RECESSION MARKETING

INTRODUCTION
A recession is a general slowdown in economic activity over a sustained period of time, or a
business cycle contraction. During recessions, many macroeconomic indicators vary in a
similar way. Production as measured by Gross Domestic Product (GDP), employment,
investment spending, capacity utilization, household incomes and business profits all fall
during recessions.

What causes it?

An economy which grows over a period of time tends to slow down the growth as a part of
the normal economic cycle. An economy typically expands for 6-10 years and tends to go
into a recession for about six months to 2 years. A recession normally takes place when
consumers lose confidence in the growth of the economy and spend less. This leads to a
decreased demand for goods and services, which in turn leads to a decrease in production,
lay-offs and a sharp rise in unemployment. Investors spend less as they fear stocks values
will fall and thus stock markets fall on negative sentiment.

Stock markets & recession

The economy and the stock market are closely related. The stock markets reflect the
buoyancy of the economy. In the US, a recession is yet to be declared by the Bureau of
Economic Analysis, but investors are a worried lot. The Indian stock markets also crashed
due to a slowdown in the US economy. The Sensex crashed by nearly 13 per cent in just two
trading sessions in January. The markets bounced back after the US Fed cut interest rates.
However, stock prices are now at a low ebb in India with little cheer coming to investors.

Effects of recessions
Bankruptcies
Credit crunches
Deflation (or disinflation)
Foreclosures
Unemployment

People have hypothesized that it’s easier to start companies during downturns, because
labor, rent, and other resources are cheaper (in economic jargon, the ‘opportunity costs’ are
lower). And there have been plenty of news articles talking about out-of-work professionals
going into business for themselves. But here’s a slightly different question—is it easier to
start a successful company during a downturn? Not so obvious, is it? It might be easier to
start a company, but harder to start a successful one if the economy is weak. The following
table, based on the Fortune 500, shows what percentages of top companies were
incorporated during a recession.

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But as we move up to the most successful companies—the ones at the top of the list—the
situation changes. Among the top 10 companies, a full 70% were started during recession
years. Let’s look more closely at these top 10. This table includes the name of the company;
the date that they were incorporated into business (when two companies merged), whether
that was a recession year according to the Wikipedia listing; and then whether it was a
recession year, according to NBER dates, which are similar but not identical to the Wikipedia
listing.

The above data shows that for companies to be successful in the long term they have to
adjust to such periods of slowdown and come out to turn them in to an advantage rather
than treating them as just a challenge for survival. All the companies mentioned above
undertook strategies to counter the recession by expanding operations and introducing
newer brands in the market.

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The greatest slowdown to have hit the world since the great depression, the current
recession has led to rising unemployment and extreme drop in sales. As a result, businesses
typically cut costs, reduce prices and postpone new investments. The first area to bear the
brunt of cost-cutting in any organization is the marketing and advertising department.
Marketing expenditures in areas from communications to research are often slashed across
the board – but such an indiscriminate cost cutting is a mistake. Although it is wise to
contain costs, overall long term performance can be jeopardized if the company fails to
support brands or examine core customers’ changing needs. Hence it is necessary to put
customers under the microscope and nimbly adjust strategies, tactics and product offerings
in response to shifting demands. In times of successful sales and rapid growth, marketers
forget that rising sales aren’t caused only by clever advertising and appealing products.
Consumers’ factors such as disposable income, feeling confident about their future, trusts in
businesses and economy and lifestyles’ that encourage consumption are the most
important factors that affect purchases.

