Advertising in Recession

8/4/2019 Advertising in Recession

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Marketing in aRecession

June 2008


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...is about turning something

which is seen as a negative...

...is about turning something

which is seen as a negative...

...into a positive more revenue /

sales, greater share of voice and

better consumer relationships

...into a positive more revenue /

sales, greater share of voice and

better consumer relationships


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...the questions a marketing manager

may be asking

What does my CFO want?

What can I doto protect my budgets?

Can we hibernate to save costs?

How will my competitors respond?Does this mean we have to cutour prices?

How will consumers change?

Is there some kind ofopportunity that we can

leverage from this?How will my brand manage?


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And the general answer is:

Lay offworkers

SLASHthe Marketing/Advertising Budget


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You can turn the engine offand

feellike youre gliding...

...put simply...


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...but youre actually falling...



...put simply...


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...but youre actually falling...



...and it takes more power ($) to get back up to your previous

height, let alone go higher than before

...put simply...


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Why not Reduce???

Advertisement shows that your company ishealthy

Garner consumer trust

Stable company

Slowdown ofconsumer spending, but not acomplete halt

Less advertising clutter for consumers to wadethrough

BRAND Image and loyalty


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When we look at a recession we tend

toonly focus on the threats

Threats

1. Spiralling price war

2. Competition for share of

SMALLER wallet3. Consumers confidence

reduces less money in

the market

4. Consumers hunting

bargains

5. Competitor activitydifficult to predict


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butthere are alsohuge

opportunities

Opportunities

There are several

opportunities we can discuss,

but we have focused on two in

this section

1. The cost of

communications deflate

meaning your money can

go further

2. Cheaper CPT channels with

better ROI help with the

CFO!


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Five tips

1. Press for better media deals

2. Reflectthe consumer mindset with a resonantmessage

Wendy's - Message: "Look, I know you have less tospend these days, butthat doesn't mean youhave to eatless."

IKEA - Message: "What recession? Sure thecountry's going through a recession. Thatdoesn't mean you have to."


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3. dontignore your current customers

Ittakes five times more money, time and effort

toacqu

ire a new cus

tomer

than

it

does to keep an existing one.

- Frederick

Reic

hhe

ld, T

he L

oya

lty E

ffec

t(1996)


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4. Gofor direct marketing

5. Test Test Test Innovative methods and newtools ofadvertising


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Last recession

Hindustan Unilever Ltd (HUL) is planning toincrease its ad expenditure this year.

Godrej Industries Ltd is tripling its ad budgetto gain high visibility for allitsproducts. Last year, the Godrej Groups advertising budget was around Rs 60 crore.

Tata Tea and Marico Industries have alsohiked their advertising budgetto pumpup volumes.

Emami, the Rs 700-crore FMCG major, is targeting Rs 300 crore, ensuring a 30 percent growthin sales from its summer care brands. Emami, whichowns brandssuch as Boroplus and Navratna, has declared a 25 per cent growthin FY09. Emamiwillinvest Rs 60-70 crore on advertising and promotions for its brands.

In spite of a slow year for consumer electronics industry in 2008, LG ElectronicsIndia managed to clock revenues ofRs 10,730 crore, a 15 per cent growthover2007, in line withits 2006 growth rate. The net profit margin was at4 per centofsales despite severe pressure on raw material costs. LG willincrease ad and

marketing budget by 10 per centto Rs 400 crore in 2009. In line withits strategy,LG grew by 20 per centin January and February. The company hopes to save $384million through cost cutting and efficiency-improvement measures in 2009.


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Historical Examples


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Recession Born Legends

IBM 1981

iPod 2001


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P&G During the Great depression they

pushed their Ivory soap

Intel during 1990-1991 pushed the campaign

Intel Inside

Walmart launched everyday low prices

campaign during 2000-01


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1974

Connecticut's Stanley Works, one ofthe world'slargest manufacturers ofhand tools

In the heartofthe recession, itlaunched the

bigges

tadver

tis

ing campa

ign

in

its

his

tory-a b

litzofnetwork TV and magazine ads aimed at driving

home the Stanley name tothe consumer market.

The campaign worked, giving the company a largesales and profitincrease in 1974 and preventing asubstantial decline in 1975.Additionally, its handtool business has continued to grow at an 8percent annual rate-twice thatofits competitors.


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GM

Another example is General Motors' Chevrolet division,whichfaced mounting inventories in 1975 due totherecession and highfuel prices.

The company abandoned its traditional practice ofsetting

its advertising expenditures as a fixed percentage ofsales. While volume fell 10 percent because ofthe economic

slowdown, Chevrolet maintained its ad budget and actuallyincreased advertising for its fuel-saving economy models.

Ford Motor Company, on the other hand, slashed

advertising by 14 percentin an attemptto shore up profits.That may have achieved its goal, butit permitted Chevrolettoincrease its market share by 2 percent.


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Kellogs

During the GreatDepression, Post was the leading cereal brand. In factit was the

only cereal brand people would have thoughtof atthe time. But, due tothe

Depression, money was tight and sales were falling.Postfigured they did not need

to continue advertising because they ownedthe market (for cereal) and they

needed to cut expense. Cereal was considered a luxury anyway.


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Kelloggs, on the other hand, took advantage ofthe economy that was suffering. They created apositive ad campaign featuring Tony the Tiger andthe very positive and enthusiastic Kelloggs sloganTheyre GREAT! They DOUBLEDtheir adbudget, and bought ad spots in newspapers andradiotime across the nation.Americans lovedTony the Tiger and the positive message he sent

during a very negative time. Kelloggs brandbucked the trend, and grew quickly, in a timewhen money was tight by keeping their brandtop-of-mind.


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During a recession people shop value stores tosave money and pick value brands for their

essential needs. Nike refused to sellits shoes in

Target,

fear

ing

tha

ts

he

lfpresence

in a b

ig-b

ox

retailer might damage its brand and reputation.So, they bought Converse for $305 million

because Converse had a lower price pointtobegin with. Converse sold so well at Target and

other retailers, Nike made back its entireinvestmentin one year.


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Selective exampleIntel Inside case study bucking the trend altogether

Intel launched its iconic campaign amidst recession

At a time when the rest of their category was competing on price alone.

Intel took their premium positioning directly to consumers.

Intel took advantage of a soft competitive market to aggressively deliver its message

Results63% increase in sales world wide

Became the third most valued brand in the world (behind

Marlboro and Coca-Cola).

Within two years, preference for the brand had risen to

80% and the company claimed more than 75% of the

microprocessor market

Source: Encyclopaedia ofMajor Marketing Campaigns


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Conclusion

Advertising builds strength: Companies thatinvestmore in advertising over a period ofyears experiencefaster growththan those that spend less.

Advertising speeds recovery: Co

mpanies

tha

th

aveincreased their advertising during a recession haverecovered more rapidly than their counterparts thathave maintained or reduced advertising.

Advertising affects sales: Organizations thathave

continuously increased their advertising investmenthave enjoyed similar increases in sales.


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Thank you

Documents

Advertising in Recession