Renegade CMO: Brother, can you spare a dime?

In this Forum series, Queen's prof Ken Wong and Capital C CEO Tony Chapman tackle marketing challenges and offer up Renegade CMO solutions. This month they weigh in on how to market your way through recession.

In this Forum series, Queen’s prof Ken Wong and Capital C CEO Tony Chapman tackle marketing challenges and offer up Renegade CMO solutions. This month they weigh in on how to market your way through recession.

Tony’s take:

Last year the American consumer was armed with cheap credit, the ability to leverage up a minimum-wage job into the purchase of a no-money-down house, stocked with don’t-pay-for-a-year furniture and appliances. Today there is no credit and trillions in subprime and derivative debt, and the U.S. economy is in a tailspin of such force that all of us will be sucked into it. Add to that rising commodity prices and we could be heading for a recession of epic proportions. Everything slows down and with it comes job losses, budget cuts and survival of the fittest.

My advice to marketers is to understand your consumer. Their shopping behaviour will change as media continuously reminds them how bad it is, and their lack of spending power reinforces it. They will shift their mindset from wanton and insatiable to conserve and hoard.

How will this mindset affect your marketing plan? Let’s go to the four Ps. With your product strategy, I would simplify features as consumers look to satisfy needs versus wants. Positioning I would base on long-term values – whether that was functional and you focused on product durability, or emotional and you talked about experiences. Pricing: we know consumers will look for deals and spend more time trading down to price, so you’d better be creative in your offer. In terms of place, you need to fight for the corners, the last three feet of your marketing plan. This is where the battle will be fought.

The winners in this recession will add the fifth P: people. They will invest in creating a culture that embraces this downturn as an opportunity to steal share and to permanently knock out weaker opponents. What a wonderful time to be in the business of building brands.

Ken’s advice:

I don’t think everyone will feel it to the same degree. So marketers had better start eating their own dog food. Forget selling to everyone in the same way and start doing a better job of knowing who you’re selling to (segmentation), the reason you want to sell to them (customer valuation) and how a slowdown will affect them, specifically.

The distribution of wealth across geographic regions has shifted over the past decade. The most populous regions of Canada, where much of the slowdown in

manufacturing is already being felt, will feel the effects long before the less populated, commodity-rich regions. Alberta? A no-brainer. But don’t forget that Saskatoon has the highest growth in real estate prices today. So maybe it isn’t a case of have and have-not but more a case of ‘no’ (recession), ‘whoa’ (slowdown) and ‘go’ (slower but still prosperous) regions.

The same will apply to age groups. Older consumers will be concerned and adjust spending accordingly. But when was the last time you heard a tween or teen talk about economic conditions? Anyone who reduces brand building with those consumers will spend a lifetime trying to win them back when the recession ends and they enter their highest spending years.

Finally, go beyond the macro indicators like GDP to the micro-economic indicators that show how people are living and spending. For example, the definition of a staple may change depending upon whether we see a reduction in two-income families due to unemployment or less job creation or an increase in two-income families as people feel less secure.

The bottom line? Don’t market the same way everywhere. Rather than assume recession, ask how much it’s going to affect your customer. And watch the economic indicators related to employment, income, expenditure and housing. There is a story about human behavior behind those numbers, and whoever can read that story will find that this is a classic case of opportunity rising from change.

Ken Wong is a career academic at Queen’s School of Business who, in a feat of time management and airport endurance, wedges consulting gigs between lecturing and speaking engagements. Tony Chapman is an entrepreneur/career brand guru and founder of Toronto-based indie agency Capital C.