Calamity: Marketing Your Way Out of This Recession

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This presentation was given at The Economist Conference, March 17th, 2009. It discusses the reality of the Brand Bubble and how to build brand value in these challenging economic times.

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  • Calamity: Marketing Your Way Out of This Recession

    1. CALAMITY presented at the 7th Americas Marketing Forum The Economist and Young & Rubicam Brands 17-18 March 2009 St Regis Hotel, San Francisco, California please use with permission only, just ask, we’re happy to grant John Gerzema
    2. CALAMITY: MARKETING YOUR WAY OUT OF THIS RECESSION SOURCE: CONDE NASTE PORTFOLIO, JANUARY 2009 Copyright John Gerzema/Young & Rubicam
    3. Copyright John Gerzema/Young & Rubicam RESULTS 1–10 OF ABOUT 22,200,000 FOR RECESSION AND MARKETING 2
    4. FUNDAMENTAL SOCIETAL SHIFT FROM A CREDIT TO A CONFIDENCE CRISIS SEA CHANGES IN CONSUMER BEHAVIORS COMPANIES MUST CHANGE HOW THEY CONNECT WITH CONSUMER Copyright John Gerzema/Young & Rubicam
    5. <ul><li>SUPERIOR CASH FLOW AND SUSTAINABLE GROWTH </li></ul><ul><li>ALIGN BRAND AND BUSINESS STRATEGY </li></ul><ul><li>ACQUIRE TALENT AND QUALITY </li></ul><ul><li>DO MORE WITH LESS </li></ul><ul><li>SHARPEN MESSAGING AND ROI </li></ul><ul><li>RETURN TO YOUR CORE </li></ul><ul><li>FACE YOUR CUSTOMER </li></ul>MANAGING FOR AN UPTURN 3 Source: Y&R Strategy, HBR: Anthony T Jan, John Quelch Copyright John Gerzema/Young & Rubicam
    6. HALF OF ALL GLOBAL WEALTH HAS EVAPORATED $36 TRILLION DOLLAR LOSS WORLDWIDE S&P 500 DECLINED 64.4% FROM 2000 45% OF AMERICAN WEALTH FROM LOSS OF EQUITY AND HOUSING VALUES AVERAGE RECESSION IS 6-12 MONTHS. THIS IS A MARATHON 5 Source: Bloomberg, Iconoculture March 2009 Copyright John Gerzema/Young & Rubicam
    7. <ul><li>UNEMPLOYMENT </li></ul><ul><li>HOUSING VALUES </li></ul><ul><li>EQUITY MARKETS </li></ul><ul><li>INTEREST RATES ? </li></ul><ul><li>COMMODITY PRICES </li></ul><ul><li>IN(STAG)FLATION ? </li></ul><ul><li>BAILOUT ? </li></ul>THE NEW FEAR ECONOMY 6 NATIONAL DEBT DETROIT CURRENCY VALUATION ? PROTECTIONISM ? BANK LENDING FACTORY & HOUSING STARTS CREDIT CARD EXPOSURE CONSUMER CONFIDENCE } Copyright John Gerzema/Young & Rubicam
    8. THE LARGEST U.S. BUDGET DEFICIT POST WWII 8 Source: Board of Governors of the Federal Reserve System Copyright John Gerzema/Young & Rubicam
    9. VISUALIZING THE BAILOUT 9 Source: The Atlantic Copyright John Gerzema/Young & Rubicam
    10. HOUSING VALUES CONTINUE TO DECLINE ACROSS THE U.S. http://www.nytimes.com/interactive/2008/11/25/business/20080624_HOUSING_GRAPHIC.html 10 Source: “Irrational Exuberance”, 2 nd edition, 2006, by Robert J. Schiller Copyright John Gerzema/Young & Rubicam
