the recession survival guide
DESCRIPTION
A guide to Recession marketing communications and how to survive in tough times.TRANSCRIPT
IMPACTFUL COMMUNICATIONS INTHE DOWNTURN
Leo Rayman, 19-Feb-09
The Recession Survival Guide
Agenda
• Latest Economic Forecast
• Charles Darwin on Recessions
• Three themes:
– Cutting & Spending
– Value & Values
– Innovation & Fame
• Summary & Conclusions
Latest economic forecast
1980-81 1991-92 2001-02 2008-09
Source: IMF, Jan 2009
Source: IMF, Jan 2009
-3.1-2.2 -2.41.9 0.7 0.5
“It is going to be quite nasty”Les Binet, Econometrician, DDB Matrix
People are not going to stop feeding their cats
Market Growth rateCinema admissions 16%Records, CDs, tapes 10%Telecoms 10%Alcohol 10%Soft Drinks 9%Pets 9%Toiletries 8%Confectionery 8%Sports & Toys 6%Food 6%
Annualised increases in consumer spending 1989-1991
Some sectors do well
Charles Darwin on Recessions
Charles Brebner, Plant Superintendent; Richard Deupree
“Recessions accelerate the changes that are already happening”
Ten things to remember
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3.
4.
5.
6.
7.
8.
9.
10.
1. Cutting & Spending
Marketing budget forecasts
Source: IPA Bellwether Survey
A good short-term effect.
Reduced Maintained Increased0%
5%
10%
15%
20%
14%
8%
12%
Marketing spend (as % of market size)
RO
CE
du
rin
g d
ow
ntu
rn
Post-2000 data
Source: PIMS & Malik Management Zentrum St. Galen, with thanks to Les Binet, DDB Matrix
But not everyone is cutting.
Q1 20090%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
51%
31%
18%
Increase
Maintain
Reduce
PR spend intentions
Source: University of Southern California, Feb 2009
Because cuts hinder recovery…
Reduced Maintained Increased
-2
-1
0
1
2
3
-0.8
0.8
2.0
Marketing spend (as % of market size)
Sh
are
ch
an
ge
du
rin
g r
e-
co
ve
ry
(% p
oin
ts)
Post-2000 data
Source: PIMS & Malik Management Zentrum St. Galen, , with thanks to Les Binet, DDB Matrix
…and damage long term sales.S
ales
Budget maintained every year
Zero marketing year 1 then back to usual weights
Half budget in year 1 then back to usual weights
Time
Source: Data2Decisions
The Great Depression
1991 Recession
It comes down to Share Of Voice
Typical SOV-Market Share RelationshipBased on 1096 Brands in 23 Countries
0
5
10
15
20
25
0 5 10 15 20 25 30 35
Market Share (%)
Sh
are
of
Vo
ice
(%)
Derived from Jones (1987)
Brands here tend to gain share
Brands here tend to lose share
Brands here gain share
Brands here lose share
Source: Les Binet, DDB Matrix
The question is what to cut…
Cut the marketing services supply chain…
Source: PIMS analysis of financial performance of 1000+ firms during market slow-downs.
Cutting and Spending(Product) Quality Maintain
R&D and NPD Maintain
Advertising Maintain / increase SOV
Operational /admin costs Cut
Spare capacity Cut (but beware cutting too far)
Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3.
4.
5.
6.
7.
8.
9.
10.
Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6.
7.
8.
9.
10.
2. Value & Values
Recessions change buyer behaviour
Classical Marketing: not right now…
The Great Unknown: How will Value brands fare?
Stelios Haji-Ioannou
Value marketing: Grow new markets, Low pricing, Low cost systems
Growing Markets
The Perils of Followership
Microsoft XBOX 360 Nintendo Wii
Source: Blue Ocean Strategy (Chan Kim/Mauborgne)
Red Ocean Strategy Blue Ocean Strategy
“Tough times make people think more. Something called value
becomes even more important; and sometimes that’s the same as
price but very often it isn’t.”
Source: Jeremy Bullmore
Value not just about Price
Source: Millward Brown Brandz 2007, 500+ brands, 23 categories
Emotional brand campaigns more profitable
Source: Les Binet, IPA Datamine
Increased sales by an annual average of 8% over three years
Ruler Brands do better in tough times
Don’t abandon the brand…
It all comes down to knowing your customer.
Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6.
7.
8.
9.
10.
Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6. Grow markets not just market share
7. Invest in brand as a strategic asset
8. Institutionalise customer insight
9.
10.
3. Innovation & Fame
Source: Epsilon US CMO survey, Summer 2008
Recessions accelerate change
“Something has changed and the reason for the change is online activity, where personal recommendations have become more important and its clearly editorial and its clearly not Advertising-based.”
Word of Mouth (someone you know)
Word of Mouth (from Internet supported by others)
News Story
Word of Mouth (from Internet, in isolation)
Advertising
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00
8.40
6.80
6.40
5.80
4.60
Source: Jon Leach, Pattern Recognition
What influences purchasing decisions?
People buy famous brands
Source: Les Binet, IPA Datamine
Source: Weber Shandwick
Content
Community
Connect
Conversations
The Story
Keep the conversation going on TwitterDo our six recommendations agree with the successes and failures you’ve seen? Use the #Web2.0work hash tag to respond to this article on Twitter. We’ll be following them and responding via our McKinsey Quarterly account, @McKQuarterly
Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6. Grow markets not just market share
7. Invest in brand as a strategic asset
8. Institutionalise customer insight
9.
10.
Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6. Grow markets not just market share
7. Invest in brand as a strategic asset
8. Institutionalise customer insight
9. Design campaigns for fame and talkability
10. Social marketing is the way of the future
Summary & Conclusions
Source: McKinsey – Perspectives on Finance and Strategy Winter 2009
Signs of Recovery?
It isn’t all bad.
It isn’t all bad.
Tino Schaedler: Stratocruiser – future airship EF Schumacher – a different kind of economics
3 things to take away
1. If you cut, cut less than your competitors
2. Insulate yourself through the power emotional branding
3. Maintain innovation and fame-building campaigns
“The future, as always belongs to the brave”
Source: Bill Bernbach