crisis and recession

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RACING AGAINST THE CRISIS

Lisbon, 28 November 2008

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WHAT´S THE FIRST MISTAKE BUSINESSES MAKE?

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Faced with a downturn, many businesses cut advertising and marketing spend. But it's their biggest commercial mistake.

In every recession of the past 90 years, independent studies show that the businesses who increase their advertising spend are the ones who survive the tough times and thrive afterwards.

That's why we're still advertising. Make sure you are, too.http://www.ftadmin.co.uk/downturn_web/index.html

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When the crisis ends the brands will need to have a customer base

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What does a recession mean to the branding industry???

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Recession is certainly unwelcomeable for branding industry.Howerver ,recession may be look edupon as a period for brand introspection . It is a period of test of brand's health.

However ,there are some product categories whose consumption is recession proof.

However ,many corporates may tend to spend less during the recession cycle, some brands can get a long lasting mind space by spending a bit more during the recession period as noise levels would be low.

Every brand must have it's own suitable strategy to combat recession.

Deepak Parashar, Asst. Manager- Marketing, SKF India Limited - February 4, 2008

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Markets will select the best adapted varieties of brands to survive and to develop. This process is well known as natural selection.

Giulio Spallanzani, Marketing Manager, Cantina Puianello - February 4, 2008

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In a recession economy is where the losers and the winners are finally distinguished.

“The recession” will act as a brand accelerator. Those brands who carefully harnessed their brand equity will obviously thrive and the others brands who where lethargic is not even worth mentioning their fate.

David Sanchez, brand consultant, HyperBrand - February 4, 2008

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I think the recession will force lot of companies to communicate about (or to find) their brand soul. More that ever a brand is not just an empowering tool, but values and concrete actions that can create individuals adherence. Finally the matter is more about the having a heart than smartly allocate the budget.

Alessandro Buffoni, International Marketing, L'Oréal - February 12, 2008

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No question: brand up! When consumer confidence is low, it's more important than ever to focus on qualities that make your brand stand above the rest. Hopefully, marketing has layed the groundwork prior to the economy's downturn so when consumers do spend their limited discretionary income, they are choosing your products or services - and feel good about it in the process.

Ikea, which just opened its doors today in the Cincinnati market, is the perfect example of the power of the brand. 11,000 people rushed into the store during the first hour alone. The Cincinnati Enquirer quoted one of the shoppers: "I'm Danish...so part of it is getting stuff that reminds me of home." The Ikea brand - consistent, focused, trendy and affordable - breeds proud Ikea loyalists.

Kathy Parsanko - March 12, 2008

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LEARN –

IN TIME OF CRISIS, WHILE SOME CRY, OTHERS ARE SELLING TISSUES

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PORTUGAL MARKET REVIEW

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The crisis requires to 12,45€ (Shoes shop in Oporto)

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Context planning Context

Consumer

Bad Economic situation

Low consumer price inflation

Unemployment

Low Gross domestic product

CRISIS AND

RECESSION

Low purchasing

power

Increase of criminology

Instability of Government

Depressing times

Financial crisis

Decrease credibilityof brands

More pessimism

Instability of Oil prices

Banks privatization

Housing Crisis More rational

consumer

Increase of cocooning

Low trust

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Now, people save time and are looking for their purchases in different shops, spending more time looking at what gives them more advantage in certain products.

The budget of the Portuguese is increasingly devoted to food and not for hygiene products or drugstore. At the same time, they are cut into leisure activities, investing more in times of homemade consumption.

Source: TNS

The paradigm of the Portuguese consumer is changing:

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And 59% of the Portuguese believe that the economy will be worst. Moreover, Portugal is the European country that have most difficulty in reaching the end of the month with budget (71%, while the European average is 47%)

Examples:- a decrease in fuel consumption: less than 18 million liters of gasoline, representing less than 218 thousand buyers and 998 thousand supplies.-The Portuguese households will spend 4.8% less in their purchases of Christmas this year compared with 2007, according to a study by Deloitte.

However, in each supermarket purchase, there is more 8.3% of items purchased!!!

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Recession Kills Brand Loyalty

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68% of consumers are brandswitchers!!!

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"To buy detergents, I choose Pro (DOB). It is cheaper and better than Sonasol, which smells like fish, as my husband says. I only use DOB´s. Brands are a mistake. VêGê Oil? It’s the same that others, only changes the packaging."

Low Cost Generation, Vox pop Portuguese newspaper.

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In fact…

"people aren't shopping to feel better. They actually are not shopping to feel better."

http://businesssheet.alleyinsider.com/2008/11/conspicuous-consumption-suddenly-gauche

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We all know that consumer behavior changes during a recession.

1. Consumers are more rational - They go more often to the supermarket but buy less.

2. They put off major purchases

3. use social-media as a source for making product purchasing decisions.

4. And trade down to cheaper alternatives!!!

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AND NEW BRANDS ARE BORNING …

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Brands with low cost spirit

In several sectors, the traditional brands lost ground to low-cost alternatives.

