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Marketing During A Recession
27 November 2008
Marketing During A Recession

Marketing During A Recession
John Rose, founder
Rose Advertising + Public Relations
Moscow, Russia
www.rose.ru

The looming crisis in Russia will cause many marketers to reevaluate budgets, strategies, and relationships. Though there may be many challenges ahead for companies as they face the prospect of slower growth and pressure on margins, there is a silver lining in that black cloud. During the last financial crisis in Russia a decade ago, some companies took advantage of falling media costs and slow-to-react competition to capture market share and set the stage for strong future earnings. Here are three opportunities for marketing during a recession.

OPPORTUNITY NO. 1: CUSTOMERS GENERALLY REEVALUATE THEIR BRAND LOYALTIES DURING A RECESSION.

It is no longer business as usual. Many people will be looking for greater value as their buying power weakens. A recession breaks down barriers that make consumers otherwise resistant to new brand messages. This creates an opportunity for brands that have otherwise been unable to capture significant market share in a crowded category or one dominated by a larger competitor. If you are the number 2, 3 or 4 brand in your category AND you have a good story to tell, this could be your best opportunity in years to deliver your story and receive a positive reception. Reacting to the last financial crisis, MTS continued advertising, while its competitor Bee-Line retreated. As a result, MTS substantially grew its subscriber base and overtook Bee-Line to become the number one Russian mobile service provider. And MTS still retains the top spot today, despite Bee-Line's ubiquitous advertising campaign.

OPPORTUNITY NO. 2: MANY COMPANIES WILL TAKE A WAIT AND SEE ATTITUDE DURING A RECESSION.

They will freeze or cut marketing budgets until they have a clearer picture of what lies ahead. This will have the knock on effect of lower media costs. The smart companies will become more aggressive while their competitors have their heads in the sand and they can get more for their marketing spend. Now is the time to be creative and get some attention for your company and brand. Establish yourself as a leader by staying visible through media & promotion and reinforcing your reputation via public relations. Show the world you have a resilient brand and a plan for a sustainable future. Experience shows that market share gained during a recession will return dividends when the economy rebounds. WimmBillDann continued to promote and expand aggressively during the last crisis Ц filling a vacuum left by international competitors who were still licking their wounds. Today they are the leading Russian producer of dairy and beverage products. Saint Springs is another example of a company that continued to expand its marketing programs while the market was still contracting. It grew to become the leader in the bottled water segment and was acquired by Nestle Waters to sit along side its Perrier, Vittel and San Pellegrino brands.

OPPORTUNITY NO. 3: CUSTOMERS EXPECT A DEAL DURING A RECESSION.

People know companies are under pressure and will expect them to react to the recession with superior products, special offers and better service to win their business or get them to buy during a recession. You don't want to disappoint them. But unless you run a volume business where you plan to always be the price leader, you shouldn't feel obliged to lower your prices to win business during a recession. Sure, discounts will move inventory today, but it may come at a high cost in the future through the loss of brand value. The key is to give your customers more rather than charge them less. Remember, it is all about value, not price. Expand product features, extend warrantees, provide special financing terms and offer enticing rewards for becoming loyal to your superior brand. Electronics retailer M-Video owes much of its success to creative promotions it began during the last crisis to lure customers and build loyalty Ц a practice they continue to this day. Currently, together with Sony Ericsson, they are giving away a card that provides free cinema tickets for one year when you buy select mobile phones. Their customers will be escaping the Russian recession to Hollywood (at least in their imagination), and will no doubt reward the company with loyalty and future purchases.

It's easier, of course, to follow the market and do what the other guys are doing during a crisis Ц which will probably be very little. However, with a better understanding of the short window of opportunity brought on by a crisis, and a little chutzpah, your company could use this recession to build a stronger brand and a more profitable business for the near future when Russia bounces back.

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