Marketing during a recession
by Steve White
You may have heard on the news reports or read in the newspapers that apparently we’re in the worst recession to hit these shores for 30 years. How very depressing. So how do we respond to a situation like this? Should we take shelter under the boardroom table and hide from this economically fragile world or should we down tools and hope to the heavens that we aren’t gobbled up by the doom and gloom that is the global credit crunch? No, of course not. We react. We plan. We implement. After all, in every situation there are losers and there are winners. Even in the darkest, deepest depression for 30 years.
Sex, chocolate and caravans
The media is more than happy to report on those losers, such as Woolies and Empire Direct, but they’ve been far less forthcoming when it’s come to the success stories we’ve seen over these difficult times.
For instance, the sex industry is well and truly holding its own. Sex sells, even in a recession! People are replacing a night on the town with a quiet night-in in front of the box. Well, they would be if Saturday night TV wasn’t so rubbish. Have you seen Dale’s Hole in the Wall? So the TVs are being turned off and people all around Britain are spending their nights-in rediscovering the joys of sex.
Hole in The Wall… possibly the worst television programme ever
Durex has recently reported that their sales have seen a 10% rise over the course of 2009 and it’s not only Durex that should be sending Dale Winton a thank you card. Sales in vibrators and other sexual aids are also romping along as are the sales of Agent Provocateur who report that their figures are up by 8% since March 2008.
There have also been some big winners in the confectionary industry. It appears that the British public are seeking solace in chocolate during these times, with Cadbury’s recently reporting a 30% rise in annual profits. “Chocolate is performing well as consumers seek to comfort themselves with brands they are familiar with” said Todd Stitzer, Cadbury’s Chief Executive. Selfridges are also experiencing a big chocolate boom, with their chocolate sales up an amazing 80% on last year.
Another industry that is positively booming is the caravan industry. This sector really is profiting as people are 
turning their backs on ever-increasing flight costs and ever-worsening exchange rates. According to The Caravan Company, industry sales are up 10-15% with much demand apparently being generated by first time buyers. The Camping and Caravanning Club say that advance bookings are up 27% on last year: “Summer holidays can be expensive, particularly for families, but a camping or caravanning holiday can be a cheaper and attractive alternative. It would certainly seem that the recession has had a positive impact on the Club”, said a spokesman.
Stick, twist or go bust
One of the biggest and most important issues facing any business during a time like this is deciding how to react to the threat of a recession. The temptation for many is to react by reducing marketing spend, but is reducing the marketing noise being generated by your business really going to have a positive impact?
That will undoubtedly be a question debated over many a boardroom table over the course of the crunch. The argument from the Finance Department will undoubtedly be that the business should react to reduced customer spending by following suit and reducing marketing budgets. However, I’m convinced that this is the wrong solution to the problem. By turning down the marketing volume you’re handing your competitors a distinct advantage in securing that all-important sale, as they’ll be given more opportunity of being heard by the customer. If your business continues losing sales to your competitors then there is only one place to go: reduced market share and decreased profits. I take the view that if the sale is becoming harder to secure, then the business has to work harder and invest more in securing it. Reducing budget may have short term benefits but ultimately could lead to long term failings.
‘Credit Crunch Song’ by Antan Debt & The Overdrafts
According to Nigel Hollis of Millward Brown, reducing marketing spend during times of trouble is counter-productive. He strongly believes that reducing your marketing spend “may leave your brand in a less competitive position when the economy recovers. Over the years, research studies have confirmed that the best strategy in terms of long-term ROI is to increase marketing expenditure during an economic slowdown”.
Be smart
It’s all very easy for me to sit here and recommend greater marketing investment to combat the recession, but clearly this alone won’t guarantee security and prosperity. Having worked client side I’m also very aware of the politics and internal “debates” that often exist around the issue of the marketing budget and just how difficult a budget can be to retain.
So how should a business react if its marketing budget is indeed given the guillotine treatment? There are a number of initiatives and business rules that can be implemented which can not only help secure survival but can also help secure additional market share from your competitors.
The focus of the business in times of trouble should generally be selling to existing customers rather than trying to secure sales from prospects. Depending on the industry, it can often be 10 times more expensive to close a new business deal than it is selling to an existing one. Speak to your customers regularly about different aspects of your business and ensure the communication is varied and interesting. By speaking to your brand advocates about new products and services on a frequent basis you’re giving yourselves the best opportunity of securing a larger share of that customer’s wallet or, indeed, purse.
Recycling and rethinking
Don’t be afraid to recycle an old idea or a previous piece of creative. If you’ve previously invested time and financial resource in a campaign and it’s worked, there is no shame in using it again or using it as the basis for another campaign. At Red C we’ve implemented several low cost campaigns based on previous creative/ideas that have generated significant ROI.
The art of taking an existing idea and creating something new
If you have business rules in place which determine whether a prospective customer or client is worth pursuing then perhaps those rules should become a little more flexible. For example, you could only consider clients of a certain size, or exclude those located outside a certain geographical range. Or you may turn away prospective customers with credit risk. And could these rules be loosened a little in the other way too? Clients and customers that you might have once turned away for one reason or another could well make all the difference in times of a recession. Not only in relation to immediate sales and income but because business is fundamentally about people, and you can never have too many contacts.
Boosting your service levels
The credit crunch undoubtedly creates an environment whereby competitors are undercutting each other on price. This can often create a scenario in many industry sectors where cost becomes less of a factor in a customer’s mindset. So businesses should be endeavouring to ensure other areas of the business, such as customer service, is of a superior level to that of their competitors. This can stem from something as simple as a prepared welcome telephone call, or an editorial newsletter packed with value added content.
When it’s likely that our clients and customers are experiencing difficulties, it’s also very important that we portray a degree of empathy in our marketing material. For many of our clients, we’re seeing some excellent results on the back of campaigns which are speaking openly about the credit crunch. By being honest and showing understanding, we’re enhancing the brand perception of the business and ultimately improving our overall standing with the customer.
The credit crunch is undoubtedly a difficult time for us all – there’s no getting away from it. However, it isn’t necessarily all doom and gloom. There may in fact, be just as many opportunities for creative marketing as there are threats to it. As I’ve said, in every situation there are losers… and there are also winners.
If you would like to find out more about marketing during the credit crunch or would like to discuss anything in this article, please call Red C on 0161 872 1361 or click here
Tags: Budgeting, Cadbury's profits, Creative recycling, Credit crunch, Customer service, Dale Winton, Doom and gloom, Durex, Hole in The Wall, Marketing budget, Recession, Selfridges chocolate, The Camping and Caravanning Club