    11. A GROWING REALITY: 19 A MORTGAGE IS FOREVER Source: Copyright John Gerzema/Young & Rubicam
    12. AMERICAN’S HOMES NO LONGER PERSONAL LINES OF CREDIT 11 Source:Us Department of Housing and Labor, 2009 Copyright John Gerzema/Young & Rubicam
    13. WHILE THE CREDIT CRISIS HAS HALTED HOUSING STARTS 12 Source: www.calculatedriskblog.com Copyright John Gerzema/Young & Rubicam
    14. INTO THE GREAT WIDE OPEN UNEMPLOYMENT 8.1%; HIGHEST IN TWENTY-FIVE YEARS THIRD STRAIGHT MONTH OF 600,000 JOBS LOST 4 Copyright John Gerzema/Young & Rubicam
    15. THIS PERIOD MARKED BY MOST JOB LOSSES, WEAKEST RECOVERY 13 Source: Change in Nonfarm Pay rolls, Reported Monthly, Bureau of Labor Statistics, U.S Dept of Labor Copyright John Gerzema/Young & Rubicam
    16. (Bottom of pyramid)14,000 Americans losing health insurance every day. http://www.americanprogress.org/ 15 MILLIONAIRES HAVE LOST ONE-THIRD OF THEIR NET WORTH. Source: AN EQUAL OPPORTUNITY RECESSION Copyright John Gerzema/Young & Rubicam
    17. AFFLUENT MORTGAGE RATE DEFAULTS 16 Source: LPS Applied Analytics Copyright John Gerzema/Young & Rubicam
    18. THE ONLY CERTAINTY IS UNCERTAINTY 22 Source: Copyright John Gerzema/Young & Rubicam
    19. THE AMERICAN NIGHTMARE THEHTTP://WWW.NYTIMES.COM/2009/03/01/US/01SURVIVAL.HTML?PAGEWANTED=ALL 18 Source:New York Times ONE STORY IN THE AMERICAN NIGHTMARE Copyright John Gerzema/Young & Rubicam
    20. MASLOW UPENDED: MARKETING MUST MOVE FROM PASSION TO COMPASSION (Bottom of pyramid)14,000 Americans losing health insurance every day. http://www.americanprogress.org/ 17 Source: American Progress.org February 2009 2007 2009 Copyright John Gerzema/Young & Rubicam
    21. TECTONIC SHIFTS IN CONSUMERISM FROM THE CULTURAL LOSS OF TRUST 23 Copyright John Gerzema/Young & Rubicam
    22. 24 Copyright John Gerzema/Young & Rubicam SELFISHNESS AND COLLUSION
    23. http://www.theglobeandmail.com/servlet/story/RTGAM.20090218.WBwblogolitics20090218151500/WBStory/WBwblogolitics/ http://news.yahoo.com/s/ap/20090216/ap_on_fe_st/toy_fair_madoff_doll 25 BEHAVIOR Copyright John Gerzema/Young & Rubicam EGREGIOUS AND CRIMINAL
    24. 33 Copyright John Gerzema/Young & Rubicam FAILURE OF REGULATORS
    25. 30 Copyright John Gerzema/Young & Rubicam TAXPAYERS ARE NOW SHAREHOLDERS
    26. 26 Copyright John Gerzema/Young & Rubicam DECAYING INFRASTRUCTURE
    27. 28 Copyright John Gerzema/Young & Rubicam LACK OF PERMANENCE
    28. Copyright John Gerzema/Young & Rubicam
    29. Copyright John Gerzema/Young & Rubicam
    30. Source: Millward Brown Optimor 2007 Copyright John Gerzema/Young & Rubicam
    31. THE 250 MOST VALUABLE GLOBAL BRANDS ARE $2.197 TRILLION DOLLARS WHICH EXCEEDS THE GDP OF FRANCE Copyright John Gerzema/Young & Rubicam
