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Marketing in a Downturn: Recession Facts


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Now is the time to separate myth from fact on what it takes to survive and thrive in a downturn. We’ll call on recessionary marketing research from the 1920’s to the 1990’s to glean insights on how successful marketers innovated, changed and thrived to emerge stronger and with greater market share than ever.

Published in: Business, Technology

Marketing in a Downturn: Recession Facts

  1. 1. The Value of Marketing During a Downturn January 27th, 2009
  2. 2. Agenda 7:45-8:30am Registration And Networking 8:30 - 9:15am Facts On The Value Of Marketing During A Downturn 9:15 - 9:45am The New Playbook For Marketing In A Recession 9:45-10:00am Break 10:00-11:00pm How To Think About Pricing And Budgeting In A Downturn 11:00-12:00pm Digital And Emerging Marketing Strategies In A Downturn 12:00- 12:45pm Networking Lunch
  3. 3. Agenda 12:00- 12:45pm Networking Lunch 12:45-2:45pm Recessionary Survival Tactics: What‟s Working And What‟s Next 2:45-3:00pm Break 3:00-3:45pm Offbeat Marketing: Frugal And Creative Ways To Gain Market Share In A Recession 3:45-4:30pm Putting It All Together: The Recessionary Marketing Roadmap 4:30-4:45pm Reflections On Marketing In A Downturn: Discussion And Q&A 4:45pm Event End
  4. 4. After-Event Slides & Resources The slides and resource links are available  electronically after the event: password: stimulus
  5. 5. Your challenges Marketing on a significantly reduced marketing budget.  Building brand identity during a decreasing economic market. Expanding and maintaining brand quality control while moving toward  more digital and social networking opportunities. Competition.  Maintaining Trade Show costs  I think our most significant marketing challenge is to convince our patients that their treatment plan is necessary despite their perceived  quot;high costquot; of it. get more people to know about us so we can increase top line revenue from 2008  Owning our thought leadership position and gaining access to target market account leaders.  Creating similar veined materials for greatly varied audiences  New ways to reach the younger generation that savvy and relatively inexpensive  Raise familiarity of the Club to drive support. The audiences are diverse (alumni to top level donors). Limited resources.  What can I do different, but within budget  Where can I get the most bang for the buck.  #1 Maintain volume with current customers. #2 Find and win new customers.  Enrollment - marketing to the 18 year old audience and their parents  Increasing customer base during a sluggish economy.  Not loosing market share from 08' 
  6. 6. Recession Slogans
  7. 7. 1932: “More than one advertising executive has publicly acknowledged his debt to the Depression, admitting that it was not until the pressure of necessity exerted itself that he really found out how to get 100 cents' worth of value from the expenditure of every advertising dollar,” - Advertising Age Editorial on Oct. 29, 1932.
  8. 8. The Great Depression of the 1930s eliminated over 50% of the retailing businesses in the U.S.
  9. 9. An example: In 1930, Scott Paper promoted the high quality of its toilet paper, saying it was better than competing brands, which its research had found were quot;chemically impure.quot; By the first 10 months of 1930, Scott's overall sales were up 14% vs. the same time period in 1929, says Bradley Johnson, Advertising Age director of data analytics. Even in the depths of the Depression, Scott persuaded consumers to spend more on the quot;ultimate disposable product,quot; Johnson says.
  10. 10. In 1933, Scott took another bold approach with ads that touted paper towels as a kitchen necessity. While consumers were watching their cash, Scott was able to sell quot;convenience,quot; Johnson says. The Depression quot;was a horrific time, yet consumers still consumed, advertisers still advertised and commerce went on,quot; Johnson says. quot;That's a pretty positive message for looking at 2009. Things will be rough, but there will be opportunities.quot;
  11. 11. 1970 recession year - American Business Press (ABP) and Meldrum & Fewsmith study showed that quot;sales and profits can be maintained and increased in recession years and [in the years] immediately following by those who are willing to maintain an aggressive marketing posture, while others adopt the philosophy of cutting back on promotional efforts when sales appear to be harder to get.quot;