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UNDERSTANDING CONSUMERS’ RECESSION PSYCHOLOGY

The wave of economic news is eroding confidence and buying power, driving consumers to
adjust their behaviour in fundamental and perhaps permanent ways. Spending in much of
the developed part of the world was based on a quicksand of debt and dwindling savings.
Marketers also abetted consumers in defining the good life in material terms, and urging
them to live beyond their means. As a result what consumers are now facing in the current
scenario are piles of bills, stagnant or falling incomes and shrinking value for their money.
Other factors such as failures in the financial, housing and insurance sectors; and taxpayer
bailouts of mismanaged businesses have also fuelled more distrust and scepticism to
marketer’s messages. These combined effects have created a profound challenge for
marketers, not only to survive during recession but rise and sustain considerable recovery
after the worst is over.
The first step in responding must be to understand the new customer segments that emerge
in a recession. Typically marketers segment according to demographics (“over 40,” or “new
parent or middle income”) or lifestyle (“traditionalist” or “going green”). However, in a
recession such segmentation may be less relevant. Marketers need to undergo a strong
exercise and segment their markets based on a psychological segmentation that takes into
account consumers’ emotional reactions to the economic environment. Marketers should
think of their consumers as falling into four groups:
1. Slam-on-the-brakes Segment: This segment feels the most vulnerable and the
hardest hit financially. Although lower-income consumers typically fall into this
segment, anxious higher-income consumers can as well, particularly if health or
income circumstances change for the worse. They react to the market changes by
reducing all types of spending and by eliminating, postponing, decreasing or
substituting purchases

2. Pained-but-patient Segment: Pained-but-patient consumers tend to be resilient and

optimistic about the long term but less confident about the prospects for recovery in
the near term or their ability to maintain their standard of living. Like slam-on-the-
brakes consumers, they economize in all areas, though less aggressively. They
constitute the largest segment and include the great majority of households
unscathed by unemployment, representing a wide range of income levels. As news
gets worse, pained-but-patient consumers increasingly migrate into the slam-on-the-
brakes segment.

3. Comfortably well-of segment: Consumers feel secure about their ability to ride out
current and future bumps in the economy. They consume at near-prerecession
levels, though now they tend to be a little more selective (and less conspicuous)
about their purchases. The segment consists primarily of people in the top 5%
income bracket. It also includes those who are less wealthy but feel confident about

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the stability of their finances – the comfortably retired, for example, or investors
who got out of the market early or had their money in low-risk investments such as
CDs.

4. Live-for-today segment: Carries on as usual and for the most part remains
unconcerned about savings. The consumers in this group respond to the recession
mainly by extending their timetables for making major purchases. Typically urban
and younger, they are more likely to rent than to own, and they spend on
experiences rather than stuff (with the exception of consumer electronics). They’re
unlikely to change their consumption behavior unless they become unemployed.

Regardless of which group consumers belong to, they prioritize consumption by sorting
products and services into four categories:
Essentials are necessary for survival or perceived as central to well-being.
Treats are indulgences whose immediate purchase is considered justifiable.
Postponables are needed or desired items whose purchase can be reasonably put off
Expendables are perceived as unnecessary or unjustifiable.

Throughout a downturn all consumers, except those in the live-for-today typically re-
evaluate their consumption priorities. As priorities change, consumers may altogether
eliminate purchases in certain categories, such as household services (cleaning, lawn care,
snow removal), moving them from essentials to expendables. Or they may substitute
purchases in one category for purchases in another, e.g. Swapping dining out (a treat) for
cooking at home (an essential). Most consumers become more price-sensitive and less
brand loyal during recession, they can be expected to seek out favourite products and
brands at reduced prices or settle for less-preferred alternatives; e.g. choosing cheaper
private labels or switch from organic to non-organic foods.

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MANAGING MARKETING INVESTMENTS

During recessions it’s more important than ever to remember that loyal customers are the
primary, enduring source of cash flow and organic growth. Marketing isn’t optional – it’s a
“good cost,” essential to bringing in revenues from these key customers and others. Still,
company budget cuts often affect marketing disproportionately. Marketing communication
costs can be trimmed more quickly than production costs – and without letting people go. In
managing their marketing expenses, however, businesses must take care to distinguish
between the necessary and the wasteful. Building and maintaining strong brands – ones
that customers recognize and trust – remains one of the best ways to reduce business risk.
The stock prices of companies with strong brands, such as Colgate-Palmolive and Johnson &
Johnson, have held up better in recessions than those of large consumer product companies
with less well-known brands. Surgically trimming the budget is easier to do during a
downturn than in prosperous times. Tough times provide an imperative to cut loose poor
performers and eliminate low-yield tactics. When survival is at stake, it is easier to get
companywide buy-in for revising marketing strategies and reallocating investments.
Managers can defy old mind-sets and creatively search for superior solutions to customer
needs instead of relying on the next line extension. The challenge is to make well-defended,
case-by-case recommendations about where to cut spending, where to hold it steady, and
even where to increase it.