    32. BRAND ESTEEM AND REGARD IS DOWN 12% BRAND AWARENESS HAS DECLINED BY 20% PERCEPTIONS OF BRAND QUALITY HAS ERODED 24% TRUST IN BRANDS HAS DECLINED BY 50% Copyright John Gerzema/Young & Rubicam
    33. TRUST IS DESIRABLE, BUT IT HASN’T DIFFERENTIATED 35 Source:BrandAsset Valuator 1993-2007 Copyright John Gerzema/Young & Rubicam
    34. Base: BAV USA Q4 2007, Q4 2008; All Adults IN THE PAST QUARTER, A ‘TRUST VIRUS’ INFECTED MANY CATEGORIES 36 Copyright John Gerzema/Young & Rubicam
    35. 37 Source: Barack Obama Press Conference, February 2009 Copyright John Gerzema/Young & Rubicam “ I SCREWED UP”
    36. CONSUMERS ARE BEGINNING TO OWN THEIR PROBLEMS 38 Source: Time Magazine Copyright John Gerzema/Young & Rubicam
    37. SAVINGS RATE HAS RISEN IN PAST FIVE CONSECUTIVE MONTHS 40 Source: U.S. Department of Commerce: Bureau of Economic Analysis Copyright John Gerzema/Young & Rubicam
    38. Q4 SPENDING FELL 3.7% FROM Q3 - STEEPEST DECLINE IN 62 YEARS. $3 TRILLION IN SPENDING STOPPED IN Q4, WAS SUSTAINING US GDP 41 Source: www.calculatedriskblog.com Copyright John Gerzema/Young & Rubicam
    39. CREATE COMPETITIVE ADVANTAGE NOW EVERY RECESSION ENDS...EVENTUALLY CONSUMERS MOVING FROM ANXIETY TO ACTION HOW YOU ACT NOW WILL SHAPE YOUR FUTURE PERFORMANCE Copyright John Gerzema/Young & Rubicam
    40. THE NEW RULES OF ‘POST-CRISIS CONSUMERISM’ 44 Copyright John Gerzema/Young & Rubicam NEW CONSUMER BEHAVIORS NEW CULTURAL VALUES NEW MANAGEMENT PRINCIPLES
    41. POST-CRISIS CONSUMERISM RULE #1 CULTURAL VALUE = INDESTRUCTIBLE SPIRIT CONSUMER STRATEGY = DURABLE LIVING MANAGEMENT = BRAND THAT PRINCIPLE LASTS Copyright John Gerzema/Young & Rubicam
    42. DURABLE LIVING <ul><li>CONSUMERS ARE DRIVING AND DINING OUT LESS </li></ul><ul><li>USE OF COUPONS IS UP 300% </li></ul><ul><li>PRIVATE LABEL UP 12% </li></ul><ul><li>“ SWISHING” PARTIES TO EXCHANGE CLOTHING </li></ul><ul><li>REPAIR FOR SHOES, CLOTHES AND CARS IS UP 22% </li></ul><ul><li>AMERICANS SPENDING IN ‘RETURN TO HOME’ </li></ul><ul><li>68% OF AMERICANS NOW CARRY A LIBRARY CARD </li></ul><ul><li>SPICES BEING USED IN LIEU OF EXPENSIVE FOODS </li></ul><ul><li>VALUE RECIPES GROWING MORE POPULAR </li></ul><ul><li>CRAIGSLIST POSTING 100% INCREASE IN TRAFFIC </li></ul>46 CULTURAL VALUE = INDESTRUCTIBLE SPIRIT CONSUMER BEHAVIOR = DURABLE LIVING MANAGEMENT PRINCIPLE = BRAND THAT LASTS Copyright John Gerzema/Young & Rubicam
    43. BRAND THAT LASTS CULTURAL VALUE = INDESTRUCTIBLE SPIRIT CONSUMER BEHAVIOR = DURABLE LIVING MANAGEMENT PRINCIPLE = BRAND THAT LASTS Copyright John Gerzema/Young & Rubicam
    44. POST-CRISIS CONSUMERISM RULE #2 CULTURAL VALUE = ETHICS AND FAIR PLAY CONSUMER STRATEGY = EMPATHY AND RESPECT MANAGEMENT = VALUE AND PRINCIPLE VALUES Copyright John Gerzema/Young & Rubicam
