Posts Tagged 'marketing in a recession'

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.


Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 28 other followers