers, have less discretionary money. Businesses will be cutting back on expenses and marketing departments will have to do more with less. This means that business goals will still be there and more challenging to meet and Marketing departments will have to do it with less money. This white paper outlines some thoughts on how marketers can be a little smarter with their money to position themselves to be successful in the marketplace.
Let’s begin by talking about what is happening in the marketplace. And why maybe some of the past recession rules may not apply moving forward in 2009.
Comparing the 2008-2009 recession to past recessions
This generation hasn’t faced this scenario before. In fact, not many adults who dealt with this scenario in the 1930’s remain (to maybe guide us). Yes. I am suggesting we cannot compare recent recession learning and need to go back to the Great Depression for learning.
In a traditional recession people are worried about losing jobs as companies cut back to face the economic challenges. In the current scenario the entire financial infrastructure seems to be breaking down – globally.
Boy, that sounds like the Depression era doesn’t it? Entire companies, brands as they may be, which have been in existence through generations are crumbling. Icons of stability are not only looking less stable they are ceasing to exist.
The difference between now and recent recession periods in the consumer’s mind can be summarized – “I am worried about losing my job versus even if I do all of these things right and keep my job can I still make it.”
Don’t be surprised when people shift into a full survival mode. And not just low and middle income people but even large wealth groups.
In this kind of environment it may seem silly to talk about marketing or protecting your brand. But these topics are relevant to business success and the economy in general. The economy machine will continue to run on strong functional products and services being marketed to people. ‘Fluff’ products and services-products and services surviving more on image than performance and ‘fluff’ marketing-will not survive.
Discretionary versus non-discretionary category marketing
The marketing rules of the game are going to vary between discretionary and non-discretionary categories. People will treat marketing messages for “items I need” and “items I want” with a different scorecard.
Discretionary categories, like soda, cigarettes, candy, movies, etc., will certainly be able to get away with traditional image driven campaigns. In fact, historical evidence suggests that lower cost discretionary items will prosper in difficult economic times (according to annualized increases in consumer spending in the UK 1989-91 movie revenue grew 16%, alcohol 10%, and sports & toys 6% – source: DDB “capturing opportunities in challenging times.”).
Bottom line is that in uncertain times people will still be seeking moments of indulgence or escapism. They will just be more thoughtful and low cost indulgent moments will prosper.
It is in non-discretionary-like categories where things will get challenging. Branding campaigns, soft image driven look & feel, in non-discretionary categories will be bad. Very bad. They will be seen as the actions of uncaring, “fat” companies. (see recent example of automotive CEO’s flying first class to Washington DC meeting). Campaigns need not be pedantic but they should err on the side of being more overt in their messaging of benefits and value. Companies messaging and spending cannot be perceived as wasteful but useful, not pandering but compassionate and not imagery but rather benefit-driven.