Posts Tagged 'consumer demand'

Brand turmoil, part 2

Here are some more observations based on the BrandAsset Valuator work of Ed Lebar and Anne Rivers that was presented to the NYAMA last March.  I bring this up again because much of the economy is still stuck in recession.

One is that there are winners and losers in any economic downturn.  Even one as steep as what we’ve just experienced.  By the time the economy turns up again, the winners will have moved clearly ahead of the losers.  At that point it may be too late to catch up.  Certainly it is more expensive to play catch up than it is to invest in marketing during the downturns.

So here we have the BAV data demonstrating that companies who continue to spend on marketing and R&D are generally better off over time than those who make severe cut-backs.  Marketing and innovation are the engines of growth.  Turning those engines off puts the future growth of the company at risk.

Having said that, the short term pressures and temptations to make the cuts are often insurmountable, particularly when faced with a panic like 2008-2009.  Even companies healthy businesses cut back on their marketing.

Hard data like the BAV is not convincing enough when it seems like the floor has opened in the economy.

Of course the most powerful levers that an individual company has to reverse the drop in demand are marketing and product innovations.  No single company can make up for the lack of demand across the economy.  But they certainly can influence the demand for their own products.  Simply look at Subaru, McDonald’s and Apple for examples.

It really does take courage and leadership for companies to invest in marketing and R&D during a downturn.   The future is too unpredictable.  How many people would bet their career on “I know this will make our net operating losses bigger for the next two years but 4 or 5 years from now we’ll be in great shape!”

BAV Invest During Downturns

 

And here are seven different strategies that were identified as contributing to the success of brands during the downturn.  These were derived empirically.  Having said that, they make complete intuitive sense.

BAV 7 Strategies for Recession

Ed and Anne use Jeep as an example of a brand being an enduring advocate.  I would add Hyundai to that list, too.  With their buyer assurance they hit on several different points all at once.

The BAV also appears to support the observation that this particular economic crisis is going to have lasting effects on the people who are living through it.  When the recovery really does come around, the old habits won’t just bounce back.  Too many fundamental beliefs have been shaken this time around.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This just in! Recession ended in June 2009! Extra! Extra!

In case you missed it, the NBER has officially decreed the end of the Great Recession and dated it to June 2009.  It’s the end of the recession as we know it!

Whew!  Time to open the champagne bottles!

So does this mean companies are back to “normal”?  Back to business as usual?  No.  Not even close.  The downturn was steep and long.  Of course there is a difference between the end of a plummet and a robust growth cycle that takes us to new highs.  In fact, for many people and companies it doesn’t feel like the recession has ended at all.  To be fair…

…the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.

Here’s the release in full.

The Recession Has Ended…sort of

The recovery is slow and uneven.  Some companies are winners and some companies are losers.  The ways that individual companies responded to the economic smackdown is now determining how well they are recovering.  In the initial drive to cut, cut, cut in 2008, many companies cut too far or cut the wrong things or missed an opportunity.   Others took a more strategic perspective to reinvent their marketing.

Examples:

McDonald’s vs. Burger King

Apple vs. Dell

Samsung vs. Sony

Hyundai vs. GM

The slow growth/no growth economy we are in today means that the marketing lessons from The Great Recession are still valid and relevant today.  Too much capacity, too little demand.  Demand is slow.  Demand is low.  Business will only recover when there is stronger demand.

It is a perfect opportunity for companies to use their marketing to gain competitive advantage.  Marketing is about generating demand, about shifting demand from their brand to our brand.

This is a time when strong marketing approaches can pay off.  It is also a time when many executives will be cautious.  So the question ahead — which companies will reinvent marketing and which ones will play it safe?

One key indicator — companies are making more profits (up $224 Billion in Q1 and $41 Billion in Q2) while holding down the size of their workforce.

Consumer attitudes – or – who’s to say what’s normal?

Okay, some more evidence that there is a real change in consumer attitudes.  This from The NPD Group.

In sum, their data shows a dramatic shift in values and attitudes. We’ve moved from an era of conspicuous consumption to the “calculated consumption era.”  According to NPD’s Marshall Cohen, the last ten or so years have been “an abnormal period”.

While I agree that attitudes have changed, I’m not so happy to think that the past decade of my life has been “abnormal.”  After all, who’s to say what’s normal?Marshall Cohen on “calculated consumption”

Philip Kotler on reinventing marketing

Looking forward to 2010!

Some marketing thoughts about the year to come.  This is from the book CHAOTICS by Philip Kotler and John Caslione.

“Great marketers don’t just rebound from crises.  They build the internal capacity to expect the unexpected. They continuously reinvent business models and marketing strategies during chaotic times so that they can adapt quickly as circumstances in the marketplace change.

Today, the typical company operates a marketing system that has emerged from years of trial and error. It has developed policies, strategies, and tactics for using marketing research, pricing, the sales force, advertising, promotions, trade shows, and other marketing tools. These practices are likely to persist because they deliver a feeling of safety and predictability.  They worked in the past and are assumed to work in the future.

There is, however, one problem.  The world keeps changing.

“These developments put a company at a strategic inflection point: Either the company continues with the same strategy or recognizes the need for a new one.  Clearly,the company needs to revisit and revise its marketing policies and tools.  If it doesn’t, the new environment will punish the company — maybe to the point of failure.”

2010 will be the year for reinventing marketing.   It is an exciting time to be in marketing!

Happy New Year’s!

Brand Avoidance – or – stop that brand!

Brand avoidance, motivations for anti-consumption, organizational disassociation, and freedom of anti-choice!