  12. 12. 1974-1975 recession years - ABP/Meldurm & Fewsmith 1979 study covering 1974/1975 and its post- recession years found that quot;Companies which did not cut marketing expenditures experienced higher sales and net income during those two years and the two years following than those companies which cut in either or both recession years.quot;
  13. 13. 1975 Recession General Motors In 1975, during a deep recession in the automotive industry, GM introduced Mr. Goodwrench as the “smiling, balding mechanic (with clean hands)” to help sell their profitable services and parts.
  14. 14. 1981-1982 recession years - McGraw-Hill Research's Laboratory of Advertising Performance studied recessions in the United States. Following the 1981-1982 recessions, it analyzed the performance of some 600 industrial companies during that economic downturn. It found that quot;business-to-business firms that maintained or increased their marketing expenditures during the 1981-1982 recession averaged significantly higher sales growth both during the recession and for the following three years than those which eliminated or decreased marketing.”
  15. 15. 1980’s Recession Softsoap out-innovated giant Colgate-Palmolive in 1980 with “revolutionary” liquid soap and was later bought by C-P in „87. Absolut vodka was brought to the US in 1981 and had #1 market share by 1985 Loyalty marketing was launched with the first-ever Carnation pioneered frequent flier program by premium cat food in 1980 American Airlines
  16. 16. 1990-1991 recession years - quot;Fortune follows the brave,“ announced the AMA, noting that the data showed that most firms that raised their marketing budgets enjoyed gains in market share. Among the sample, 15 percent reported quot;greatly decreased” ad budgets. Advertising was quot;somewhat cutquot; by 29 percent. quot;The keys to gaining market share in a recession,quot; concluded Management Reviewquot; seem to be spending money and adding to staff. Firms that increased their budgets and took on new people were twice as likely to pick up market share.
  17. 17. Thought Leadership in the 1990-1991recession From July 1990 to March 1991, the U.S. economy was in the grips of a deep recession. Economic growth hadn‟t been as slow since the Great Depression. American companies severely cut spending on consulting, information technology and IT services – except in one area: on firms that could help them reengineer their operations. Reengineering was powerful in showing how companies used IT to make dramatic productivity improvements. But it also demonstrated to consulting, IT, and IT services firms how they could greatly increase demand for their offerings: by creating thought leadership. In the consulting and IT industries, reengineering was the blockbuster management concept of the 1990s.
  18. 18. More recession marketing facts Businesses that increase marketing expenditures in  recessions gain an average of 1.5 points of share Businesses that cut marketing do so at an average  rate of 23% in recessionary periods Those increasing budgets do so at a rate of 17%  1/3 of retailers shift ad agencies during recessionary  periods Firms that hire marketers and increase budgets are  2X as likely to pick up market share Firms that changed agencies were 5X as likely to pick  up market share!
  19. 19. Why the recession works in your favor The relationship between SOM and SOV  The relationship between brand size and profit  margins Reduced noise during recessions provides  opportunities
  20. 20. The relationship between SOM and SOV Share of Voice leads to Share of Market  Increase SOV in year 1, realize SOM in year 2  Depends on competitor SOV reduction 
  21. 21. The relationship between brand size and profit margins Increasing SOB (size of brand) footprint increases  ROC (return on customer) over time Increase in ROMI (return on marketing investment)  over mid-term (lower marketing rates + new customers + retention = >ROMI) “Bigger brands” enjoy great scale 
  22. 22. Reduced noise during recessions provides opportunities New product/service launches often have greater  impact in recessions Lower „volume‟ in the marketplace makes SOV &  SOM easier to capture Stay away from safe “me-too” offerings 
  23. 23. A.G. Lafley CEO, Procter & Gamble “We have a philosophy and a strategy. When times are tough, you build share.”
  24. 24. Facts on the Value of Marketing During a Downturn Q&A Need help after the presentation? Email