5 June 2008

Marketing During a Recession, Part 3: Time To Pump Up the Volume

by Freddy Tran Nager, Founder of Atomic Tango + Guy Who’s Survived And Thrived During Some Serious Down Times…

When the economy slows to the speed of a three-toed sloth after one too many hash brownies, the knee-jerk reaction by most marketers is to reduce ad expenditures. For some brands, however, a recession presents sweet juicy opportunities that call for increased spending. Really. And no, I’m not hitting on those brownies myself…

Yes, it’s gruesomely true: many consumers are reducing their discretionary spending in order to feed their kids and their cars (not necessarily in that order). But most are not living in caves and subsisting on nuts, grubs and free samples at Trader Joes… unless they’re former Bear Stearns employees. Consumers are still spending — they’ve just shifted to new categories.

For example, Spam is on the rise — and I’m not talking the email variety here. I’m referring to that original canned meat delight created in 1937, fed to Allied troops during WWII, mocked by Monty Python, and regularly served amongst the many guilty pleasures at King’s Hawaiian restaurant in Torrance, California (macadamia pancakes and fried Spam — mmmm). Sales of Spam have increased over the past few months as consumers look for cheaper protein fixes. According to the L.A. Times, “Spam sales were up 10.6% in the 12-week period ended May 3, compared with the same period last year. In the last 24 weeks, sales were up nearly 9%.” Dig in!

What warms my marketer’s heart most about this news? Hormel (Spam’s parent company) is crediting its first national ad campaign in years for helping spur sales. Even though Spam enjoys near-universal name recognition, in order to drive consumers from awareness to action, Hormel realized you have to tell them to come and get it — and give them reasons to do so. Hence, Hormel boosted their advertising. Based on Spam’s successful lead (Spam as a leader — who’da thunk?), other producers of low-cost alternatives should follow suit and step up their hype. Hamburger Helper, anyone?

It’s not just low-cost processed-food brands that should boost their marketing during tough times. Let’s hear it from all these guys:

Compact cars: Despite the credit crunch, consumers are buying cars in this economy. Since fueling up an SUV now costs an entire day’s pay for flipping burgers, many drivers are finally ditching their behemoths for smaller cars. Honda Civic sales are up 38.5% since May 2007, while sales of the grotesquely obscene Hummer have plummeted 36% in the first five months of this year, 60% last month alone. (Anyone else notice how Governor Arnold’s approval ratings seem to rise and fall in synch with Hummer sales?) So if your brand manufactures a fuel-efficient vehicle, time to toot your horn.

Local vacations: Since the dollar won’t even buy you a used tourist map of Europe these days, many Americans are choosing to vacation closer to home. Really close. As in, hey, a BBQ in the local park sounds exotic and exciting, doesn’t it? Now’s the time to hype weekend escapes at the local resort hotel, theme park deals for area residents, cruise-like buffets and giant drinks at the neighborhood margarita joint. And while you’re hyping it up locally, don’t forget to promote your attractions internationally: there’s a lot of wealth being created in countries like India, Korea, Brazil and China — and visa requirements for Chinese tourists have been reduced — so start thinking tourism ads on the big foreign websites, like Orkut (Brazil) and 51.com (China).

Higher education: When the job market gets brutal, the brutalized go back to school. Wall Street is estimated to have lost 22,000 jobs in the past year, with the total expected to reach as high as 36,000. In an attempt to make flying even more hellish than it already is, the airlines are shedding employees by the thousands. And don’t forget all those once rollicking realtors. Time for MBA programs, extension schools, and other career-oriented options to boost their recruiting efforts. And if you can offer an escape on top of an advanced degree (you listening, University of Hawaii MBA program?), ads in the New York City subway might generate more than a little interest, particularly come winter.

Job sites: Job hunters are increasing, so where’s all the advertising from the job sites? Monster.com, CareerBuilder and Craigslist aren’t the only job sites out there. There are dozens of others, such as Jobster, FutureStep and Doostang. There’s a reason you might never have heard of these sites: their marketing bites. So a message to all you second-tier job dotcoms: speak up, or you may find yourselves in the unemployment line with all the people who could have been your customers.

Second- or even third-choice brands:
It’s not just the secondary job sites who should speak up — so should any brand that’s found itself in a secondary or even lower position. Dell, for example, found itself losing market share… until the recession hit. For many consumers, cheap and boring doesn’t sound so bad when money is tight. So, dude, it’s time get Dell marketing back up to speed. Whether you sell MP3 players or athletic shoes or gourmet coffee, an economic slump presents a primo opportunity to promote your brand. Consumer loyalties begin to come undone in a recession. They might not be willing to step down entirely in category (few Starbucks junkies are going to seek out the brew at a Circle K), but they might explore alternatives that offer similar quality but less sex appeal at a lower price — like the local coffee shop.

Even if your product does not fall into the “recession-friendly” categories, you should maintain your current level of advertising if you see your competitors cutting back. The best time to grab mindshare is when the competition is taking a time out. (See “Giuliani decides to sit out most primaries and wait for Florida.”) Note how Southwest is stepping up its campaigns while American and other airlines are cutting back on basic services. Consumers are still spending money, so channel more of it in your direction while less savvy marketers sit around trying to wait things out. Don’t join your competitors on the bench — use this opportunity to knock them completely out of the game.

More Tips on Marketing During a Recession:

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Freddy is the Founder & Creative Strategist of Atomic Tango. He also teaches graduate-level marketing communication courses at the University of Southern California (go Trojans!), shoots pool somewhat adequately, and herds cats. Freddy received his BA from Harvard and his MBA from USC.

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Kevin Nakao
Kevin Nakao
16 years ago

Nice analysis Freddy. Spam Musabi is the best way to fuel yourself out of a depression.

16 years ago

GREAT post! I think my favorite so far.

S of 52 Faces
16 years ago

Hey! My Costco-sample diet is increasing my flab just fine! Just because I have to recycle shower water to save money doesn’t mean times are THAT hard…

Former BS IB Asst.

(spell THAT out)

Doug aka nullvariable
Doug aka nullvariable
16 years ago

yeah, kinda a bad idea to cut back on marketing. There’s surely a ratio of effect even if the economy is in a downturn.

I’ve decided that one of the biggest reasons for the current downturn is the instability inherent in our electoral process. People are holding off on buying things and what not until they see where things are going to go. I’m sure someone has studied this and got some numbers, I’m just too busy to see if I can find it….

Ani Patwardhan
Ani Patwardhan
14 years ago

Good article. Following the herd will not help you win.

The best companies see recession as an opportunity. They are investing in advertising (e.g., Dr. Pepper). They are driving innovation (e.g., Apple). They are hiring the best employees from pools of available talent (e.g., IBM).

Major industry upheavals can dethrone yesterday’s leaders and can create tomorrow’s stars. The stars go up because they adjust to their new playground either through strategic foresight or through rapid adjustment. Figure out which of the two strategies suits your organization better, then execute it. Your employee will get energized if they see you following a courageous, well thought out path to the top. They may lose all morale, however, if you continue the game of cost-cutting much longer.


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