Assess opportunities. Begin by performing triage on your brands and products or services.
Determine which have poor survival prospects, which may suffer declining sales but can be
stabilized, and which are likely to flourish during the recession and afterward. Your strategic
opportunities during the downturn will strongly depend on which of the four segments your
core customers belong to and how they categorize your products or services. For example,
prospects are reasonably good for value-brand essentials sold to slam-on-the-brakes
consumers, who will forgo premium brands in favor of lower prices. Value brands can also
effectively reach out to pained-but-patient consumers who previously bought higher-end
brands, a strategy Wal-Mart aggressively used with its “everyday low prices” policy in the
2001 recession. Value brands have opportunities with postponable products, as well. Repair
services can market to the pained-but-patient group, who will try to prolong the life of a
refrigerator rather than buy a new one. Where the business opportunities are uncertain or
declining, it may be time to part with brands or products that were ailing prior to the
recession and are on life support now. For those that remain, companies should concentrate
their marketing resources on maintaining relevance to core customers in order to sustain
brands through the recession and into the recovery.

Allocate for the long term. When sales start to decline, companies shouldn’t panic and alter
a brand’s fundamental proposition or positioning. For instance, marketers catering to
middle- or upper-income consumers in the pained-but-patient segment may be tempted to

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move down- market. This could confuse and alienate loyal customers; it could also provoke
stiff resistance from competitors whose operations are geared to a low-cost strategy and
who have intimate knowledge of cost-conscious customers. Marketers that drift away from
their established base may attract some new customers in the near term but find
themselves in a weaker position when the recession ends. Their best course is to stabilize
the brand. Even cash-poor firms would be wise to commit a substantial portion of their
marketing resources to reinforcing the core brand proposition. Reminding consumers of
how the brand matters can add to the cushion provided by previous investments in building
the brand and customer satisfaction. De Beers came to this realization aft er it reduced its
U.S. marketing budget early in 2008 in response to the grim economic outlook. When
research revealed that diamonds represent enduring value to a majority of consumers, the
company doubled its Christmas advertising spending over the previous years. Brand-
awareness ads in several media proclaimed, “Here’s to less,” and enjoined us to buy “fewer,
better things” because “a diamond is forever.” Although Christmas sales in the United States
softened compared with the previous year’s, prices were stable – and trends in consumers’
desire to buy diamonds remained healthy.

When opportunities are stable or uncertain (but leaning toward stable), firms should push
their advantage. In past downturns, consumer goods companies that were able to increase
share of voice by maintaining or increasing their advertising spending captured market
share from weaker rivals. What’s more, they did it at lower cost than when times were
good. On average, increases in marketing spending during a recession have boosted
financial performance throughout the year following the recession. (Of course, not all
increases have raised performance. Therefore, especially in the current, deep recession,
resources should be judiciously targeted to viable business opportunities.) Firms with deep
pockets can make cost effective acquisitions that strengthen their brand portfolio or
customer base. In the 2001 downturn, Smucker’s acquired the Jif and Crisco brands from
Procter & Gamble. These brands were too small for P&G and not in any of its core
categories, but they proved to be a good strategic fit for Smucker’s. In the current recession,
Smucker’s is acquiring another such brand from P&G – Folgers. Though it does not meet
P&G’s margin targets, with renewed marketing attention it has the potential to be an
important source of future sales for Smucker’s. In deciding which marketing tactics to
employ, it’s critical to track how customers are reassessing priorities, reallocating budgets,
switching among brands and product categories, and redefining value. It’s therefore
essential to continue investing in market research. As the recession winds down, consumers
will regain buying capacity but possibly will not return to their old purchasing patterns.
Market research should explore whether consumers will go back to familiar brands and
products, stay with substitute products, or welcome innovations.

