Marketers in recession ‘Yes, but where’s the money?’

Written by AdMix / Marjorie Teresa R. Perez(joyetteperez@yahoo.com)

Monday, 23 February 2009 22:57

Long before the global financial crisis, business managers were making the most of the ready cash put into consumer pockets by the expanded defense budget and ballooning deficit spending. Rumblings of a coming adjustment to a new information-based economy were shrugged off as irrelevant to prosperous decade of transition. What turned out to be a fatal fallacy for many companies was the failure to understand just how fast new consumer attitudes and the new media and technologies would unravel the business assumptions of the past. The marketing transformation predicted in the past is now history, but many marketers still don’t get it. By and large, the marketing/advertising establishment seems unwilling to let go of the past. Far too many managers remain ill-prepared philosophically to deal with today’s world of constant risk-taking. Businesses are downsizing, employees are being retrenched, consumers are spending less and markets are heading into recession! This year may turn out to be the most destructive in terms of economic scale. I was a witness to the fact when the move from mass marketing to a more fragmented marketplace was picking up momentum—and nothing seemed quite what it had been before. A new world was stirring to life; a world in which dealing with a faceless mass market was giving way to direct interaction with known prospects and consumers; a new reality in which the discontinuity was being replaced by an organic continuum. I did, however, find examples of companies beginning to get some of it right (as I wrote in my previous columns), so that the reader could envision the potential in putting the pieces together. This “wait-and-see” strategy can be critical to your company’s future. The necessity for a new outlook was revealed at a meeting with Josiah Go, author of bestselling marketing and sales books, business educator in the country, and Blue Ocean qualified-strategist who conducted over 500 marketing and sales workshops in almost all industries. Go is credited for bringing into the country for the first time “market-driving strategies [MDS],” a new marketing tool needed to help management get moving in the right direction. “Unfortunately, most companies are still practicing their traditional ways, still trapped in their old paradigm of customer satisfaction, researching customer’s needs and brand, and utilizing tools like price, sales promotion and advertising that are very tactical in nature. This is the right moment to change direction—a better direction!” Go said in a recent interview. Instead of focusing on customers, firms must now add another dimension, which is to focus on marginal and noncustomers. This is where MDS comes into the picture, as it expands the horizons of the firm’s marketing strategy on a strategic thinking level. This revolutionary marketing tool will help marketers and entrepreneurs to weather the crisis and beat the odds. The three pillars Go presented reduced the traditional ways of doing business to their three common denominators: the prospect, making the sale and developing the relationship. This strategy does not mean giving up what your company is already doing. It means examining every step of your selling process, from visualizing your prospect to what you do after the sale is made and maximizing performance along the way. It means adding powerful new capabilities to what you are already doing very well. With the MDS model, it offers a unified strategy approach in which people who are actually or potentially your best customers are identified, motivated, activated and cultivated in order to maximize sales and profits. This is something quite different from the accepted marketing know-how. n Where are you? Instead of following the traditional logic of industry, firms can learn from the logic of strategy by being different instead of merely being better, they can break the industry rules by redefining both the value proposition and marketing activities. n Where do you want to be? Instead of targeting existing customers and using simplistic brand-switching strategies, marginal and noncustomers are the ones targeted. This expands the market and/or increases consumption so companies can thrive even in a downturn economy. n How to get there? Instead of focusing on the existing business system, a thorough review of the firm’s end-to-end chain is indicated for greater sustainable advantage, bringing back strategic thinking to marketers instead of being trapped in the day-to-day tactical side of the marketing mix. “It is possible for firms to increase revenues and profits for 2009 if they know this game-changing innovation and breakthrough marketing thinking with emphasis on the business system,” Go said. He saw firsthand what is possible when market-driving strategies are carried out by farsighted clients. The process of examining and analyzing the achievements of these companies slowly but surely brought us to a startling conclusion. There was a common philosophy underlying the ingenious actions taken to meet the wide range of challenges they faced: a winning attitude that can best be described as having the right vision which is an equally important component of MDS. According to Go, successful MDS can be found in these two companies, the first is a company in the US, while the second is here in the Philippines. 