The Recession Survival Guide
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The Recession Survival Guide

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A guide to Recession marketing communications and how to survive in tough times.

A guide to Recession marketing communications and how to survive in tough times.

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The Recession Survival Guide Presentation Transcript

  • 1. IMPACTFUL COMMUNICATIONS IN THE DOWNTURN Leo Rayman, 19-Feb-09
  • 2. The Recession Survival Guide
  • 3. Agenda • Latest Economic Forecast • Charles Darwin on Recessions • Three themes: – Cutting & Spending – Value & Values – Innovation & Fame • Summary & Conclusions
  • 4. Latest economic forecast
  • 5. 1980-81 1991-92 2001-02 2008-09 Source: IMF, Jan 2009
  • 6. 1.9 0.7 0.5 -2.4 -2.2 -3.1 Source: IMF, Jan 2009
  • 7. “It is going to be quite nasty” Les Binet, Econometrician, DDB Matrix
  • 8. People are not going to stop feeding their cats
  • 9. Some sectors do well M a rk e t G ro w th ra te C in e m a a d m is s io n s 16% R e c o rd s , C D s , ta p e s 10% T e le c o m s 10% A lc o h o l 10% S o ft D rin k s 9% P e ts 9% T o ile trie s 8% C o n fe c tio n e ry 8% S p o rts & T o ys 6% Food 6% Annualised increases in consumer spending 1989-1991
  • 10. Charles Darwin on Recessions
  • 11. Charles Brebner, Plant Superintendent; Richard Deupree
  • 12. “Recessions accelerate the changes that are already happening”
  • 13. Ten things to remember 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
  • 14. Ten things to remember 1. Some categories grow in Recessions 2. The ability to evolve ensures survival 3. 4. 5. 6. 7. 8. 9. 10.
  • 15. 1. Cutting & Spending
  • 16. Marketing budget forecasts Source: IPA Bellwether Survey
  • 17. A good short-term effect. 20% ROCE during downturn 14% 15% 12% 10% 8% 5% 0% Reduced Maintained Increased Marketing spend (as % of market size) Post-2000 data Source: PIMS & Malik Management Zentrum St. Galen, with thanks to Les Binet, DDB Matrix
  • 18. But not everyone is cutting. 100% 18% 90% 80% Increase 70% 31% 60% Maintain 50% 40% Reduce 30% 51% 20% 10% 0% Q1 2009 PR spend intentions Source: University of Southern California, Feb 2009
  • 19. Because cuts hinder recovery… 3 Share change during recovery 2.0 2 0.8 1 (% points) 0 -0.8 -1 Reduced Maintained Increased -2 Marketing spend (as % of market size) Post-2000 data Source: PIMS & Malik Management Zentrum St. Galen, , with thanks to Les Binet, DDB Matrix
  • 20. …and damage long term sales. Sales Time Budget maintained every year Zero marketing year 1 then back to usual weights Half budget in year 1 then back to usual weights Source: Data2Decisions
  • 21. The Great Depression
  • 22. 1991 Recession
  • 23. It comes down to Share Of Voice T yp ic a l S O V -M a rk e t S h a re R e la tio n s h ip B a s e d o n 1 0 9 6 B ra n d s in 2 3 C o u n trie s 25 Brandsd s h e re te ngainin s h a re here d to g a 20 B ra n share S ha r e o f V o ic e (% ) 15 Brands here lose share B ra n d s h e re te n d to lo s e s h a re 10 5 0 0 5 10 15 20 25 30 35 M a rk e t S h a re (% ) D e riv e d fro m J o n e s (1 9 8 7 ) Source: Les Binet, DDB Matrix
  • 24. what to cut… The question is
  • 25. Cut the marketing services supply chain…
  • 26. Cutting and Spending (Product) Quality Maintain R&D and NPD Maintain Advertising Maintain / increase SOV Operational /admin costs Cut Spare capacity Cut (but beware cutting too far) Source: PIMS analysis of financial performance of 1000+ firms during market slow-downs.
  • 27. Ten things to remember 1. Some categories grow in Recessions 2. The ability to evolve ensures survival 3. 4. 5. 6. 7. 8. 9. 10.
  • 28. Ten things to remember 1. Some categories grow in Recessions 2. The ability to evolve ensures survival 3. Cutting makes recovery harder 4. Cutting damages brands in the longer term 5. Cut, but cut less than others 6. 7. 8. 9. 10.