In recessions, marketers have to stay flexible, adjusting their strategies and tactics on the
assumption of a long, difficult slump and yet be able to respond quickly to the upturn when

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it comes. This means, for example, having a pipeline of innovations ready to roll out on short
notice. Most consumers will be ready to try a variety of new products once the economy
improves. Companies that wait until the economy is in full recovery to ramp up will be at
the mercy of better-prepared competitors. Even during a recession, new products have an
important place. Live-for-today customers, with their undiminished appetite for goods and
experiences, oft en appreciate novelty. And the other segments will embrace new products
that offer clear value compared with alternatives. Because new-product activity slows in
recessions overall, launches can economically gain visibility. In 2001, for example, Procter &
Gamble’s successful introduction of the Swiffer WetJet established a new product category
that eased the chore of mopping floors and weaned consumers away from cheaper
alternatives.

Balance the communications budget. During recessions cash-strapped marketing

departments are under pressure to do more with less and demonstrate high returns on
investment. Typically, the share of the advertising budget devoted to broadcast media
shrinks, whereas the share that goes toward efforts with more-measurable results, such as
direct marketing campaigns and online ads, grows. Point-of-purchase marketing–promoting
price cuts or generating in-store excitement–also tends to pick up during recessions.
Internet advertising in particular is targeted and relatively cheap, and its performance is
easily measured. Despite a deepening recession, marketers spent 14% more on online ads
over the first three quarters of 2008 than they did over the same time frame in the previous
year. Another factor driving this growth in digital-ad spending is consumers’ migration to
online social media such as MySpace, Facebook, and LinkedIn, which help people intensify
networking efforts amid layoffs and a tough job market. The new-member sign-up rate at
LinkedIn, a site that focuses on professional networking, has doubled in the past year. That
said, broadcast media still remain important for building mass-market consumer brands.
Although strong brands can be carried for a period on the momentum of previous brand-
building investments, no brand can afford to coast solely on earlier efforts. Brands that are
out of sight on the television screen will sooner or later be out of mind for a large
percentage of consumers. Indeed, while advertising in newspapers and magazines and on
radio and local television all declined in 2008, advertising on the four national broadcast
television networks in the United States remained steady.

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ADVERTISING: AN ANTI-RECESSION TOOL

When the American arm of Hyundai, a South Korean carmaker, said that it was worried
about the economy and may cancel its plans to advertise in the Super Bowl, American
football's grand finale, on February 3rd last year, the advertising and media industries
shuddered. Marketing spending is one of the first things companies decide to cut when
faced with slowing sales. Suddenly a recession in ad-spending seemed imminent.

This data makes the company believe that ad spend does not give enough returns for the
amount spent on it, so the first thing in a slowdown is to cut the advertising budget. But in
this data the long term impact of advertising is not quantified.
The explanation is generally based on share of voice. In a recession, some brands reduce ad
spend, which can allow those brands which don’t cut to steal market share from those
which do. There are probably more subjective elements too: in a recession, advertised
brands may appear to consumers as safer, more aspirational choices. But ultimately the
main factor seems to be whether or not a brand is being advertised more than its
competitors. Of course this suggests success is not just about being brave and maintaining
budgets in a recession. It also requires that at least some competitors aren’t so bold and are

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cutting back. There are additional factors at work in a recession. For a start, advertising
(especially TV) becomes cheaper due to reduced demand. So the same money buys more
media. Consumers reining in their spending also tend to stay at home more so the TV
audiences available to advertisers can go up. These trends allow brave advertisers to get
better value for their media ad spends. The long term effect of advertising (which often
comprises up to 80 per cent of the total effect of ad spend) and its duration can be a
significant determinant of sales not only during the recession but for some time afterwards.
To demonstrate this, Figure shows the sales generated by advertising under three different
scenarios:
1. Maintaining ad budgets.
2. Cutting budgets by 50 per cent for one year.
3. Axing budgets by 100 per cent for one year.