1. Minute Clinic. Instead of doctors treating common ailments of sick patients, it is the nurse practitioners taking over the doctors’ role. Instead of treating all types of diseases, it limits diseases into common family diseases. Instead of charging a high price, prices are published on a menu that is a small fraction of what the doctors or emergency rooms would normally charge. Instead of long queues and appointments in the doctor’s office, a patient walks in and out within 15 minutes. Instead of a doctor’s office, it locates itself beside the drugstores. Instead of following doctor’s weekday office time, it is open daily. As you can see, instead of patients doing self-medication or consulting their parents or friends, new demand is created by those who want faster, cheaper health services without compromising quality, something cofounder Rick Krieger envisioned as he experienced two hours of waiting time when he had to bring his son to the doctor’s office before. 2. Belle de Jour Power Planners. Instead of boring planners, Belle came out with multicolor, design-oriented planners for the fashionista. Instead of showing dates, it is expanded into a two-in-one planner plus discount coupons allowing BJ girls (Belle’s customers) to have the lifestyle they want. Instead of mere profit orientation, it supports women advocacy. Instead of a commodity, it created an online community and supports with various online activities. The result is 50,000 planners sold in 2008, a good output for a relatively new brand created by then 24-year-old entrepreneur Darlyn Ty, who thought of the idea, despite the increasing popularity of digital planners, because she couldn’t find a planner she likes. I believe that a much broader view is needed to be a winner in today’s blazing competition for market share and to win new customers in times of crisis. The likelihood of matching the impressive performances illustrated by the MDS success stories of Go is dramatically increased whenever there is a willingness to look at how a company measures up at every point of contact with the marketplace. MARGOT TORRES: “To survive, we need creative marketing solutions.” New communications approaches urged Marketers must become more conscious of rapidly changing needs of businesses in the country given the economic crisis, as new creative marketing solutions have started to redefine the global consumer’s spending habits and choices. This was the advice given by Margot Torres, this year’s overall chairman of the 21st Philippine Advertising Congress, slated from November 18 to 21 in Baguio City, during a press briefing held recently. The host organization Philippine Association of National Advertisers (Pana) will carry the theme “Perspectives: Ano sa Tingin Mo?”, which strongly suggests that coping in today’s global economic turndown and finding creative solutions to rise above the situation will be the main focus of the congress. Participants will have the opportunity to see things from different points of view—everything from multidimensional and everything relevant to the industry. “We are confronted with a challenging business environment because of the worldwide economic crisis. And to survive, we need creative marketing solutions,” Torres said in an interview. Realizing that the marketplace would continue to undergo radical change, Torres starts a new dance as Ad Con’s overall chairman and must perform well the best way she can, together with a core group of well-known advertising stalwarts, to spearhead various committee work. “Usually, the first thing we do is to cut training; actually advertising, and we have to contend with that. A good delegate’s fee is what we can offer. [That’s why] we hardly changed the fee from two years ago. The second challenge was same thing for the sponsors—they also have their own budgets and under the same pressure [as any marketing company]. Are we going to get the same kind of support? But we’ve been very happy—the industry has been very supportive so even nine months away from the actual congress, we have a healthy revenue sales. We are confident that we can really pull this off,” she pointed out. Torres has already started the challenges of inviting delegates to the Ad Congress in Baguio. With this more accessible venue, the Ad Congress is set on breaking attendance and exhibit records. The trade exhibit, called Spectrum, is set to be the grandest yet. Spectrum will be held at the CAP Convention Garden Wing, to be formally opened by Baguio City Mayor Peter Ray Bautista. Advertisers, suppliers, media and industry players are pulling out all the stops to provide delegates with exciting offerings. The Baguio Country Club will play host to breakout groups, while the Sunken Garden at Camp John Hay will be the venue for everyone’s favorite pastime, lunch and dinner. Plenary sessions will likewise be held at the CAP Convention, highlighted by industry movers and shakers as speakers. At the helm of it all and keynote speaker is none other than business tycoon and philanthropist Fernando Zobel de Ayala, president and chief operating officer of Ayala Land Inc. Track-specific breakout sessions will also be available at Baguio Country Club and CAP Convention where participants can choose from three tracks—creative, marketing and media. Torres noted that they will be strict with regard to the walk area, such that cars will be prevented from entering. “You have to take the shuttles and [we will make sure] there are going to be shuttles that will pass by every now and then. Our rule of thumb here is to move it like clock work.” Apart from the highly informational and interactive talks both in the