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recession proof marketing
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Recession Proof Marketing Written by Sumit Gupta Course MBA (IB) First Year Indian Institute of Foreign Trade Recession Proof Marketing Abstract Recession the word signals declining sales, mounting inventories, declining margins, employees demotivation, uncertainty of cash flows. The obvious measures like across-the-board cost cutting often end up destroying value. It is those who can look beyond the obvious (and often erroneous) who emerge as winners. This paper looks at how marketing in recessionary times is different from the boom times and needs to be adaptive in the changed circumstances. Firstly we will develop the perspectives for marketing in recession. We will then present how marketing is to be adapted to the difficult times through Seven specific strategies. Our points have been adequately substantiated through the examples of various companies who have been noteworthy in adopting the strategies. I. The perspectives Recession provides an opportunity for change and re-configuration. If we view market as a system of relationships, the recession upsets the existing balance in the system. This takes away the inertia in the existing configurations. This loss of inertia will enable one to reconfigure ones relative position in the market place. The strategies outlined in the paper are a series of planned and proactive measures to undertake when recession strikes, and prepared in advance. It is not as if these strategies don’t work in non-recessionary times. They do, but they take a centre stage in a company’s strategy. It is not a string of knee-jerk reactions to short-term pressures on performance but a well thought-out and conscious strategic decision. To begin with, let’s look at two major issues that completely change the consumer’s mindset in terms of needs fulfillment and buying behavior: 1) It might be useful to look at the essential needs of humans, to get an idea of what motivates humans to act, to change, or to buy products and services. Psychologist Abraham Maslow suggested that we each have a "needs hierarchy" which essentially tracks our life cycle from birth to maturity. Maslow has used a ladder analogy to picture this hierarchy because individuals are not motivated by the "higher" needs until the basic ones have been filled. On the other hand, all of the needs are recurring, so they are up and down the ladder quite a bit. What changes during recession is the relative importance of these individual needs. Consumers emphasize more on fulfilling their basic needs first instead of aspiring for fulfillment of higher order needs. This makes it imperative for any marketer to see if he can relate the major benefit of his product or service to one or more of these essential basic human needs. Then re-focus his marketing -- his wording, his look, his positioning statement -- so that it is clear just how he can help a person have his or her basic lower order needs met. “What psychological "button" does marketer’s message push to get the attention of those he can help” is the prime question required to be answered here. 2) The big brands become vulnerable during recessionary times. The external cause of vulnerability is in terms of mindshare of the customer. The customer questions the value of the offering and becomes particular about the marginal benefit of additional features of the product. She evaluates it in terms of its functionality and her need, assigning a high weightage to those features. This brings all products in the market close to one another than before in terms of their value in the mind of customer- even for the brand loyal customer. What is worth consideration during recession is that consumers place higher weightage to the core benefits & features related to the product instead of going after non-core attributes Consider this example: Let us say the attributes of a product ‘X’ are a, b, c, d, e, f, g. Out of these, let us say a, b and c are core functional attributes, ‘d’ is a psychological attribute like prestige value, ‘e and f ‘ are special or unique features of the product and ‘g’ is the brand name. Core Functional Attributes Psychological Attributes Special or Unique Features Brand Name a B c d E f G Weights W1 W2 W3 W4 W5 W6 W7 The value of the product = a*W1 + b*W2 + c*W3 + d*W4 + e*W5 + f*W6 + g*W7 Where Wi is the weights assigned to each attribute, W1+W2+--------+W7 = 1 The weights given to different each of these attributes varies across segments. But in any segment, the weightage assigned to the core functional attributes ‘a, b and c’ increases and that of other attributes reduces, when the customer is apprehensive of spending. As a result the differential between a superior product and a basic product reduces. Specifically the products, which bank on non-core attributes and on brand name, will suffer the greatest value erosion in the mind of consumer.
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