In the latter two, scenarios we assume the brand in question returns to spending a “normal”
budget in the year after the cut. The result on sales directly attributable to the company’s
decision to stop advertising altogether for one year and then returning to normal weights
after this, it takes three-four years to get back to the sales level where the brand would
have been had its ad budgets been maintained.
Even cutting budgets by 50 per cent for a year takes two years to recover fully (as shown by
the middle line in Figure). This is one explanation why those brands not cutting budgets
during a recession seem to benefit for two to three years after the recession is over: rival
brands that did reduce spends will take time to get back to their pre-recession levels.
Looking at this another way, if ad spend is cut during a recession; it has to be increased
during recovery to get back to pre-recession sales levels quickly.
The crunch is that for the example in Figure the increased spend required during the
recovery just to get back to pre-recession sales levels within a year will have to be around 60
per cent higher than the amount saved by cutting the ad budget in the first place. And this,
of course, assumes that the lost consumers can be won back easily. From a financial point of
view it would seem the only justification for cutting advertising spends in a recession would
be if a company needed the cash flow earmarked for advertising. Otherwise, the figures
simply do not justify the cut in the ad spend.

Value, value, value

Ultimately, there may be no choice for a company, and marketing budgets may have to be
cut for a business to survive on reduced revenues. It may be decided that profits have to be
shored up during the recession by reducing expenditure, even in the knowledge that future
profits will be hit during the recovery if the brand has to spend more to claw back lost
ground. Before swinging the knife, marketing teams should investigate whether they can
make current budgets work harder in a way which would allow them to reduce outlays
without experiencing a drop in sales. For advertising there are many alternatives to
investigate: from quality viewing (buying media time within more relevant programmes) to

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more efficient budget allocation and improvement of advertising creative. Some of these
could more than compensate for fairly sizeable budget cuts. However, if cuts have to be
made, the question then becomes which expenditure adds the least value? This is possibly
what drives companies to reduce their advertising expenditure - simply because they do not
understand its full value and especially as it is usually the single biggest investment on the
balance sheet. The temptation to switch to greater use of promotions, which could generate
a visible short term increase in sales, may be too strong. But there is evidence that even
promotions rarely achieve a positive ROI (for the manufacturer) so understanding the brand
and how effective its different marketing spends are is crucial for responding quickly when
the recession bites. Then the expenditure stream that adds the least value can be reduced
first. For most brands, however, that would not be advertising.

Facts which substantiate the importance of advertising in recession:

1970 recession year – American Business Press (ABP) and Meldrum & Fewsmith
study showed that “sales and profits can be maintained and increased in recession
years and [in the years] immediately following by those who are willing to maintain
an aggressive marketing posture, while others adopt the philosophy of cutting back
on promotional efforts when sales appear to be harder to get.”
1974-1975 recession years – ABP/Meldurm & Fewsmith 1979 study covering
1974/1975 and its post-recession years found that “Companies which did not cut
marketing expenditures experienced higher sales and net income during those two
years and the two years following than those companies which cut in either or both
recession years.”
1981-1982 recession years -- McGraw-Hill Research’s Laboratory of Advertising
Performance studied recessions in the United States. Following the 1981-1982
recessions, it analyzed the performance of some 600 industrial companies during
that economic downturn. It found that “business-to-business firms that maintained
or increased their marketing expenditures during the 1981-1982 recession averaged
significantly higher sales growth both during the recession and for the following
three years than those which eliminated or decreased marketing.

