The Value of Marketing During a Downturn

January 27th, 2009

Agenda

7:45-8:30am

Registration And Networking

8:30 - 9:15am

Facts On The Value Of Marketing During A Downturn

9:15 - 9:45am

The New Playbook For Marketing In A Recession

9:45-10:00am Break

10:00-11:00pm

How To Think About Pricing And Budgeting In A Downturn

11:00-12:00pm

Digital And Emerging Marketing Strategies In A Downturn

12:00- 12:45pm Networking Lunch

Agenda

12:00- 12:45pm Networking Lunch

12:45-2:45pm

Recessionary Survival Tactics: What‟s Working And What‟s Next

2:45-3:00pm Break

3:00-3:45pm

Offbeat Marketing: Frugal And Creative Ways To Gain Market

Share In A Recession

3:45-4:30pm

Putting It All Together: The Recessionary Marketing Roadmap

4:30-4:45pm

Reflections On Marketing In A Downturn: Discussion And Q&A

4:45pm Event End

After-Event Slides & Resources

The slides and resource links are available electronically after the event:

events.marketingsavant.com/stimulus

password: stimulus

Your challenges

Marketing on a significantly reduced marketing budget.

Building brand identity during a decreasing economic market. Expanding and maintaining brand quality control while moving toward

more digital and social networking opportunities.

Competition.

Maintaining Trade Show costs

I think our most significant marketing challenge is to convince our patients that their treatment plan is necessary despite their perceived

"high cost" of it.

get more people to know about us so we can increase top line revenue from 2008

Owning our thought leadership position and gaining access to target market account leaders.

Creating similar veined materials for greatly varied audiences

New ways to reach the younger generation that savvy and relatively inexpensive

Raise familiarity of the Club to drive support. The audiences are diverse (alumni to top level donors). Limited resources.

What can I do different, but within budget

Where can I get the most bang for the buck.

#1 Maintain volume with current customers. #2 Find and win new customers.

Enrollment - marketing to the 18 year old audience and their parents

Increasing customer base during a sluggish economy.

Not loosing market share from 08'

Recession Slogans

1932: “More than one advertising executive has publicly

acknowledged his debt to the Depression, admitting that it

was not until the pressure of necessity exerted itself that

he really found out how to get 100 cents' worth of value

from the expenditure of every advertising dollar,”

- Advertising Age Editorial on Oct. 29, 1932.

The Great Depression of the 1930s eliminated over

50% of the retailing businesses in the U.S.

An example: In 1930, Scott Paper promoted the high

quality of its toilet paper, saying it was better than

competing brands, which its research had found were

"chemically impure."

By the first 10 months of 1930, Scott's overall sales were

up 14% vs. the same time period in 1929, says Bradley

Johnson, Advertising Age director of data analytics.

Even in the depths of the Depression, Scott persuaded

consumers to spend more on the "ultimate disposable

product," Johnson says.

In 1933, Scott took another bold approach with ads

that touted paper towels as a kitchen necessity. While

consumers were watching their cash, Scott was

able to sell "convenience," Johnson says.

The Depression "was a horrific time, yet consumers

still consumed, advertisers still advertised and

commerce went on," Johnson says. "That's a pretty

positive message for looking at 2009. Things will be

rough, but there will be opportunities."

1970 recession year - American Business Press

(ABP) and Meldrum & Fewsmith study showed that

"sales and profits can be maintained and

increased in recession years and [in the years]

immediately following by those who are willing to

maintain an aggressive marketing posture, while

others adopt the philosophy of cutting back on

promotional efforts when sales appear to be harder to

get."

1974-1975 recession years - ABP/Meldurm &

Fewsmith 1979 study covering 1974/1975 and its post-

recession years found that "Companies which did not

cut marketing expenditures experienced higher sales

and net income during those two years and the

two years following than those companies which cut

in either or both recession years."

1975 RecessionGeneral Motors

In 1975, during a

deep recession in the

automotive industry,

GM introduced Mr.

Goodwrench as the

“smiling, balding

mechanic (with clean

hands)” to help sell

their profitable

services and parts.

1981-1982 recession years - McGraw-Hill Research's

Laboratory of Advertising Performance studied recessions in the

United States. Following the 1981-1982 recessions, it analyzed

the performance of some 600 industrial companies during that

economic downturn. It found that "business-to-business firms

that maintained or increased their marketing expenditures

during the 1981-1982 recession averaged significantly

higher sales growth both during the recession and for the

following three years than those which eliminated or decreased

marketing.”

1980’s Recession

Softsoap out-innovated

giant Colgate-Palmolive in

1980 with “revolutionary”

liquid soap and was later

bought by C-P in „87.

Absolut vodka was brought

to the US in 1981 and had

#1 market share by 1985

Carnation pioneered

premium cat food in 1980

Loyalty marketing was

launched with the first-ever

frequent flier program by

American Airlines

1990-1991 recession years - "Fortune follows the brave,“

announced the AMA, noting that the data showed that most

firms that raised their marketing budgets enjoyed gains in

market share. Among the sample, 15 percent reported "greatly

decreased” ad budgets. Advertising was "somewhat cut" by 29

percent. "The keys to gaining market share in a recession,"

concluded Management Review" seem to be spending

money and adding to staff. Firms that increased their

budgets and took on new people were twice as likely to

pick up market share.

Thought Leadership in the 1990-1991recession

From July 1990 to March 1991, the U.S. economy was in the grips

of a deep recession. Economic growth hadn‟t been as slow since

the Great Depression. American companies severely cut spending

on consulting, information technology and IT services – except in

one area: on firms that could help them reengineer their

operations.

Reengineering was powerful in showing how companies used IT to

make dramatic productivity improvements. But it also

demonstrated to consulting, IT, and IT services firms how they could

greatly increase demand for their offerings: by creating thought

leadership. In the consulting and IT industries, reengineering was

the blockbuster management concept of the 1990s.

More recession marketing facts

Businesses that increase marketing expenditures in

recessions gain an average of 1.5 points of share

Businesses that cut marketing do so at an average

rate of 23% in recessionary periods

Those increasing budgets do so at a rate of 17%

1/3 of retailers shift ad agencies during recessionary

periods

Firms that hire marketers and increase budgets are

2X as likely to pick up market share

Firms that changed agencies were 5X as likely to pick

up market share!

Why the recession works in your favor

The relationship between SOM and SOV

The relationship between brand size and profit

margins

Reduced noise during recessions provides

opportunities

The relationship between SOM and SOV

Share of Voice leads to Share of Market

Increase SOV in year 1, realize SOM in year 2

Depends on competitor SOV reduction

The relationship between brand size

and profit margins

Increasing SOB (size of brand) footprint increases

ROC (return on customer) over time

Increase in ROMI (return on marketing investment)

over mid-term (lower marketing rates + new

customers + retention = >ROMI)

“Bigger brands” enjoy great scale

Reduced noise during recessions

provides opportunities

New product/service launches often have greater

impact in recessions

Lower „volume‟ in the marketplace makes SOV &

SOM easier to capture

Stay away from safe “me-too” offerings

A.G. LafleyCEO, Procter & Gamble

“We have a

philosophy

and a strategy.

When times are

tough, you build

share.”

Facts on the Value of Marketing During a Downturn

Q & A

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