Marketing in the down economy

Reinforce don’t reinvent

By Barry Vucsko

May 28, 2009http://rblb.wordpress.com

Marketing in the down economy

Marketing’s Fate Intention & Expectation

Reinforce don’t reinvent

How we process messages Reinforce Don’t reinvent

Social Media

Marketing in the down economy.

In an Epsilon study, 94% of CMOs and other marketing execs agreed with the statement:

“A tough economic period is precisely the time when marketing plays a key role”

Average tenure for a CMO: 18 months

Marketing’s Fate

As unique as this recession/depression is,

Its result on marketing is, unfortunately, nothing new.

Marketing’s Fate

Marketing’s Fate

Cutting back on “non-core” functions--anything that doesn’t

design, build or distribute the widget

Marketing’s Fate

Cut backs on marketing communications (brand strategy, advertising, promotion,…)

Marketing’s Fate

Marketing Communications is a lifeline How a company announces new productsHow they converseHow they educate about their productsHow they build their brandHow they create loyalistsHow they understand their customers

Marketing’s Fate

Marketing Communications is a conversation, cut it short and customers will forget what

you were saying

Intention and Expectation

Intention: Your customer’s desire or need to

buy your products.

Expectation: What they think about, or expect

from, your product. Expectation is BRAND.

Intention is Waning

This economy is killing or changing intent.

Customers are tuning off

They’re in saving mode

They’re looking for alternate (often cheaper) solutions

Putting things on hold (“wait and see” attitude)

Four Types of Intent

Status Quo Intent

Price Competitive Intent

Postponed Intent

No Intent

Expectation is BRAND

The more customers expect of a brand the more supported that brand becomes.

Expectation is BRAND

Customers expect things based on:Brand HistoryBrand PromiseBrand’s relation to its competitionMarketing Communications

Marketing Communications builds expectation

Decreasing marketing communication

Decreases expectation

Intention/Expectation Equation

Waning Intention

+

Reduced Expectation

=

-(I)+-(E)=

Intention/Expectation Equation

-(I)+-(E) =

Reinforce don’t reinvent

How we process marketing messages

Most psychologists and educators espouse that we learn new things by relating them to past things.

When brands reinforce their message, they are aligning past and present

This alignment strengthens the brand and creates reference points.

How we process marketing messages

Brand Messaging

Short-term Memory

Long-term Memory Store

Product Evaluation

Beverage

Soft Drink

Coke Pepsi, 7Up

Stored as “networks” of associations

ST activates LT store based on frequency, recency and elaboration

*Sternthal & Lee, 2005 Northwestern University

Expectation

Our minds are like old buckets.

Brand communications fill those buckets

Customer expectation IS your brand.

They increase expectation.

If you don’t fill them they go dry

The wood cracks

They get kicked over

People use them as a place to store mops, sponges and dirty rags

Buckets leak.

It takes a lot to fix and fill that bucket.

Acquiring new customers can cost 5 times more than satisfying and retaining current ones.

Murphy & Murphy, 2002, Leading on the Edge of Chaos

A 2% increase in customer retention has the same effect on profits as cutting costs by 10%.

Murphy & Murphy, 2002, Leading on the Edge of Chaos

A 5% reduction in customer defection rate can increase profits by 25%-125%, depending on

the industry.

Murphy & Murphy, 2002, Leading on the Edge of Chaos

The average company loses 10% of its customers each year.

*Murphy & Murphy, 2002, Leading on the Edge of Chaos

This is not a normal recession.

REINFORCE

Strategic Reinforcement

Elaboration of recognizable

product characteristics and messaging.

Strategic Reinforcement

1. Reinforce where needed most

3. Reinforce often

5. Reinforce in the same ways

Don’t Reinvent

Don’t Reinvent

Waning intent, diminished budgets AND new messaging will harm your brand

NO Porsche Every Day Low Prices

NO Nike Orthopedic Shoes

NO Hershey’s Lager Beer

Don’t Reinvent

Reinvention only as a last resort and as a corporate, rather than marketing, strategy

Don’t Reinvent…Unless

Dying industriesDying brands

Changing technologyChanging generations

Stay Connected

Don’t stop listening.

Know the marketplace

Know your customer--research to learn who they are and who they are becoming

Know their worth--perform Customer Lifetime Value analysis

These will tell you if you need to reinvent.

Tactical Reinforcement—Social Media

Social Media Blogs Networks (Facebook, Mixi,

LinkedIn, Twitter etc) Wikis Forums on existing site

Knowledge Networks survey:

“Less than 5% of social media users regularly turn to these sites for guidance on purchase

decisions in any of nine product/service categories.”

Knowledge networks survey:

“The largest percentage, 54%, said that

“staying connected” is what they like most about social networking sites.”

Bebo.comBlackplanet.comCafemom.comClassmates.comClubPenguin.comDel.icio.usDigg.comFacebook.comFlickr.com

Friendster.comHi5.com

Imeem.comLast.fm

Live.comLinkedIn.comLivejournal.comMyspace.com Myyearbook.comNing.comPicasa.comPlaxo.comReddit.comReunion.comTagged.comTwitter.comYouTube.com

How to use social media wisely

Don’t throw tactics at your customer

Social Media should NOT replace advertising.

It’s a PR tool

Figure out your marketing goals

Can Social Media help you meet these goals?

Know your Social Media users

Creators

Critics

Collectors

Joiners

Spectators

Inactive

Li & Bernoff, Groundswell 2008

IF..social media is the right choice…

1. Use it for cheap, easy PR.

2. Keep the conversation going

3. Stay on brand

How to use social media to reinforce

Right Brain/Left Brain Marketinghttp://rblb.wordpress.com

How to market in a downturn2009, Quelch & Jocz for HBR

Turning adversity into advantage: Does proactive marketing during a recession pay off?

2005, Srinivasan, Rangaswamy, Lilien

Recapturing lost customers2004, Thomas, Blattberg, Fox

Further Reading