Marketers prep for economic recovery

While many marketers espouse consistency in brand message throughout the various economic cycles, experts claim there should be a subtle shift toward a stronger value-added, performance-based proposition that occurs at the cusp of the economy's stabilization.

While many marketers espouse consistency in brand message throughout the various economic cycles, experts claim there should be a subtle shift toward a stronger value-added, performance-based proposition that occurs at the cusp of the economy’s stabilization.

In these tumultuous times, some companies are indeed hedging their bets and have already moved towards modifying current marketing plans or developing new programs in anticipation of halcyon days.

Alan Middleton, an assistant professor of marketing at the Schulich School of Business at York University in Toronto, believes it is the performance function that will reign supreme in consumer minds as they become acclimatized to a healthier economic environment.

‘It doesn’t mean we move away from image advertising, but the market will be pushed to say what is different about the product or service,’ he says, warning that cautious Canadians aren’t going to turn into spending mavens overnight. ‘I think you’ll see less ‘in-yer-face’ image advertising.’

Savvy marketers, he says, will make the switch early – as the economy is about to convalesce, not when it already has. But the million-dollar question is, when exactly will it recover?

Of course, it’s inevitable that the recession will wane. And the soothsayers seem to think it will happen sooner rather than later. According to the latest Merrill Lynch Fund Manager Survey, 86% of 273 fund managers surveyed worldwide in January appear convinced that the global economy will improve over the coming year.

Middleton suggests monitoring consumer confidence as an indicator, as opposed to a corporation’s own sales. However, since the new marketing direction wouldn’t exactly be a paradigm shift but rather one that will derive from the overall brand essence, the risk is minimal.

The fast food companies, for instance, have been successful at this. During the tumultuous post-Sept. 11 climate, they offered a low-price menu, but recently they have also begun to unveil new products.

‘The food industry is introducing new dishes with good value, like [the Garden Sensations] salads at Wendy’s,’ explains Middleton, who implies that this sort of synergy with the consumer mind-set reflects positively on the brand. ‘Part of the relevance of the brand is not only, ‘Are you keeping up with the target group?’ but also, ‘Are you keeping up with the times?”

Middleton isn’t the only supporter of this philosophy. Patrick Rodmell, VP, global marketing for Watt International in Toronto, concurs brands should move from an emotional or savings push during economic deterioration, to accentuating product benefits during resurgence. ‘I, as a consumer moving from a state of concern to one of prosperity, am going to look more at what products and services deliver as opposed to what they cost.’

Rodmell adds that brand-building campaigns should be instated during downturn, when share of voice is increased due to a lack of competitive clutter, to be followed by more reactionary advertising during upturn. ‘Advertising that is driven for short-term sales impact won’t be as successful during a recession, because consumers aren’t spending as much. Instead, brand building should be taken advantage of, so that when the economy turns, brand awareness is high.’

It’s a formula that seems to have been adopted by St. Laurent, Que.-based Canderm Pharma, distributor of pharmaceutical cosmetic brand NeoStrata. After launching a TV ad campaign with a ‘beauty glam message’ last year, the company has moved on to outlining beauty tips in its print and TV campaign, which launched Jan. 26 in French, and will soon be followed by an English version. ‘We wanted to position ourselves as a brand that solves problems,’ explains executive director Lucy Papa. ‘It was wonderful to have the glamour ad to build brand imagery first, but we wanted people to be educated: ‘This is the problem, this is what it looks and feels like, and here’s what you can do about it.”

A major strategic shift for the firm was the recent conception of individual, niche products, created with ‘the assumption that growth will come [as] … people spend more money and the population ages.’ These sub-lines enable NeoStrata to directly address specific concerns, like dark circles and redness, for which it can then propose solutions.

Says Papa: ‘We asked, ‘What problems can we solve?’ These are issues that have always existed, but before, the economy was too sluggish [to focus on them].’

Similarly, in October, Days Inn debuted a TV commercial engineered to augment its brand image that was also bolstered with a direct mail and print call-to-action campaign. Melissa Evans, director of national marketing for the Toronto-based chain, says the economic impact of 9/11 actually drew new business customers who could no longer afford higher-end hotels.

‘Fortunately, we had an image campaign in the works early in the year,’ she says. ‘We’ve built a promotion into it, which is targeted at bringing people back.’

The 30-second spot, from Pirate Radio & Television, Toronto, is a humorous depiction of an anxious woman who, suspecting her husband is having an affair, follows him to a Days Inn. When she bursts into the room, where he sits alone watching TV, he guiltily proclaims, ‘I-I-I just love the room.’

