Sunday, February 01, 2009

Communications budgets: Marketing lessons from past recessions

What are the marketing lessons from past downturns/ recessions? By cutting communications budgets during the last recession, did corporates gain or loose?

Martin Runnacles, the former marketing director of Jaguar and BMW and currently marketing director of Ultegra Consulting, says, “The key is to avoid distressful marketing and hold true to the quality of the brand.”

UK’s Marketing Magazine also reports that Mark Simpson, marketing director of Ford of Britain, has learned his economics lesson the hard way.

“At all costs, we have to continue to invest in our future products,” says Simpson. “We didn't do that in the last recession, and we paid the price. We gave every marketing cost a haircut back in 1990/91, including our future product plans, and we emerged from recession with poorer products as a consequence. That decision affected us for about five years, until 1998, when we replaced the Escort with the Focus, which marked a fundamental shift in our fortunes. We could possibly have done that earlier by maintaining our investment in product development… The lesson for big ticket items such as cars is that the desire does not change in a recession, so we have to work even harder to convert that desire into purchase.”

It is early days, of course, but the fact that Ford's retail sales were down only 18%in the year to November, compared with 45% for the overall UK retail car market, suggests that its focused strategy is paying off, adds Marketing Magazine.

One of the biggest differences between this and the last major recession in 1991 is what Hugh Davidson, author of Offensive Marketing and a former Procter & Gamble and United Biscuits marketer, calls 'the compelling evidence' that has accrued, indicating that cutting back on investment, innovation, product quality and customer service results in a market share loss that is impossible to recapture.

In contrast, those that maintain, or even increase, their investment can take advantage of falling media prices to steal a march on the competition.

“Companies like Procter & Gamble, Colgate and Reckitt Benckiser have been applying this formula for a long time,” says Davidson. “They rub their hands when they see a recession coming, because they know they can really score.”


Blogger Shirish Subramanian said...

Quite an interesting point you make there. But then, in your opinion, what is it that should be done by entities that can help these big names do their maketing? What would make them more approachable, and get them listened to? Lets look at th other side of the coin too. I think it may lead to valuable contributions to this end of the discussion too.

Blogger J S Sai said...

You have raised a pertitent issue.

Your question reminds me what a very eminent marketing professional had said. "No matter how eminent a doctor is, his place is beside the patient," said the marketing professional. "Doesn't matter if the patient is sinking, stinking... Likewise, a marketing professional has to be with the customer."

Apply this litmus test to any marketing initiative, and you could probably never go wrong. There no short-cuts here. That does not mean we always need big budgets. There are ways of evolving effective marketing communications programmes at low cost....


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