Page 342 - Marketing Management

COMPETITIVE DYNAMICS | CHAPTER 11 319

Firms should characterize any changes as temporary adjustments versus permanent shifts. 72 In
explaining why it is important to look forward during a recession, Eaton CEO Alex Cutler noted,“It is
a time when businesses shouldn’t be assuming that the future will be like the past. And I mean that in
virtually every dimension whether it is economic growth, value propositions, or the level of govern-
ment regulation and involvement.” 73
At the peak—the bottom—of the recession, a Booz & Company survey of 1,000 U.S. households
found 43 percent were eating at home more and 25 percent were cutting spending on hobbies and
sports activities. In both cases, respondents said they would likely do so even when the economy
74
improved. With consumer confidence at its lowest in decades, spending shifted in many ways.As one
retail analyst commented, “Moms who used to buy every member of the family their own brand of
shampoo are buying one big cheap one.” 75
The potential value and profitability of some target consumers may change. Marketers should
evaluate this factor to fine-tune their marketing program and capitalize on new insights. After un-
successfully chasing twenty-somethings with trendier clothing, Old Navy refocused its message to
target a budget-conscious mom shopping for herself and the family. 76

Review Budget Allocations
Budget allocations can be sticky and not change enough to reflect a fluid marketing environment.We’ve
seen repeatedly that the vast penetration of the Internet, improved functionality of the cell phone, and
increased importance of events, experiences, and emotions as marketing opportunities have dramati-
cally changed the marketing communications and channels environment in just five years.
A recession provides an opportunity for marketers to closely review how much and in what ways
they are spending their money.Budget reallocations can open up promising new options and eliminate
sacred-cow approaches that no longer provide sufficient revenue benefits. Underperforming distribu-
tors can be weeded out and incentives provided to motivate the more effective product sellers.
Marketing communications allow much experimentation. In London, T-Mobile created spon-
To reflect more challenging
taneous, large-scale, interactive “happenings” to convey its brand positioning that “Life’s for
economic times, GE Profile
Sharing” and generate massive publicity. Its “Dance” video, featuring 400 dancers getting the whole
Liverpool tube station to dance, was viewed millions of times on YouTube. 77 changed its ad strategy to
emphasize practicality.
Firms as diverse as Century 21 realtors and Red Robin gourmet
burgers increased their Internet marketing activities during the re-
cession. 78 The 120,000 U.S. dental practices were not immune to
the economic downturn, as patients chose to postpone dental
work and even skip routine cleanings. Many dentists turned to
marketing and increased personal communications with patients
via e-mail newsletters, calls to set up appointments, and even
Twitter messages to share new product or service developments. 79

Put Forth the Most Compelling

Value Proposition
One mistake in a recession is to be overly focused on price reductions
and discounts, which can harm long-term brand equity and price in-
tegrity. Marketers should increase—and clearly communicate—the
value their brands offer, making sure consumers appreciate all
the financial, logistical, and psychological benefits compared with the
80
competition. The more expensive the item,the more important this value
framing becomes.In the recent recession,GE changed its ad messages for
the $3,500 Profile washer-and-dryer set to emphasize its practicality—it
optimizes the use of soap and water per load to reduce waste and saves
customers money by being gentle on clothes, extending their life. 81
Marketers should also review pricing to ensure it has not crept up
over time and no longer reflects good value. Procter & Gamble
adopted a “surgical” approach to reducing prices in specific categories
in which its brands were perceived as costing too much compared
with competitive products. At the same, it launched communications
about the innovativeness and value of its many other brands to help