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Cahners and Strategic Planning Institute (SPI) produced their report, “Media
Advertising when your market is in a Recession.” It disclosed, “During a recessionary
period, average businesses do experience a slightly lower rate of return relative to
normal times. However, expansion times do not generate a higher level of profits
than normal periods as might be expected.” This phenomenon was explained by an
analysis of changes in market share. “During recessionary periods,” said the
Cahners/SPI report, “these businesses tended to gain a greater share of market. The
underlying reason is that competitors, especially smaller marginal ones, are less
willing or able to defend against the aggressive firms.” The study then pointed out
that businesses that increased media advertising expenditures during the
recessionary period “gained an average of 1.5 points of market share.”

Media Ad Expenditure Impact on Market Share

Average Point Change

1990-1991 recession years – Management Review asked AMA member firms about
spending during the 1990-1991 recession. “Fortune follows the brave,” it
announced, noting that the data showed that most firms that raised their marketing
budgets enjoyed gains in market share. Among the magazine’s sample, 15 percent
reported “greatly decreased” ad budgets. Advertising was “somewhat cut” by 29
percent. “The keys to gaining market share in a recession,” concluded Management
Review” seem to be spending money and adding to staff. Firms that increased their
budgets and took on new people were twice as likely to pick up market share.

Profit Impact of Marketing Strategy (PIMS) Study

In 1999, PIMS conducted a study of 183 UK-based companies that compared advertising
spend during recessions to share and profit gains during recovery – those that spent in
recession did better afterward than those that did not.

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Beyond the statistics, why it may be more important than ever to market despite
economic downturn: Strong consideration should be given to the idea that marketing plays
a more critical role now than it did during previous recessions. While marketing’s role was
once more informational than brand identity building, and considering that never more than
today has the clutter factor been so great, relationships between customers and brands are
critical.

Evolving role of marketing over the period:

BRAND AND
INFORMATIONAL RELATIONSHIP
BUILDING

Relationship marketing has surged to the top of effective marketing campaigns as a

means to keep an appropriate level of share of mind for purchase loyalty. Marketing
serves to foster and maintain consumer-brand relationships.
The effect on profits - From the Harvard Business Review, “Advertising as an
antirecession tool,” come the effects of cutting advertising on the bottom line. “The
rationale that a company can afford a cutback in advertising because everybody else
is cutting back [is fallacious]. Rather than wait for business to return to normal, top
executives should cash in on the opportunity that the rival companies are creating
for them. The company courageous enough to stay in the fight when everyone else is
playing safe can bring about a dramatic change in market position.” In addition, the
article points out “Advertising should be regarded not as a drain on profits but as a

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contributor to profits, not as an unavoidable expense but as a means of achieving

objectives. Ad budgets should be related to the company’s goals instead of to last
year’s sales or to next year’s promises.”

OPPORTUNITY MATRIX

HIGH HIGH LOSS RECESSION

POTENTIAL Opportunity

BRAND
EQUITY
SURVIVAL DOUBLE OR
GAME NOTHING
LOW

LOW HIGH

BRAND
INVESTMENENTS

By combining two dimensions of brand equity at the onset of the recession and
brand investments in the recession, we get four scenarios.
1. Brand Equity (High), Reduction in brand investments: High Loss Potential
2. Brand Equity (High), No reduction/increase in brand investments: Recession is
opportunity
3. Brand Equity (Low), Reduction in brand investments: Survival game
4. Brand Equity (Low), No reduction/increase in brand investments: Double or
nothing

Brands in cell (1) run the distinct danger that their equity will be significantly eroded
in the current recession. They start from a favorable position, but their behavior will
lead to a significant weakening of their position by the competition from private
labels and the brands in cell (2). Managerial decision-making for these brands is
overly cautious and focused on the short-term. These brands should emphasize
activities that keep their customers satisfied (and, hence, retain them), rather than
focus on cost-saving activities. Indeed, customers lost during the recession may
never come back, even when the economy’s outlook improves again.