    45. <ul><li>SEEKING BRANDS THAT SUPPORT SIMILAR BELIEFS AND CAUSES </li></ul><ul><li>BE TRANSPARENT (WHITEHOUSE.GOV) </li></ul><ul><li>USER REVOLT AND RESPONSE (FACEBOOK) </li></ul><ul><li>ENCOURAGE CONSUMER PROBLEM SOLV IN (LEGO) </li></ul><ul><li>CONSUMERS EXPECT YOU TO Don’t s t op believing </li></ul><ul><li>GOING GRASS ROOTS AND GREEN (TR UE NORTH) </li></ul><ul><li>CULTURAL SHIFT TOWARD SCORNING GREE D </li></ul><ul><li>CONSUMERS EXPECT TO BE REASSURED DURIN G A CRISIS </li></ul><ul><li>ENRICH COMMUNITY TO CLOSE SAL E </li></ul>50 CULTURAL VALUE = ETHICS AND FAIR PLAY CONSUMER BEHAVIOR EMPATHY AND RESPECT MANAGEMENT PRINCIPLE = VALUE AND VALUES Copyright John Gerzema/Young & Rubicam EMPATHY AND RESPECT
    46. VALUE AND VALUES Copyright John Gerzema/Young & Rubicam CULTURAL VALUE = ETHICS AND FAIR PLAY CONSUMER BEHAVIOR EMPATHY AND RESPECT MANAGEMENT PRINCIPLE = VALUE AND VALUES
    47. POST-CRISIS CONSUMERISM RULE #3 CULTURAL VALUE = LIQUID LIFE CONSUMER STRATEGY = DÉCLASSÉ CONSUMPTION MANAGEMENT = DOLLARS AND PRINCIPLE SENSE Copyright John Gerzema/Young & Rubicam
    48. DÉCLASSÉ CONSUMPTION CULTURAL VALUE=LIQUID LIFE CONSUMER BEHAVIOR = DÉCLASSÉ CONSUMPTION MANAGEMENT PRINCIPLE= DOLLARS AND SENSE Copyright John Gerzema/Young & Rubicam
    49. DOLLARS AND SENSE CULTURAL VALUE=LIQUID LIFE CONSUMER BEHAVIOR = DÉCLASSÉ CONSUMPTION MANAGEMENT PRINCIPLE= DOLLARS AND SENSE Copyright John Gerzema/Young & Rubicam
    50. POST-CRISIS CONSUMERISM RULE #4 CULTURAL VALUE = RETURN TO THE FOLD CONSUMER STRATEGY = COOPERATIVE CONSUMERISM MANAGEMENT = COMMUNITY PRINCIPLE ORGANIZER Copyright John Gerzema/Young & Rubicam
    51. COOPERATIVE CONSUMERISM CULTURAL VALUE = RETURN TO THE FOLD CONSUMER BEHAVIOR = COOPERATIVE CONSUMERISM MANAGEMENT PRINCIPLE= COMMUNITY ORGANIZER Copyright John Gerzema/Young & Rubicam
    52. COMMUNITY ORGANIZER CULTURAL VALUE = RETURN TO THE FOLD CONSUMER BEHAVIOR = COOPERATIVE CONSUMERISM MANAGEMENT PRINCIPLE= COMMUNITY ORGANIZER
    53. THE OPPORTUNISTIC CEO: BRAND MANAGER IN CHIEF Copyright John Gerzema/Young & Rubicam
    54. MARKETING IS NOT A COST, BUT A FIDUCIARY RESPONSIBILITY TO SHAREHOLDERS Copyright John Gerzema/Young & Rubicam
    55. THE CHINESE CHARACTER FOR CRISIS ALSO MEANS OPPORTUNITY 65 BAD COMPANIES ARE DESTROYED BY CRISIS. GOOD COMPANIES SURVIVE THEM. GREAT COMPANIES ARE IMPROVED BY THEM.” — ANDY GROVE Copyright John Gerzema/Young & Rubicam
    56. Source: Gerzema, Jacobson, Lebar, Mizik, Stanford and Poor’s COMPUSTAT over 1988-2003, University of Chicago’s Center for Research in Security Prices from 1993-2003. BAV 1993-2004 CONSUMERS REWARD BRANDS WITH ENERGIZED DIFFERENTIATION Copyright John Gerzema/Young & Rubicam
    57. Copyright John Gerzema/Young & Rubicam

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