plenary and breakout sessions, participants can look forward to a lot of fun and exciting activities, from fabulous parties, sporting events to an Amazing Race, photography session, Baguio yours and even poker for a cause! To cap the event, the annual Araw Awards will take place on the last night, where the winners will be judged not just by creative excellence but also by marketing effectiveness. Part of the Araw Awards is a student competition component. The theme “Perspectives” will be highly merchandised and will use the winning logo design of DDB Philippines. About 4,500 delegates are expected to attend and participate. Upside in downturn Amid the doom and gloom of the current global economic crisis, Ogilvy & Mather Asia-Pacific chairman Tim Isaac has offered a glimmer of hope for informed marketers: seize this moment as an opportunity to grow your brands and secure future success. “As the global downturn impacts us in the Asia-Pacific region, it’s tempting to imagine this recession will have a hugely negative impact on all our clients’ businesses,” advised Isaac. “Our experience at Ogilvy & Mather has proven that downturns can be opportunities to differentiate your company and your brand in the marketplace.” In order to inform top company executives, Ogilvy & Mather Worldwide has published a booklet, entitled Optimizing the Marketing Budget in Recession. The booklet offers practical advice on the consequences of cutting, maintaining or increasing marketing spends. It draws upon Ogilvy’s understanding of winning during recessionary times and the latest research into best practice. This is among the seven booklets that Ogilvy has published and posted on the web site (www.ogilvyonrecesssion.com), along with other relevant material. The booklets highlight strategies and tactics across different marketing disciplines that illustrate how clients can support and build their brands during these uncertain economic times. ”While some companies do face real cash-flow issues, the opportunity to win market share through smarter marketing investment is open to most,” said Isaac. “Companies that come out of this recession ahead of their competitors will be those that respond to this recession as an opportunity.” “I believe times like this can also provide opportunities. There are so many things we can learn from similar situations in the past which can be very useful in making us not just survive this recession but thrive in it,” said Ogilvy & Mather Philippines country manager Randy Aquino. PAM GARCIA provides local nsight and advice on how o beat the odds. Tips to survive JWT Manila furnished a global study on the 10 global trends for 2009, based on a JWT Worldwide Study. Pam Garcia, executive planning director at JWT Manila, ran a parallel ethnographic study in the Philippines and correlated her insights with those from the global study. Garcia discussed the 10 trends identified by JWT in its global trend survey and provides local insight and advice on how to beat the odds: 1. Recessionary Living. The threat of a global recession has spurred people to make adjustments in their standard of living, whether it be cutting back on spending, trading down, choosing quality over quantity or becoming adept at relying on their own resources. Expect an uptick in entertaining at home and more DIY activity. More consumers will make brand decisions that cross categories. Locally, adversity begets more creativity. Consumers will do more scrimping and stretching, extend usage and maximize dosage (i.e., baby oil as gel for dad, moisturizer for mom aside from prebath massage for baby). Possibly kids’ needs only during dire times, or extend use to the whole family. Tip: With consumers looking at value for money more than any attribute, companies must learn to start looking at positioning their products to show “critical proof of value” at every purchase. 2. Simple Pleasures. The reality of money running short is a major incentive for consumers to find new ways of enjoying what they have and what they can truly afford. Rather than splurging on extravagant treats and “retail therapy,” consumers will look to simple pleasures as a more suitable and satisfying way to feel good. For example, people will be looking more at the multisensorial experience of outdoor markets rather than expensive boutiques and going for small-cost-but-big-impact purchases like lipstick vs. expensive shoes. Locally, consumers are counting their blessings by mixing and matching what’s already in their closets, and going for small indulgences like food, opting for a movie-house treat instead of waiting for the DVD and trying all kinds of food experiences. Tip: Brands can work out the price-pleasure ratio for consumers. Offer the most pleasure through the product or its surrounding sensory experience at the most affordable cost. 3. The Energy Race. While the drop in oil prices and immediate economic concerns have taken some of the spotlight away from the energy challenge, consumers have already committed to making conscious efforts to save on fuel. Globally, brands like Google, Shell and British Petroleum are also looking into projects using alternative-energy sources. Regardless of a dip or rise in fuel prices, local consumers by now know that they must conserve resources. From timing their air-conditioning consumption, teaching their kids to turn off the lights or maximizing the fuel in their car, timing their trips and sharing taxis with their officemates, Filipinos have realized by now that it makes sense to use resources wisely. Tip: Look for opportunities to align your brand with resource-saving ideas. 