This is an interesting article that I came across in a leading marketing & business magazine. I found it a good read.
What’s common to Hyatt Corp., Burger King Corp., Microsoft Corp. or FedEx Corp. or CNN or MTV? They all debuted when the economy slowed down. Yes it’s true, a lot of today’s well-known and successful organisations were born during a slump!
It’s said when things slow down, that’s when true winners emerge and they almost always beat the competition by creating something new, something unique. Topping the list is Apple. The company worked on iTunes, iPod and its retail stores during the last slowdown and once the growth momemtum returned, Apple was ready to destroy and crush all competition.
As the economy slows, the speed with which new ideas services and products are being introduced is increasing. Ben Sann, a 20-year-old has introduced BestParking.com which allows customers to scan the parking lot prices in four major cities and figure out which ones have the best deals. His sales have hit $250,000. Innocent, the famous brand selling smoothies in Europe, has chosen this time to branch out into convenience foods with a new range called VegPot. Tesco is planning to launch a bank. It feels there is a need for this service and people trust it hence this is the best time to introduce it. “Travelodge” has applied the budget airline model to its hotel trade and is seeing an increase in its bookings by 45%
Kellogg and Post were close competitors in the breakfast cereal market in 1929. When the Great Depression started Kellogg’s maintained its advertising spend while Post cut back. Till date Post has not been able to beat Kellogg’s dominance in this category. Similarly Philip Morris and Revlon did not cut back on their advertising spends during the 1975 recession and gained market share, while Avon and Hershey cut and lost. Pizza Hut and Taco Bell ate into McDonald’s market share during the recession of the 90’s when the latter cut its advertising budget. In the same year Kraft salad dressings and Jiff peanut butter, both raised their marketing budgets and their sales increased correspondingly by 70% and 57% respectively! Times are hard, but it is times like these that give you that unique opportunity to stand out. It’s time to be aggressive – but wise. Ads during a slow down need to be positive and sensitive. Look at Walmart’s current ad campaign “Save Money. Live Better.” It seems to work fabulously.
The first reaction of most is to cut budgets. But remember, every time you cut, you give the consumer a chance to forget. According to Thomas Garbett who researched 30 companies during the 1981-82 slowdown, “Memory decay can be as rapid as a few months.” Importantly, ads shape perceptions of consumers and you cannot just stop doing it. After all, clear brand association and leadership comes through communication. From Chevy to P&G, all knew this and kept advertising – for that’s the only way to maintain brand loyalty. People associate stability with brands that keep advertising. Moreover this is the time to get some of the best media deals too. A slowdown in fact is the right time to build a greater share of market through aggressive advertising and marketing. This is the time to do things differently from your competitor and stand out.
John Von Neumann invented the ‘Game Theory’ while playing poker and he realised what winning was all about. He said, to win, you don’t play based on your knowledge of probabilities, but on the knowledge of your competitors’ psychological needs and behaviour patterns. This is the right time to study your competitor and do a little more than him, you will standout doubly. Good times or bad times, never forget your basics. According to Ken Wheaton in Advertising Age, “For all the talk of change, for all the rhetoric about new media, Barrack Obama rode to victory the old fashioned way – he outspent his opponents.” No wonder the media paid him back dearly with positive articles over negative ones by a margin of 7:1, more than any politician in American history.
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