  • 29. 2. Value & Values
  • 30. Recessions change buyer behaviour
  • 31. Classical Marketing: not right now…
  • 32. The Great Unknown: How will Value brands fare?
  • 33. Value marketing: Grow new markets, Low pricing, Low cost systems Stelios Haji-Ioannou
  • 34. Growing Markets
  • 35. The Perils of Followership
  • 36. Microsoft XBOX 360 Nintendo Wii
  • 37. Red Ocean Strategy Blue Ocean Strategy Source: Blue Ocean Strategy (Chan Kim/Mauborgne)
  • 38. “Tough times make people think more. Something called value becomes even more important; and sometimes that’s the same as price but very often it isn’t.” Source: Jeremy Bullmore
  • 39. Value not just about Price Source: Millward Brown Brandz 2007, 500+ brands, 23 categories
  • 40. Emotional brand campaigns more profitable Source: Les Binet, IPA Datamine
  • 41. Increased sales by an annual average of 8% over three years
  • 42. Ruler Brands do better in tough times
  • 43. Don’t abandon the brand…
  • 44. It all comes down to knowing your customer.
  • 45. Ten things to remember 1. Some categories grow in Recessions 2. The ability to evolve ensures survival 3. Cutting makes recovery harder 4. Cutting damages brands in the longer term 5. Cut, but cut less than others 6. 7. 8. 9. 10.
  • 46. Ten things to remember 1. Some categories grow in Recessions 2. The ability to evolve ensures survival 3. Cutting makes recovery harder 4. Cutting damages brands in the longer term 5. Cut, but cut less than others 6. Grow markets not just market share 7. Invest in brand as a strategic asset 8. Institutionalise customer insight 9. 10.
  • 47. 3. Innovation & Fame
  • 48. Recessions accelerate change Source: Epsilon US CMO survey, Summer 2008
  • 49. “Something has changed and the reason for the change is online activity, where personal recommendations have become more important and its clearly editorial and its clearly not Advertising-based.”
  • 50. What influences purchasing decisions? 0.00 2.00 4.00 6.00 8.00 10.00 Word of Mouth (someone you know) 8.40 Word of Mouth (from Internet supported by others) 6.80 News Story 6.40 Word of Mouth (from Internet, in isolation) 5.80 Advertising 4.60 Source: Jon Leach, Pattern Recognition
  • 51. People buy famous brands Source: Les Binet, IPA Datamine
  • 52. Source: Weber Shandwick
  • 53. Keep the conversation going on Twitter Do our six recommendations agree with the successes and failures you’ve seen? Use the #Web2.0work hash tag to respond to this article on Twitter. We’ll be following them and responding via our McKinsey Quarterly account, @McKQuarterly
  • 54. Ten things to remember 1. Some categories grow in Recessions 2. The ability to evolve ensures survival 3. Cutting makes recovery harder 4. Cutting damages brands in the longer term 5. Cut, but cut less than others 6. Grow markets not just market share 7. Invest in brand as a strategic asset 8. Institutionalise customer insight 9. 10.
  • 55. Ten things to remember 1. Some categories grow in Recessions 2. The ability to evolve ensures survival 3. Cutting makes recovery harder 4. Cutting damages brands in the longer term 5. Cut, but cut less than others 6. Grow markets not just market share 7. Invest in brand as a strategic asset 8. Institutionalise customer insight 9. Design campaigns for fame and talkability 10. Social marketing is the way of the future
  • 56. Summary & Conclusions
  • 57. Signs of Recovery? Source: McKinsey – Perspectives on Finance and Strategy Winter 2009
  • 58. It isn’t all bad.
  • 59. It isn’t all bad. Tino Schaedler: Stratocruiser – future airship EF Schumacher – a different kind of economics
  • 60. 3 things to take away 1. If you cut, cut less than your competitors 2. Insulate yourself through the power emotional branding 3. Maintain innovation and fame-building campaigns
  • 61. “The future, as always belongs to the brave” Source: Bill Bernbach