Market your way out of the recession

November 2008

It is perhaps the sheer pace that things have changed over even the last month or so which has surprised us all. Yes we’ve been hearing about the ‘credit crunch’ for a year or two, but it’s probably fair to say that both the effects and speed of the effects of this now household term, have been a tad more profound and swift than we’d all expected (though perhaps not if you’re a brilliant politician, brilliant economist, or indeed both).

So, and dependant on what sector you’re in and how much this will be affected, what are you going to do in order to keep sales buoyant, maintain market share, or even just stay in business? To start with you’ll know enough about your market to already have a pretty good idea about the extent the impending recession will affect you. So unless your name is Aldi (who we’ll come back to) and actually you’re doing ‘very well thank you’ at the expense of the competition, or you’re in a sector which is largely recession proof – running hospitals for example – then chances are that things may well be looking rather bleak.

Looking on the bright side though, it was nothing you personally messed up which got us all here in the first place (we can apparently blame the ‘bankers’ for that…) but you are now in a position to personally do something positive about your own business or business you work for.

Before looking at what you might do, it’s just worth envying for a moment the brands which will actually prosper in the current climate. We’ve already noted Aldi and you may well have read that recent sales for them are up a massive 40% and 25% year-on-year. As Aldi’s UK corporate buyer Tony Baines said: “Our figures show our market share is rising fast. Footfall — the number of people through the door — is up 25 per cent. And half of our customers are ABC1, people who normally shop in Sainsbury’s and Waitrose, or the more affluent Tesco shopper.” Mr Baines added: “Our fruit and vegetable sales are up 80 per cent year-on-year and sirloin steak and smoked salmon are performing strongly.”

So are Aldi just fortunate that they’re in the right place at the right time? No, I don’t think so. The fact is that Aldi have a strong brand proposition and have executed some excellent marketing – and specifically have sharpened their message as the credit crunch has quickly bitten. For example, their strapline ahead of the recession was ‘spend a little live a lot’, but when the effects of the impending recession quickly started to take us all by surprise, their line immediately became ‘Don’t change your lifestyle, change your supermarket’.

What makes Aldi’s brand proposition and marketing delivery so clever, is that they haven’t taken the historical route other discounters have (and by that you can think almost any retail sector). The traditional discounter model largely, though certainly not always and entirely, aims their offer at lower socio-economic groups – so Ds, Es and C2s. Aldi though – and embraced in the two consecutive straplines – give a reason for ALL socio-economic groups to shop with them. So hats off to Aldi and if you also need a lesson in simple yet authoritative websites, then have a look at theirs.

But back to the rest of us who are unlikely to be facing such upbeat Monday morning sales meetings in the months and possibly years ahead as the team at Aldi will be, and a few thoughts on what you might and might not do.

Number one is that, and despite what’s happening around you, now probably isn’t the time to change what your brand stands for. So if in your respective market you take a relatively high-end position, then don’t even consider becoming a discounter overnight. Remember that when the recession ends – and end it will at some stage in the future – then regaining your position at the top of the market will be a whole lot tougher if you’ve put yourself at the bottom of it. So typically, stick to your brand values and do everything else you can to weather the storm. That doesn’t of course mean you might not put a value message into your campaign – M&S are currently doing it very well in their food ads and consider their market position relative to Aldi – but that doesn’t constitute a major shift in brand positioning.

Number two: don’t cut your marketing spend – cut the spend on something else. Okay I’m bound to say that, but actually, when you think about it, there could well be a case to actually increase your spend on marketing. Why? Because, chances are, you’re going to have to work a whole lot harder for even the same level of sales. And keep in mind this text book definition of marketing: ‘The development and implementation of strategies which move product or services to customers in a profitable way.’ So that’s exactly what you need to do right now.

Next up then is to review your marketing strategy as, almost certainly, the economic climate will have changed significantly since you wrote it (unless of course you wrote it in the last month that is…). And having said that there could be a case for increasing your marketing spend, what you might actually conclude is that you shift the same spend to elsewhere and get more value for money from it. For example, and obviously this will be market dependant to some extent, but what are you currently putting into Google or organic SEO development? For many business sectors and specific product categories, Google and/or SEO investment represents phenomenal value for money.

So three very broad things to consider and broad they really are – every brand and business is of course different.

On a final note and having extolled the virtues of Aldi’s brilliant brand and marketing strategy to beat the recession, here’s a brand whose strategy isn’t so smart. The RSPB – or Royal Society for the Protection of Birds – is a huge brand. In fact they have over one million paying members in the UK and over two million people apparently read their quarterly magazine ‘BIRDS’.

Now two years ago the RSPB launched its own range of bird food and related product – e.g. feeders to put the food into – and this to compete with a number of leading brands who, not surprisingly, paid handsomely to advertise in the RSPB’s magazine (and probably to the tune of £200k per annum). So what have the RSPB done to gain competitive advantage in the tough times ahead? Is it to have the best range on the market (no; they don’t have), is it to have the most appropriate and memorable brand message (no; they continually change it), or is it to have the best advertising? (No; it’s hopeless.) What they’ve actually done is to ban all their competitors from advertising in the BIRDS magazine…

“So”, you ask, “that surely isn’t big business and worth worrying about?” Wrong – the wild bird care market and related garden wildlife product (e.g. everything from sunflower hearts to hedgehog boxes) is estimated to be worth up to £250m in the UK annually – and growing.

Other than the obvious abuse of its unique market position (and watch this space for more news on the legality of the RSPB’s decision) the move, from a brand perspective, is crass on a number of levels:

• It undermines an expected value (if not an internally documented one) around decency and fairness – something you’d expect from any charity and certainly one concerned with protecting the environment and therefore people (a recent RSPB strapline read ‘For birds, for people, forever’).
• It inhibits their customers’ choice and prevents easy price comparisons on comparable product, therefore suggesting the brand has something to hide.
• It suggests an arrogant stance.
• Amazingly, the carbon footprint of the RSPB’s commercial offer seems, on the face of it, to be relatively high compared to other brands. Specifically, it uses multiple premises in different places of the country for processing, packing and distribution – ‘carbon miles’ being run-up by transport between them – and this compared to some other brands that each operate out of single premises.
• They haven’t been transparent – in a statement in the last issue of BIRDS, it sets out a case for its members to only buy its products, but doesn’t tell them that it’s banned competitors from advertising let alone tell them why!

It could be argued that, as it’s their magazine, the RSPB has every right to ban commercial competitors. Well putting aside the above issues and also that it’s debatable if there’ll easily recoup the lost £200k in advertising revenue from increased profits annually (particularly as they sub-contract out the entire operation – so a number of businesses have to make their margin before the RSPB sees any cash), the position could reasonably be compared with this hypothetical scenario: Imagine that the BAA decided to launch their own airline. They then banned all other airlines from flying from their airports – even though their airline flew to fewer destinations and was typically more expensive – and, of course, they own all the major London airports. Ummm…don’t think they do it or get away with it if they tried.