No, today is not opposite day.  Although I have to admit to a through-the-looking-glass-darkly sensation as I began to read about brand avoidance and anti-choice.

There is a small body of research that looks almost exclusively at the dark underside of branding — brands that people go out of their way to actively avoid.  Usually we think of a brand as an attention magnet. Strong brands have a strong attraction.  Weak brands have little or no attraction.  This looks at the other side of the magnet where the brand pushes people away, it repels them.

Professor Michael Lee has been one of the academics in this area.  He has been creating a framework for  categorizing and understanding the types and mindsets of brand avoidance.  He separates them into 3 categories based on the primary cause for avoiding a brand: bad experience, identity avoidance and moral avoidance.

Bad experience: Going out of your way to avoid consuming a brand because you had a bad experience with it

Identity avoidance: Going out of your way to avoid consuming a brand because it is disturbing to your self-image — symbolic incongruity (I love that phrase!).  The, “I would be caught dead in that” mentality is how I like to think of it.

Moral avoidance: A conscious choice to avoid a brand because of its actions or behavior.  Not shopping at Wal-Mart because they lock-in workers overnight or don’t offer health insurance to most employees.

The concept of anti-choice is antithetical to how we typically think about marketing.  No doubt there are some clever companies out there exploiting this mindset.  I can see the marketing campaign now:  It’s the anti-choice of a new generation!

What really jumped out at me was the recognition that people can and do change their minds, and behaviors.  They can look at a brand in a new way, their relationship with the brand can – and does – change over time.

This is particularly important to brands that are second or third tier brands and trying to break into the top rank of brands.  LG and Lenovo are two that come to mind immediately.

In the paper by Professors Lee, Motion and Conroy, one paragraph in particular jumped out at me.  While meant to propose a strategy for countering brand avoidance, it immediately struck a chord of recognition.  In fact, it was very similar to the bold strategy taken by Samsung starting in the mid-1990s to elevate the brand image and reputation.

“The first antidote [to brand avoidance] involves a genuine adaptation of the brand, one that is initiated from the highest point within the company and permeates throughout the entire brand/organization. Such a strategy may alleviate brand avoidance that is motivated by corporate irresponsibility or consumer resistance philosophies; however, in spite of these efforts many consumers may remain cynical. Thus, such a drastic strategy may not be feasible for the firm.”

That is indeed a drastic strategy.  And very, very powerful.  At Samsung the initiative came from the Chairman himself.  His call to action was, “Change everything except your spouse and children.”  They changed product quality, product design, marketing strategies, pricing strategies, distribution strategies…as well as the brand strategy.  And Samsung had the courage and patience to stay on the same course for a number of years instead of changing strategies every 12 or 18 months.

Here is a link to one of the recently published articles by Professors Lee, Motion and Conroy and  on research into BrandAvoidance.  Caution: this is wonkish.

Anecdotal evidence of marketing coming back to life

It seems that change is in the air.

In my conversations over the past few weeks with marketers on both the corporate and agency side I am hearing a new story.  People are beginning to plan for 2010, with the expectations that corporate marketing activity will increase.

For some this has been driven by necessity — from acquisitions or spin-offs.  More encouraging are the conversations about the need to get back to marketing.  In the first half of the year the theme was about driving down costs.  The new theme is the  need to drive customer demand.   The budget process for 2010 is moving forward, and people are saying that marketing budgets will increase from this year.  Projects that were on hold are now beginning to move.

Another common theme I am hearing is that it won’t be business as usual.  Marketers have been changed by this economic crater we fell into.  The move away from traditional media to digital media has accelerated.  The need to drive down costs hasn’t gone away.  There is a strong focus on justifying marketing to the senior management. The internal resources and staffing will remain at lower levels than before.

This is all still anecdotal.  Even so, it is encouraging to hear some optimism in the marketing field.

 

 

 

Howard Johnson as a character

In my previous post I began to discuss the ways to consider your brand as if it were a person, a fully developed or “rounded” character that you might find in a book or movie.

It’s worth the exercise because those brands become more than just household names, they become part of our culture.

From the outside it looked like any ordinary 1964 Cadillac limousine.  In the expensive space between the driver and the passengers, where some installed bars, or even bathrooms, Mr. Howard Johnson kept a tidy ice cream freezer in which there were always at least eighteen flavors on hand, though Mr. Johnson ate only vanilla.

So starts the novella The Oranging of America by Max Apple.  It was first published in American Review and then as the title story in Apple’s first short story collection.  Howard Johnson is more than just a name or a label, he is the main character in this wonderful story.  A fully realized example.  And a lesson to everyone who considers themselves a branding expert.

The richness of observation and insight bring Howard Johnson closer to us than any advertising brief could.  We read this delightful story and understand the man, understand the brand.  Yes, it is fiction. But a wonderfully realized fiction.  And, after all, isn’t that really what a brand is all about?  Being as live in our minds as the most powerful characters in literature…or movies…or plays.

I was first introduced to that story by the writer and cultural critic John Leonard.  It was one of the stories that had a staying power.  It burned brightly in my memory long after I put down my copy of the book.  So I highly recommend it — for a variety of reasons.

Another example: In the mid 1990s I was working on the Kellogg’s advertising account at J. Walter Thompson.  Before one of my frequent trips to Battle Creek, Michigan, a friend sent me galley proofs of The Road to Wellville by T. C. Boyle.  It was a novel about William Kellogg himself.  Not far from my hotel room was the real building where the fictional Kellogg was starting his empire.

I strongly recommend any marketer to read these stories and books.  They are immensely enjoyable.  And they are enlightening on the power of a brand, the myth of a company’s founding, to make a true human connection between the company and the customer.

No positioning statement can do that.


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