4. The Small Movement. Everything is getting smaller, from stores to cars to mobile technology to packaged goods. Detergent, coffee and many products now come in concentrated forms. Locally, Filipinos practically invented the “sachet” and megadose retailing. In a similar fashion, “small” can take the form of consumers wanting more compact and more portable but functionally powerful products. Tip: Look for ideas in your brand that can demonstrate small = powerful. 5. The Mobile Device as the Everything Hub. With the growing accessibility of wireless broadband and affordable broadband-capable mobile phones, the mobile device will become the preferred hub for digital activity. (Example: mobile devices becoming the first PC owned by youths, which is already the case in some developing markets like China.) Locally, the mobile phone as the Pinoy’s “everything” hub can be relative. For a call-center employee, it is his “all-in-one entertainment hub” as he plays his music or watches free TV on his phone while riding the FX public transport. For a young father recently interviewed, it is his social hub—his party music player when he holds impromptu parties at friends’ houses. Tip: Mobile marketing will become imperative for brands wanting to connect to diverse consumer markets. 6. Career Reinvention and Extension. More people will find themselves facing a career break (a.k.a. being laid off), and many will question whether they want to return to the same line of work—either because it wasn’t fulfilling in the first place or because more lucrative opportunities now lie elsewhere. Some will shift to jobs that have more demand but less risk like in the fields of education, government or medicine. Locally, sites and helpful content have sprung up to help the Pinoy with backup options in case of a layoff. Consumers cite the following industries as good backup businesses: food, communication (phone cards and load), repairs, lending, Internet cafés, online training, delivery and transport. Tip: Brands need to look at how their core offerings can help consumers through the turmoil of life and career changes. Likewise, consumers need to start looking for a “Plan B” for income generation and be ready for anything. 7. Distraction as Entertainment. Understanding that people do more than one thing at a time, content creators are turning what could be a negative (distraction) into a positive (an immersive experience). By layering a multitude of media into entertainment, they are creating content designed for simultaneous consumption and engagement. (Example: authors suggesting playlists to accompany their books.) Locally, Nestlé’s Chuckie chocolate milk gets kid appeal with its attractive box packaging that can be turned into a plaything at home and contains a password to an online game. It is a good start at simultaneously engaging kids in three platforms: in-store, experience media and digital. Tip: Brands with imagination can take advantage of this by introducing entertainment with their products as an opportunity to simultaneously engage their customers on multiple platforms. 8. Authenticity Matters. Authenticity will become paramount for brands as they look to regain credibility and trust. In the wake of a financial crisis that has seen established institutions topple overnight and many others teeter on the brink, consumers have lost a great deal of faith in brands once deemed unquestionably reliable; they are searching for truths and clamoring for transparency. (Example: Barack Obama’s authentic credibility connected with voters in the US presidential election.) Likewise, the melamine scare placed authenticity into better perspective as consumers are now more discriminating on where their products come from. Consumer experience can enhance a brand’s authenticity as consumers are allowed to road-test a brand’s core benefit for themselves. Locally, Red Horse Beer, through its Muziklaban rock concert experience, enables its users to experience strong beer in a raw rock experience. Tip: Brands can take advantage of this period to play up their authenticity through genuine consumer experiences, or hyping up their origin as consumers demand accountability and reliability. 9. Redistribution of Power. The coming years will see a widespread redistribution of power in almost every major sphere: economic, social and political. (Example: the growing power of the BRICs: Brazil, Russia, India and China markets.) Locally, consumers are citing the growing power of the young and females in politics. Within a local household, as more and more women find available jobs that suit their skills and personalities, watch out for a redistribution of chores and brand decision-making (i.e., more men doing grocery shopping and more househusbands doing the laundry). Tip: Brands can look at marketing their products to new markets, an example of which is targeting male consumers for products that are originally targeted for the female market. 10. The Collective Consciousness. With the increasing popularity of online technologies and a new global mindset, people are thinking less about “me” and more about what “we” can do—collectively—to address the challenges of modern society. (Example: the online sharing program freecycle.org, which aims to reduce consumer waste). Locally, the study found that a large portion of the below 30s and single below 40s are participating in “small causes.” Tip: Companies need to ask: Can our brand or its properties make a difference in the lives of many people?