The objective was to portray Days Inn as a quality hotel, ‘without the hefty price tag,’ according to Evans. Meanwhile, the ‘Days Inn Means Business’ promotion, which runs until April, rewards guests with up to $120 worth of prizes.

The benefit of exercising a CRM initiative just as signs of buoyancy are emerging is that it’s measurable, and that makes it an easy sell to management, according to David Strickland, SVP marketing at Zellers.

‘If more money becomes available, we’ll go to management and say, ‘Here’s a list of our next projects based on their expected return,’ and treat it as a business case.’ He adds that flexibility is crucial to being able to develop new programs when a window for growth appears. ‘You have to be prepared to go to management teams with business cases, not only around what you would do if things get worse than you expected, but also what you do if things get better.’

Of course, a firm’s performance in economic recovery depends on how they run their business during downturn. If marketers pull the plug on advertising while in the clutches of recession, they could face an uphill struggle even to get back to original awareness levels, according to Andrea Southcott, president and COO at Vancouver-based agency Bryant, Fulton & Shee.

‘If you stop ad spending, then it becomes really expensive to get awareness levels back, because what happens is there are fumes and then there is nothing,’ she explains.

‘There are big drops and you really need to spend more to bring it up to where it was. You’re much better off to spend consistently at lower levels, rather than dropping off completely.’

As well, she adds, persistent marketing alleviates the danger of being caught flat-footed when the economy does eventually rebound, which would mean a missed opportunity. ‘If you manage owning customer relationships during tough times, they’ll reward you in good times.’

Andrew Howard, director of Labatt Blue and value brands for Labatt Breweries, also has faith in steady, year-to-year communications, as this approach is an integral ingredient of the brewer’s Labatt Blue Cup Crazy campaign, which runs annually during the Stanley Cup playoffs.

‘It’s very inefficient if you’re building ideas and great programs one year, and then cancelling them another year,’ he says, pointing out that downturns also provide an opportunity to re-examine marketing elements in order to ensure that they have value to the consumer, and that they also positively impact the brand.

For instance, one of the key decisions for Labatt recently was to reduce its in-pack premiums because the free T-shirt giveaways had insignificant value to the consumer and provided little support to its brand image.

‘It wasn’t an ideal way to build the brand, so we’ll see less of that in the business next year,’ says Howard, who adds that beer industry sales were actually up 2% to 3% in 2001. ‘We’re thinking of ways to spend money better. The ideal is if you can take fixed costs out of your ad spend, and, in the consumers’ mind, still look better as a brand.’

Sidebar: Agency recession strategies a mixed bag

Canadian agencies have embraced the philosophy that building or maintaining the best possible staff during recession is key to being well-positioned for economic recovery. But that doesn’t mean they haven’t trimmed the fat.
‘We run the agency very lean and there’s not a lot of superfluous effort going on, so I think when there are market downturns, we could adapt to things pretty readily,’ says John Farquhar, Toronto-based Young & Rubicam’s president, whose business strategy is to spread the agency across several different categories. ‘By no means are we recession-proof, but we aren’t caught completely unawares if there’s a flame-out in one sector.’

At Vancouver-based Palmer Jarvis DDB, president and COO Tony Altilia says the shop focuses on the ‘big potatoes,’ in order to keep the coffers filled. ‘You tend to concentrate on the big projects, so you’re only dealing with those that will have a positive impact on the business,’ he says, adding that PJ did administer some layoffs in Vancouver, due to its loss of the McDonald’s account last year. ‘As long as you don’t cut too deeply, there’s a benefit because you learn to become more efficient.’

But not all agencies would eliminate staff to deal with financial constraints. Bryant, Fulton & Shee, which is part of the TBWA ChiatDay network, would do ‘everything else’ before resorting to layoffs, according to president and COO, Andrea Southcott. That includes taking less profit, salary freezes and salary rollbacks in management.

‘We lost business last year and we didn’t let anybody go…. Showing that kind of confidence really helped maintain a positive momentum within the agency,’ she says, adding that at the end of 2001, business was actually up 20%. ‘Clients also [appreciate it], because they see that the agency respects its staff and also can maintain the same level of service.’
BFS certainly isn’t alone in its philosophy. In New York, 20 senior-level executives at TBWA ChiatDay recently agreed to take a 5% to 10% pay cut, while employees at Portland, Ore.-based Wieden & Kennedy saw paycheques reduced by 10%.