In my last blog posting, I made the case that there will be “no normal” to return to, once the recession is over.  People’s heightened search for value and economizing have changed brand choices and shopping patterns.  Private label brands are likely to keep much of their share gains as retailers seize their opportunity and squeeze marginal national brands out of the assortment.  Coupon use is up with online coupon sites have more than doubled their traffic. The media landscape will keep “media-morphising” as the long tail gets longer, as social media becomes mainstream and as TV adopts digital, 2-way technology platforms. 

However, the news is not grim for all national brands.  Brands that have become permanent casualties (like Circuit City and Pontiac), “free up” share points for remaining brands to gobble up.  There will be winners (and not just the private label brands) coming out of the recession. 

What can YOU do to be one of the winners?  Create momentum by starting to build the right kinds of relationships now.

1—Understand how people feel and befriend them.  At the ARF annual conference, Prof Zaltman (video here) showed results from his ZMET method that dramatized the pain; people see the economy metaphorically as a malevolent force of nature like a tornado/avalanche/tsunami…one that is destroying the American Dream, making them feel insecure about their future, and helpless.  Life has become much more complicated and anxiety-filled.

My recommendation… your brands need to befriend people.  Hyundai’s sales were up 5% in Jan/Feb as they offered to take over car payments if someone lost their job.  Jos A. Banks offered to take back the suit. Value brands and value offerings (Wal-Mart, Miller High Life, Bounty) have been reported to be doing well. Some brands become psychological “comfort food” by stressing family values (as Prof. Quelch from Harvard suggests); Shredded Wheat cereal is talking about putting the “no” in “innovation.  Still others are stressing sustainability.

Marketers should try to befriend people; sooth them, simplify their choices, help them make ends meet, and give them back a measure of control and dignity. This recommendation goes beyond the ad and the brand positioning; to fully build this type of relationship, marketers should find ways to create more conversation via social media and communities centered around the challenges and joys that people want to talk about.  Use research to gain insights into the right way, of these options, to activate a “befriending” approach for your brand.

2—Understand what has worked.  Brands that increase their advertising support while their competitors are cutting back come out of the recession in stronger market share positions.  In other words, this is the time to ramp up! This was the conclusion by Prof. Gerry Tellis from a re-analysis of 40 studies on marketing in a recession.  Burger King and Procter are two companies that are reported to be buying more, not fewer impressions, and they are doing it at very attractive rates (Procter is reported to be getting more impressions and actually spending less.)  However, referring to point 1, you might want to find a message that is timely rather than continuing pre-recession messaging.

3—Be bold and imaginative.  I know it’s hard to take risks in this environment, but once you accept that there is no normalcy to return to, it becomes easier.  For example, the coffee wars just heated up with McDonald’s announcing a $100MM ad campaign for the launch of McCafe and Starbucks simultaneously announcing an aggressive defense of their product superiority.  Burger King is greatly increasing messaging with very edgy Crispin-Porter work. Harley-Davidson is now reaching out to different demo groups (females, minorities) in a bold attempt to expand their base of brand enthusiasts…a risky move, but “playing it safe” is perhaps the riskiest strategy of all.

I think it’s time to reverse the marketing mindset about the directionality of loyalty; stop asking consumers to be loyal to your brand and start demonstrating that your brand is loyal to them!  Create advertising, conversations, and programs that show you care.

Our economy has taken a triple hit. First, we were buffeted by rising gas prices, then a wave of inflation that hadn’t been seen in 30 years, and then the current recession. For many, this “perfect economic storm” has changed our “personal rules” that anchor us and help us to simplify the tasks of managing our monthly and longer term budgets. People are thinking about what they didn’t have to think about. Just having to rethink your everyday purchasing tradeoffs will create anxiety and make life more stressful. In fact, there was a remarkable article in the NY Times that talked about the anxiety people are feeling who aren’t even directly financially impacted. It is a society-wide trauma.

People are rethinking value and making different tradeoffs that involve money and time. Private label market shares are steadily increasing. People are planning their shopping trips differently according to IRI. There is also a huge jump in traffic to websites that offer coupons and to coupon use. Bain and Company anticipates a 7% drop in worldwide luxury goods sales.

A key question is, “Will things go back to ‘normal’ when the economy improves?” I think it is impossible for three reasons, so marketers need to be at the top of their game to come out of the recession poised for growth.
1. Historically, private label brands do not give back all of their share gains after the recession ends (as documented by Prof. Jerry Tellis at the last ARF Conference.)
2. The media world, especially social media, will be so different when the economy recovers that there is no “normal” media environment to return to.
3. Consumers have been profoundly impacted by the feeling of deprivation and how they cope with that. This is the same conclusion reached in a recent article in The Economist. For example, those who have switched from national to store brands and are concluding that performance is acceptable, will be harder to switch back to national brands even when the economy rebounds. Those of us in our 50s or 60s, know how different our parents’ sense of frugality was because they lived through the depression.

Marketers need to use inspired research and listening methods to gain windows into the souls of today’s consumers and shoppers to position themselves for growth once the economy begins to rebound. That will be the focus of my next entry.

Next: Recession strategies for the short and long-term.