Millward Brown gives tips for recession marketing

Millward Brown UK has released seven tips for marketers to help their brands thrive in the current uncertain market climate.

Experience from the last recession shows that it is common for marketing spend to be squeezed and emphasis placed on maximising short term sales uplifts, through promotions, to help meet profit targets.

However, economic downturns can present opportunities for the focused marketer.

Here are seven tips to help brands thrive in challenging economic conditions or even a full blown recession.

Use price promotions sparingly The use of price promotions to help generate consumer spending during a downturn, while common, can actually damage the brand.

Millward Brown's analysis highlights one brand that reduced media expenditure, reported increasing share but it masked the fact that underlying base sales for the brand were in decline; this decline was matched by tracking study measures which showed a decline in use of the brand.

Millward Brown's BrandZ brand equity database shows that on average, 10 per cent of consumers are exclusively motivated by price.

So even if a promotion doubles during a recession, the impact of these price-driven consumers will be relatively small and they will probably not be inclined to be brand loyal to begin with.

True brand loyal consumers look for ways to continue getting their favourite brand.

They may watch for opportunities to buy on deal, or buy a larger, more economical product.

The key issue is perceived value.

Do your consumers believe that your brand offers better value than the competition? Provided that its price is in an acceptable range, people will be more inclined to buy a trusted brand than a cheap one.

Focus on reminding people why your brand is worth the price by focusing on the functional advantages.

Monitor the equity of your brand.

If your brand is being sold increasingly on promotion, and your overall sales are holding up, it can be hard to assess if any long-term damage is being done.

In the example above, without the brand tracking study analysis, the brand team would not have been aware of the harm being done to the brand When your competitors are promoting on price, it can be hard to avoid joining in; but the results can be hugely damaging to all the brands.

In the UK, an OTC category was growing.

However, as a result of a price war, the total volume sold on promotion increased by 15 per cent across all brands for one year.

Not only was value driven out of the market, but brand equity declined.

Just half the consumers (55 per cent) had a strong affinity to any one brand after the war, whereas 81 per cent had a strong affinity before.

Beware of reducing your ad spend for more than a few months While reducing advertising spend can seem a logical way to increase short-term profitability during a downturn, the consequences can be damaging in the long term.

Brands can indeed 'go dark' for six months or so with little apparent deterioration in their health.

But the problems come in the longer term; and once decline sets in, it's hard to reverse.

One brand came off air in one region (Region B), but continued advertising in the rest of the country.

Within a year, market share had dropped 2 per cent in the region without advertising, while holding steady elsewhere.

But in the following year, when the advertising was resumed, Region B's market share continued to lag behind the rest of the country.

Research proves that the higher your share of voice compared to your actual market share, the more likely your brand is to grow its market share in the subsequent year.

So, if you increase your marketing investment at a time when competitors are reducing theirs, you should substantially increase the saliency of your brand.

This could help you establish an advantage that could be maintained for many years.

Brands that increase share during a recession stand to benefit from this multiplier once the economy rebounds.

Keep a longer term focus Advertising has a long-term as well as a short-term effect on the brand.

On average, there is about a 3:1 ratio of long-term to short-term sales (short term here referring to the first eight weeks of an advertising campaign).

This is variable across campaigns though we have seen campaigns with a 5:1 ratio.

Stopping advertising, or cutting ad spend may look like a short-term fix, but you are likely to be setting up problems for the future.

Analysis of 350 brands highlights the value of maintaining advertising investment.

Relative under-investment is clearly linked with a greater risk of decline in market share.

At a time when other brands are cutting their spend media costs are likely to go down, and achieving a strong share of voice can be achieved relatively cost-effectively.

Ensure your advertising copy is working as hard as possible While ideally you should aim to maintain your spend, it is possible to grow your brand with lower budgets, provided the ad copy quality at least compensates for this.

On average, 20 per cent more brands lost share of voice and share of ad awareness than gained.

But when both share of voice and share of ad awareness increased, nearly a third more grew than declined.

When share of ad awareness grows, despite a drop in spend, more brands grow than decline.

A small amount of research can be invaluable when there is pressure on budgets to ensure that your ROI is maximised.

Reduced noise provides opportunities A new product launch may actually have greater impact during an economic downturn than at other times, for several reasons.

A product that is unique or demonstrably better than others should be able to command a higher price, even among price-conscious shoppers.

Competitors who are running scared may be late in countering a new product with their me-too offerings.

And, because media costs are likely to be lower, advertisers can get more bang for their buck.

These savings may be compounded by the relative ease of cutting through in a less cluttered atmosphere.

Focus on the strength of your brand Reinforce the attributes that differentiate your brand.

Small or niche brands would do well to focus investment on the core brand offering rather than spread existing resources too thin.

Larger brands may find more scope in category extension, particularly if the new category offers better growth prospects.

The PIMS database analysis suggests that companies with a high percentage of sales coming from new products tend to outperform others.

Weaker brands should focus on protecting existing share by focusing on your most loyal and valuable customers Competing in an economic downturn is like running a marathon.

A smart frontrunner will seize the lead and work to increase it while others are flagging.

Of course, if every brand increased investment during this time, share of voice would remain consistent and little would be achieved.

While this is unlikely to happen, you must consider the probable response of your key competitors.

If the other runners allow the gap to widen, it will be really tough for them to regain the lost ground when the pace picks up again.

The effects of an economic downturn will vary for different types of product and service categories.

For example, people are more likely to postpone purchase of high ticket items.

For these items they will spend more time researching alternatives and will be more inclined to negotiate.

Base products with fewer options are likely to sell better.

Back to top