It’s a fairly common assumption that in a recession, marketing budgets are the first to go. And yet Nielsen’s quarterly AdView Pulse report released this week reveals that global advertising spend increased by 3.1% in the first quarter of 2012 (Europe though was the only region to see it decrease). And there’s evidence to suggest that maintaining marketing spend during tough times can increase companies’ market share, if competitors are cutting back. According to MarketingSavant, a consulting firm, businesses that raise marketing expenditure in recessions gain an average of 1.5 points of share. But it’s unlikely that the pressure on marketers for proven returns will ease. How can they make their budgets work harder?
When economic hardship looms, consumers stick with trusted brands as a safe choice, rather than exploring new horizons. Reassuring them with a “we’re in this together” message and reminding them of why they chose the brand in the first place will be key. FedEx, a North American logistics services company, successfully launched its “We understand” campaign in 2009, aiming to position the brand as reliable in difficult times. Consumers will also be looking for the best deals. Marks & Spencer, a major British retailer, has been telling its customers since 2008 that they are getting more for their money with its “Dine in for £10” deal- more expensive than a bowl of pasta at home but cheaper than eating out- whilst preserving its brand image (low prices can be seen as a sign of poor quality).
Beyond pricing tactics, companies will have to concentrate marketing spend on regions that deliver the greatest returns. According to John Quelch, dean of the CEIBS, China’s top business school, of the four Ps of marketing (Product, Price, Promotion and Place) it is place that matters most. In his book “All Business is Local: Why Place Matters More Than Ever in a Global Virtual World”, co-written with Katherine Jocz, he argues that the world’s best global brands are the world’s best local brands. McDonald’s may have a global slogan (“I’m lovin it”), but it has successfully adapted its menu to local markets, from vegetarian burgers in India to a McSpicy Chicken sandwich in Thailand.
“Never waste a crisis. Even if it is not a good one” said US Secretary of State Hillary Clinton. Now more than ever, uncertain consumers will seek the reassurance of known brands, and that’s when marketers need to make their voice heard.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
