The New Playbook for Marketing in a Recession

January 27th, 2009

The old playbook…

“…build a recession

marketing plan based

on the firm’s strategic

capabilities”

“…response to the

recession varies by

geography, sector and

firm size”

The new playbook

There is no panacea

Strong firms benefit from investment and suffer from

cost cutting

Proactive marketing is not always a guarantee of

success

Firm’s viewpoint on the recession determines strategy

“How an organization perceives a change in the

environment affects the level and type of response”

Focusing on historically profitable regions and

customer groups will miss the mark

Four prescriptions for managing through an

economic recession

Prescription Explanation Effect

To conserve resources

Position the firm in multiple

markets and geographies.

Sales are imperfectly correlated

across regions and industries.

Creates a balancing effect on cash

flow.

Plan for the contingency of

sharply declining sales.

Recessions are hard to forecast;

sales declines are a leading

indicator.

Facilitates a swift response to

recession.

To attract resources

Promote the business in tough

times.

Customers often rethink supplier

relationships during tough times.

Makes new customer inroads.

Prepare to exploit the recovery

with careful investments.

When competitors are conserving

cash, desirable hires, capital assets,

and even companies may become

available.

Adds capacity or customers at a

discount.

One way of looking at things…

Corporation

Customer

Competition

Conversation

Recession marketing framework

Internal Branding and Morale

Employee issues are critically important during

recessions and in preparation for recovery

Constant communications has been proven to sustain

high morale and maintain company strength

For Example: Black and Decker increases communications during times of recession in

order to maintain morale and credibility among their employees.

• The company alerts employees to changes in their respective departments

• They communicate up front what the managers see as areas for potential reductions in

employment or financial support

• Black and Decker continues its investment in organizational development

• The company philosophy is to promote employees from within, even during a recession.

Multiple markets and geographies

Examine your customer base for cycles &

counter cycles and prepare to shift focus

Examine regions, or even parts of the

city/state/county that have performance

differentials

Identify customers less affected by recession

Who needs your help the most in the recession?

Could you do more business virtually, not

dependent on local geography?

Micromarket to profitable segments

Consumer marketers with access to micromarket

data have even more opportunities to enhance

profitability.

One beverage company recently conducted surveys that

identified staggering differences in the potential profitability of

customers within individual markets and micromarkets. A

company can maximize its profitability by focusing on

micromarkets less sensitive to prices while also offering discounts

or preferential pricing elsewhere to drive sales volumes.

Micromarket to profitable segments

Plan to confront declining sales

Ear to the ground, “CRM mentality”

Don’t believe that economists (3/01 – 90% said “no

recession)

Get comfortable with the data – it’s all about the

data!

Setup trigger points at which you invoke different

parts of your recession marketing plan

For Example: In 2001, ADC communications, a competitor to Lucent, Cisco and Nortel

saw it’s sales degrading to the point of a 27% dip. The immediately retrenched, changed

course, implemented a recession marketing & sales strategy and gained market share on

each of their major competitors that they retain to this day.

Promote products & services

Don’t be tempted to abandon planned initiatives

Supplier switching activity peaks during recessions!

Cheap advertising = higher ROMI

Your best prospects are your competitors best

customers

For Example: Dixieline Lumber, a 10-unit San Diego chain, two marketing initiatives

helped increase company sales by 9% during the recession of 2001.

1) The first was directed to the building trade and involved training the in-store sales

force to assemble hardware packages for custom-home builders.

2) The second initiative was directed at homeowners and involved increasing marketing

on millwork as homeowners switched from spending on traveling and entertainment

to fixing up their homes.

Maintain advertising & marketing

All data points to higher post-recession market

share for sustained or increased investment

Confidence is built through sustained successful

efforts

Mix in new marketing vehicles to maintain reach but

reduce cost

Steady marketing sustains brand awareness and

position with consumers

For Example: Carpet Mills of America increased its sales by 24.4% during the recession

of 2001 simply by sustaining their overall marketing efforts while their competitors

shuttered their marketing.

Introduce new products & services

Historically, some of the best innovations come from

recessions

Less noise and clutter means more room for you

(increase SOV & SOM)

Innovations are proven to keep customers buying in

times that are otherwise slow

For Example: There are two examples of great interest:

1) Paychex, an payroll processor, launched Taxpay in 1990 as an additional service for

it’s existing customers on Paychex. It brought in a burst of new revenues from

existing customers while introduced new customers to both Taxpay and Paychex,

setting itself up nicely for the recovery

2) Black & Decker introduced a highly successful line of 33 new power tools during the

1990 recession that set it up to capitalized on the DIY boom of the next decade.

Find price cut alternatives

Don’t send unintentional messages training your

customers to buy on discount only

Bundling, repackaging, white labeling, adding

service elements to products, tiered offerings and a

host of other mechanisms can sustain profitability

without entering a price war.

For Example: Grocery stores, department stores and other retailers often seek to raise

the profile of their own labels during recessions, often rebranding things to give them

broader appeal while increasing their profitability.

Microsoft and others have always sold a ‘bundled’ set of products that offers value while

maximizing profitability. Offer packages, include service offerings and seek out

customer input on what will provide the most value to them.

Attract new customers

Now’s a great time to get deep profiles of your

best customers (“Vertizontal”)

Focus on solutions – deep understanding of

customers includes deep understanding of their

needs, problems, pain points & desires

Maintain marketing presence as a show of strength

Capitalize on competitors pullbacks by

approaching their customers

Employ new marketing tools & channels to attract

customers from new media

Reprioritize marketing vehicles

Reevaluate the

effectiveness of current

vehicles

Shift 10-15% into new

media

Conduct a marketing

audit, don’t just do

guesswork

Reprioritize customer segments

Analyze customer segments for profitability to

determine shifts

B2B should examine risk on a per-customer basis

Watch where the trends are going

Setup tiers of customer segmentation

Core

Secondary

Opportunity

Harvest

Prepare for economic recovery

Typical recessions are 6mos – 2 years … Prepare

your plans for a 2 year horizon

Look for bargain acquisitions, leases, employees,

whatever you need to be successful on the upswing

Marketplace protection moves rapidly to

marketplace expansion

You’ll be flush with cash from the new customers

acquired in the downturn, ready to expand into the

recovery

Recession marketing framework

The New Playbook for Marketing in a Recession

Q & A

Need help after the presentation? Email dana@marketingsavant.com