How and why to market during a recession/economic downturn.

1. faltering and bargains were plenty. He was poorly
When the Market Cools, suited for the task and had no experience at buying
Consider a Fur Coat such luxurious (or frivolous you might think) items
Jim Huges & Gail Guge, but was determined to make that year the Christmas to
Wilkin Guge Marketing remember. He scanned the many ads from numerous
furriers - most with bomb bursts and exclamation
Here we are again in another economic downturn. points promoting “Red Tag sale” prices, “Inventory
Headlines in the LA Times in late March of this year, reduction” sales and even “Going out of business”
read, “U.S. home prices drop 11.4% in year”. Some sales. It all made him liken these retailers to the many
would argue that it’s really a recession. Defined on carpet store ads he’d seen - even more, they made
Wikipedia, a recession is a decline in a him frightened to take such a plunge.
country’s gross domestic product (GDP),
“During each rebound, He asked himself, what if these guys
or negative real economic growth, for really do go out of business? Where
two or more successive quarters for a some companies did they get this merchandise, anyway?
year. Well, so, what’s new? Been here Then, one day he came across an ad
before, right? Right, especially for those
would rise up from the high-end department store,
in the retail sector - anyone there has like a Phoenix - Neiman Marcus. Two words, elegantly
felt the anxiety attacks more than once typeset, proclaimed “Fur Sale.” The
in the last decade. And some emerge most would fall. man soon found himself in the Neiman
better and stronger than ever while some Any lessons Marcus store and quickly spoted a
disappear from sight. to be learned?” well designed, typical NM sign that
read: “30% Off All Furs.” Heaven
These economic gyrations have been
sent he rationalized, and purchased a
revisiting us for a long, long time. The first recorded
coat – even had it monogrammed. The lesson? Not
was the Panic of 1797 – the effects of the deflation of the
for a moment, did he think Neiman Marcus was going
Bank of England crossed the Atlantic Ocean to North
out of business or selling inferior products – it was
America and disrupted commercial and real estate
opportunity knocking. Now did NM sell more furs
markets in the United States colonies - it lasted 3 years.
than the others? Don’t know. But the lesson learned,
More recently, we weathered the oil crisis of 1973, the
is that NM was still a shinning example of a luxury
Iranian Revolution of the early eighties, the late 80’s/
brand, when that recessionary period ended. The others
early 90”s meltdown (particularly in California) of the
were, more than likely, history. If they had a brand to
Aerospace/defense industry and Real Estate markets.
begin with, they would now have to begin the time
Then there was the burst of the Dot-com bubble in
consuming and expensive process of rebuilding their
2001-2003. During each rebound, some companies
brands all over again.
would rise up like a Phoenix - most would fall. Any
lessons to be learned? So what about car dealers and real estate developers?
Ads proclaiming “Sale of the Century” and “Never
A true story: A man was in the market for a fur coat
before Savings” really promote “Make us a ridiculous
for his wife in the early eighties. The economy was
(cont. on reverse)
news & muse about the least understood yet most oversold subject — brands.

2. “The lesson?
Not for a moment did he think Neiman Marcus
was going out of business or selling inferior products -
it was opportunity knocking.”
offer” or “How low will they really go?” and they bring the better. However, maintaining brand value while
out the bargain hunters, not the value buyers. There reducing those inventories should be the CEO’s mandate
was a great ad for a new home development in the to marketing. Case in point: the Be dazzled ad approach.
late seventies, during the 18%+ interest rate days. The In the Neiman Marcus example, the fur coat shoppers’
headline read: Be dazzled - Spectacular views, luxurious purchase intentions were truly at risk. He was actually
amenities, interest rates reduced to 6.75% . What a afraid to buy until he was persuaded by what appeared
great way to add urgency to the ad to quickly reduce to be an opportunity to purchase a name brand fur at a
the builders’ inventory, but all without commoditizing reduced price. The brand was not the least bit injured
the community. Most of the competitive ads at the time - his consumer confidence was even lifted and brand
were communicating desperation and distress to reduce loyalty secured. None of which happened with the other
their inventories. brands showcasing distress ads.
Now make no mistake about it, inventory and its So, Mr. or Ms. Retailer, homebuilder, auto dealer,
control or management is the economic engine that etc., go ahead, reduce your prices and inventories, but
drives, or stalls entire categories. And marketing’s to protect your brand’s value perception during a cold
responsibility is to reduce inventory and the faster market, consider a fur coat.
“What a great way to
add urgency to the ad
to quickly reduce
the builders’ inventory, but all
without commoditizing
the community.”
Wilkin Guge Marketing is the Inland Empire’s largest business and
brand development firm. We help companies thrive beyond their
expectations by providing uncommon strategic thinking brilliantly
communicated. Here, brands leap and business bounds.
If you would like to brand speak with Gail Guge, Andrew Wilkin or
Jim Hughes, please call 909-390-1239. To subscribe to Momentum,
please visit www.wilkinguge.com.