Marketing in a Recession Playbook


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Before we embark on the path to recession resistant marketing, we’ll set the stage with a framework that you can use to guide you marketing decisions, budget discussions and recessionary marketing strategy. Based on leading research from McKinsey & Company, AdAge and other thought leaders, this playbook will serve as your roadmap through the rest of the day.

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Marketing in a Recession Playbook

  1. 1. The New Playbook for Marketing in a Recession January 27th, 2009
  2. 2. The old playbook… “…build a recession “…response to the   marketing plan based recession varies by on the firm’s strategic geography, sector and capabilities” firm size”
  3. 3. The new playbook There is no panacea  Strong firms benefit from investment and suffer from  cost cutting Proactive marketing is not always a guarantee of  success Firm’s viewpoint on the recession determines strategy  “How an organization perceives a change in the  environment affects the level and type of response” Focusing on historically profitable regions and  customer groups will miss the mark
  4. 4. Four prescriptions for managing through an economic recession Prescription Explanation Effect To conserve resources Position the firm in multiple Sales are imperfectly correlated Creates a balancing effect on cash markets and geographies. across regions and industries. flow. Plan for the contingency of Recessions are hard to forecast; Facilitates a swift response to sharply declining sales. sales declines are a leading recession. indicator. To attract resources Promote the business in tough Customers often rethink supplier Makes new customer inroads. times. relationships during tough times. Prepare to exploit the recovery When competitors are conserving Adds capacity or customers at a with careful investments. cash, desirable hires, capital assets, discount. and even companies may become available.
  5. 5. One way of looking at things… Corporation Conversation Customer Competition
  6. 6. Recession marketing framework
  7. 7. Internal Branding and Morale Employee issues are critically important during  recessions and in preparation for recovery Constant communications has been proven to sustain  high morale and maintain company strength For Example: Black and Decker increases communications during times of recession in order to maintain morale and credibility among their employees. • The company alerts employees to changes in their respective departments • They communicate up front what the managers see as areas for potential reductions in employment or financial support • Black and Decker continues its investment in organizational development • The company philosophy is to promote employees from within, even during a recession.
  8. 8. Multiple markets and geographies Examine your customer base for cycles &  counter cycles and prepare to shift focus  Examine regions, or even parts of the city/state/county that have performance differentials  Identify customers less affected by recession  Who needs your help the most in the recession?  Could you do more business virtually, not dependent on local geography?
  9. 9. Micromarket to profitable segments Consumer marketers with access to micromarket  data have even more opportunities to enhance profitability. One beverage company recently conducted surveys that  identified staggering differences in the potential profitability of customers within individual markets and micromarkets. A company can maximize its profitability by focusing on micromarkets less sensitive to prices while also offering discounts or preferential pricing elsewhere to drive sales volumes.
  10. 10. Micromarket to profitable segments
  11. 11. Plan to confront declining sales Ear to the ground, “CRM mentality”  Don’t believe that economists (3/01 – 90% said “no  recession) Get comfortable with the data – it’s all about the  data! Setup trigger points at which you invoke different  parts of your recession marketing plan For Example: In 2001, ADC communications, a competitor to Lucent, Cisco and Nortel saw it’s sales degrading to the point of a 27% dip. The immediately retrenched, changed course, implemented a recession marketing & sales strategy and gained market share on each of their major competitors that they retain to this day.
  12. 12. Promote products & services Don’t be tempted to abandon planned initiatives  Supplier switching activity peaks during recessions!  Cheap advertising = higher ROMI  Your best prospects are your competitors best  customers For Example: Dixieline Lumber, a 10-unit San Diego chain, two marketing initiatives helped increase company sales by 9% during the recession of 2001. 1) The first was directed to the building trade and involved training the in-store sales force to assemble hardware packages for custom-home builders. 2) The second initiative was directed at homeowners and involved increasing marketing on millwork as homeowners switched from spending on traveling and entertainment to fixing up their homes.
  13. 13. Maintain advertising & marketing All data points to higher post-recession market  share for sustained or increased investment Confidence is built through sustained successful  efforts Mix in new marketing vehicles to maintain reach but  reduce cost Steady marketing sustains brand awareness and  position with consumers For Example: Carpet Mills of America increased its sales by 24.4% during the recession of 2001 simply by sustaining their overall marketing efforts while their competitors shuttered their marketing.
  14. 14. Introduce new products & services Historically, some of the best innovations come from  recessions Less noise and clutter means more room for you  (increase SOV & SOM) Innovations are proven to keep customers buying in  times that are otherwise slow For Example: There are two examples of great interest: 1) Paychex, an payroll processor, launched Taxpay in 1990 as an additional service for it’s existing customers on Paychex. It brought in a burst of new revenues from existing customers while introduced new customers to both Taxpay and Paychex, setting itself up nicely for the recovery 2) Black & Decker introduced a highly successful line of 33 new power tools during the 1990 recession that set it up to capitalized on the DIY boom of the next decade.
  15. 15. Find price cut alternatives Don’t send unintentional messages training your  customers to buy on discount only Bundling, repackaging, white labeling, adding  service elements to products, tiered offerings and a host of other mechanisms can sustain profitability without entering a price war. For Example: Grocery stores, department stores and other retailers often seek to raise the profile of their own labels during recessions, often rebranding things to give them broader appeal while increasing their profitability. Microsoft and others have always sold a ‘bundled’ set of products that offers value while maximizing profitability. Offer packages, include service offerings and seek out customer input on what will provide the most value to them.
  16. 16. Attract new customers Now’s a great time to get deep profiles of your  best customers (“Vertizontal”) Focus on solutions – deep understanding of  customers includes deep understanding of their needs, problems, pain points & desires Maintain marketing presence as a show of strength  Capitalize on competitors pullbacks by  approaching their customers Employ new marketing tools & channels to attract  customers from new media
  17. 17. Reprioritize marketing vehicles Reevaluate the  effectiveness of current vehicles Shift 10-15% into new  media Conduct a marketing  audit, don’t just do guesswork
  18. 18. Reprioritize customer segments Analyze customer segments for profitability to  determine shifts B2B should examine risk on a per-customer basis  Watch where the trends are going  Setup tiers of customer segmentation   Core  Secondary  Opportunity  Harvest
  19. 19. Prepare for economic recovery Typical recessions are 6mos – 2 years … Prepare  your plans for a 2 year horizon Look for bargain acquisitions, leases, employees,  whatever you need to be successful on the upswing Marketplace protection moves rapidly to  marketplace expansion You’ll be flush with cash from the new customers  acquired in the downturn, ready to expand into the recovery
  20. 20. Recession marketing framework
  21. 21. The New Playbook for Marketing in a Recession Q&A Need help after the presentation? Email