The tourism (hotels, airlines, rent a car) and clothing (Zara and H&M) are perhaps the most advanced in this pressure for lower prices.

Other sectors where it will attend a small revolution is the automobile. The group Renault-Nissan is already focusing on Dacia, the Indian Tata is producing the cheapest car in the world and Fiat announced in 2010 that will launch a low cost brand.

And what’s about Ikea? Design at low prices.

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Airlines

Supermarkets

Car insurance

Rent a car

AirlinesSupermarkets

hotelsCable tv

Airlines

Communication Automobile Supermarkets

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So, What role is reserved for marketers in the current time of economic crisis?

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“Maybe, instead of cutting it is necessary to find a cheaper product”.

"Those who do not innovate, stagnate”.

by Philip Kotler

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The turbulence of the economy can also be seen as an opportunity for brands and for agencies. Opportunity to reinvent the industry, products and services.-Need to know how to communicate them, in order to meet the expectations of consumers.

In terms of retail, there was the explosion of brands and product discount, but that's not enough. We need to do a job with consumers who are not confined to the price. There is need to establish brands with new levels of confidence among consumers, and here I speak of reputation and trust.

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We know that many consumers are already hitting the pocket, but they will continue as always to make savings and more rational choices in certain products or services and then doing something that gives them more pleasure, and then spend their money savings.

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If studies show that there are new consumers,

By contrast, the brand must rethink and adapt its offers to this new consumer.

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“In time of crisis it is necessary to improve the consumer experience at the sales and service, to create greater customer loyalty”.

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SOME BRANDS TRY TO FIGHT AGAINST CRISIS…

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Brand - OMO Natural soapCategory- Laundry

A detergent with the efficiency of today but with the price of the good old days. Driver – save a lot of money

Agency: Lowe Lisbon

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Example: McDonald's launched “Eurosaving”, low-price products to continue to attract consumers.

Agency: TBWA Lisbon

Brand- MCDONALD´S

Category – fast food

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Brand – JumboCategory – retail

“Portuguese people love Jumbo because Jumbo loves the Portuguese people" is the claim of Jumbo in the campaign developed by BBDO Portugal. The main objective demonstrates that the Jumbo worries about all the Portuguese, and is attentive to their needs, which is at their side to help and support. The communication helps to create empathy with people, especially at a time of crisis in which people need distraction, moments of entertainment. Agency – BBDO Lisbon

***Jumbo is a hypermarket brand

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Brand - Pingo DoceCategory – retail

Recently, this supermarket brand changed it’s positioning and claim to “Feels good pay so less”

“Enough promotions, loyalty cards, or coupons. We want lower prices”

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With this bet, the Natural shape Luso*** wants to reach the entire population and attract new consumers, who seek the benefit of Luso but don´t like flavoured water. But if this product responds to the demands of consumers, the objective is to be more economic too.

***Luso is a water brand

Brand - Luso natural shapeCategory – beverages

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Other international examples…

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VW

None of houses, cars or pots - American advertisers and agencies are offering cash prizes to encourage consumers to buy. The trend is related to the economic crisis and would be a resumption of a popular form of promotion during the years of depression, the decade of 30, when cash prizes were distributed by advertisers through radio programs and competitions in magazines and newspapers

Volkswagen, Crispin Porter @Radical.Media, for example, produced a series about race with “wannabes professional pilots” in which the winner has led USD 100 thousand of VW.

Source -http://www.bluebus.com.br/show/1/87835/premios_em_dinheiro_para_atrair_o_consumidor_na_crise_igual_aos_anos_30http://www.nytimes.com/2008/11/25/business/media/25adco.html?_r=1

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Pillsbury Home is Calling

Amid wide-spread economic woes, marketers are ratcheting up images of family and the warmth and safety of home. Agency: Saatchi & Saatchi

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Online travel company Zuji Australia believes everyone should be able to travel more. As part of their “Helping holidays happen” campaign, Zuji produced and sold their won household items such as baked beans, toothpaste and toilet paper, and sold them at “ridiculous low prices” to allow people to save for their next trip.

Zuji

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In times of crisis, any charity helps

http://www.fortheloveofwispa.co.uk/?campaign_id

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Starbucks for a dollar

Starbucks CEO Howard Schultz once said, “Our marketing will emphasize quality and service, not price.” But in january 2008 he did something different.

Starbucks sold short-sized cups of brewed coffee for a $1.00 and offering free refills at Seattle-area locations.

http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSN2355697420080123

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Other references:Other references:http://www.wpp.com/wpp/marketing/publicrelationshttp://www.brandrepublic.com/InDepth/Features/860184/survive-recession/http://marketingblog.net/2008/10/02/recession-kills-brand-loyalty-retailers-turn-to-social-media/http://communicate.io/index.php?option=com_content&view=article&id=16:recession-marketing&catid=28:home-pagehttp://brandcameo.org/features_effect.asp?pf_id=414

crisis and recession

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