This is the ideal time to show you customers how much you love them and build up market share for when the upturn comes. John Sanders reports.
It’s hard to get marketing experts to agree about much, but most go along with this: In a downturn, you need to get the basics right and steer clear of anything whacky or zany. That means focusing on quality, competitiveness and safeguarding the reputation of your organisation.
The collapse of banks and familiar High Street brands like Woolworths and MFI has left consumers in desperate need of reassurance. Above all, they want to know that the organisations they shop and bank with will be around when the recovery comes.
“Everybody is a little bit nervous,” says Jon Hollins, managing director of Cardiff-based Freshbaked PR. “They would rather keep their money under the mattress than in a bank or spend it. We have to give people reasons to trust us and deal with us and convince them we will give them value for money.”
How and what you communicate with customers changes in a recession, says Hollins. Organisations should thank staff and customers, protect jobs and make customers feel valued. “Getting those messages out is really important, because it’s about the ‘we’re in this together spirit’. The customer doesn’t mind spending money with companies that they think are not profiteering,” says Hollins.
This is in stark contrast to the corporate message of the past two decades, which focused primarily on shareholder value. “Don’t take the customers’ spend for granted. Give them something extra. Now is the time to reward your customers. If you focus on that in the next 12 months, then hopefully they will come back and reward you for the next 12 years,” he adds.
Companies are advised to steer clear of linking marketing messages with conspicuous corporate wealth or success – an approach that could easily backfire as greed is well out of fashion.
Some argue that the change in attitudes triggered by this recession is swifter and more significant than in most previous downturns, citing the interest in “staycations” (staying at home instead of holidaying abroad) as one sign of a much bigger shift.
For the first time, significant numbers of people are basing purchasing decisions on environmental impact, sustainability and where products come from. Choosing not to fly abroad on holiday fits that pattern well. Similarly, increased sales of better quality meat and food support the view that environmental issues are gaining ground.
“People are making fewer but probably more considered purchases,” says Jonathan Deacon, marketing expert at the University of Wales, Newport. “So instead of rushing out and using retailing almost as a contact sport, people are asking: ‘How many T-shirts do I need?’ and considering their purchases a little more.”
He links this shift to broader societal changes such as Barack Obama’s election as US president and the outrage over politicians’ expenses in the UK. These moves towards greater transparency and accountability “cannot be divorced from how we go about our daily purchases of goods and services. We are part of that society. Therefore that trickles over into our other behaviours as well”.
Deacon advises company owners to factor these attitudinal changes into their marketing. “Organisations that are transparent, open and more forthcoming with information and provide accurate detail are likely to be the ones that appeal – not on a price or service level but on a moral and motivational level to the audience,” he says.
But finding the right tone can be a challenge. Organisations have to tread a fine line when responding to the mood of these straitened times and should avoid reminding people they are worse off than a year ago. “People don’t want to be told they are short of cash. They want value,” he says.
Research also indicates that retro items, such as music and fashions from the past, and even Wispa bars, become more popular during a recession. This is because “we find comfort in those things from our past when times were better. It’s the old values, the old brands, the nice cosy things we enjoyed, the names we were familiar when times were good. They are our little safe havens”, according to Deacon.
He rejects the idea that price is always the main factor in purchasing decisions, adding: “Every good piece of research will tell you that price is not number one on the list of purchasing decisions. There is a change and people are making very interesting purchasing decisions at the moment based on factors that are non-traditional.”
But that’s not to say that price doesn’t have a role to play. Cake-maker Finsbury Foods, based in Cardiff, has made some of its products more affordable. But brand director Mark Bruce says this has not been at the expense of quality: “It’s about value for money, which is a combination of quality and price point. That remains the case whether we’re in a recession or whether the economy is booming.”
Over the past 12 months research from Finsbury’s focus groups indicates that price is moving up the consumer agenda. In some cases the company can take account by offering consumers the chance to buy in smaller volumes.
So far the strategy is working. Sales to supermarkets – Finsbury’s main customers – remain strong, partly, believes Bruce, because people are eating out less and entertaining at home more.
The company, owner of Memory Lane Cakes, highlights the resilience of brands in a recession. “People place their faith in brands because it’s clearly understood what that will deliver – whether that’s a food product that delivers great taste or a service in terms of a holiday operator,” says Bruce. “The brand gives them the trust that when they spend their hard-earned cash they are going to get value for money.”
The benefits of marketing spend can be easier to demonstrate in a recession. Reduced competition means advertising can cost a bit less, yet produce a bigger impact.
“When your message gets out there, you get a much larger share of voice,” says Hollins. “So during a recession you will be seen to stand out much stronger from the crowd.”
He adds that organisations should learn how to exploit new media and low cost interactive marketing tools like Twitter and blogs. “It goes back to the basics of trust and reputation. Nothing can help build that more than a personal recommendation. The internet allows that to be a mass market and instant tool for people.”
Also in: July/August
-
Editorial
Whenever I start to feel a bit jaded, I head for the Valleys. You can always get a bit of inspiration and conversation there.
-
Interview: Peter Griffiths
Peter Griffiths needs all his boxing instincts about him as Principality defends its patch. Douglas Friedli meets a born fighter.