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For brands in cell (2), the recession is an opportunity to pull ahead of their short-
sighted competitors in cell (1). Their proactive behavior will strengthen their
(relative) position, not only in the recession period, but also in subsequent years.
Brands in cell (3) are in the worst possible situation: they start weak, and their
management makes the wrong decisions. They are prime candidates to be de-listed
by retailers who are pushing their private labels in recessions – and many of them
will. Their brand equity will decline, and many will not even survive the recession
The brands in cell (4) have the opportunity of a lifetime to fight back. They start in an
unfavorable position – their equity is low and, in normal times, it would take
tremendous marketing investments to break through the competitive clutter.
However, given that most brands cut back in recessions and, hence, belong to cells
(1) and (3), brands in cell (4) are able to increase their share of total market
communication in the category dramatically by maintaining or – even better –
increasing their marketing investments. But it is a risky strategy – if it is poorly
executed, the anticipated increase in sales and profits will not materialize and the
brand may be discontinued.

Conclusion: Just as slumps in the stock market offer great opportunities for courageous
investors, slumps in the real economy offer great opportunities to courageous managers. All
evidence indicates that a proactive strategy is associated with increased brand success and
shareholder value. If you wait till the good times come back, you ignore the advice given by
the legendary ice hockey player Wayne Gretzky: “I skate to where the puck is going to be,
not to where it has been.” Recessions are not for the faint-hearted but who said that fair
weather makes great managers?

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DIGITAL AND INTERNET MARKETING

Some traditional media only make sense if you have sufficient funds to run the media
enough times to reach a certain ‘threshold’ level. It requires enough funds so the
production-to-media expenditure ratio stays sufficiently low. However, some digital options
– such as search marketing – can be used at virtually any scale and budget; effectiveness is
not dependent upon threshold levels. Search terms, which generate leads to your site, can
be bought as single words or thousands of words. They can be bought for a day, a week, a
month or whatever intervals you choose. They can be bought immediately around key
events or special promotions. Even small businesses can buy search terms. And the key is
that you only pay for results (when someone clicks on to your site). So there is a direct
correlation of spend and return, with no production costs involved.

Creative pre-testing: More companies are realizing that they can use the instant feedback of
the Web-to-Test ideas – including for non-digital material. Web-based testing can be overt,
in the form of asking for consumer feedback or it can be covert, by simply looking at the
data related to consumer usage patterns to determine which material performs best.

WEB Based testing

COVERT OVERT
Techniques Techniques

Feedback by looking at the Feedback by asking the

data related to consumer usage consumers
patterns to determine which
material performs best

Competitive monitoring: The last point is a reminder that even during the tough times, your
competitors aren’t sleeping. In fact, they – like you – are probably considering new and
better options. During tough times, it’s important to monitor their activities. Where they
are, outdo them. Where they aren’t, fill the void (if it’s cost-effective and makes sense for

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you). When they stumble, pounce on the opportunity with better offers, better information
and better options – punishing them by swaying consumers away from them. Doing some
simple online monitoring will help you know what they are doing and what consumers are
currently saying about your competition.

The next digital difference to note is the benefit of digital channels relative to data and
interactivity. Data is both the fuel and the byproduct of digital marketing. It is the ‘fuel’
because you generally need some data (email or website addresses, opt-in permission, etc.)
to enable your digital marketing efforts, such as sending out emails. Most companies these
days already have some of that data. At the same time, every interaction with consumers
generates data; it is the natural byproduct of digital marketing. As noted in the previous
point, a lot of this data (on site traffic, etc.) can be used for measuring and improving your
digital marketing. Digital marketing can also generate a great deal of personal user data that
has value. In fact, this is data that often costs money when it comes from third-party
sources. So smart activities can yield real benefits. Beyond user data, you can also gather
user opinions, views and insights.
Nowadays, brands are looking for more innovative ways to attract customers – whether be
it increasing brand awareness, acquiring users, promoting new products or simply tapping
into a new segment. India being the biggest untapped and fastest growing online market in
the world - brands are more than happy to explore this space and use their money
intelligently. Brands do not seem to be reducing their advertising investment; instead they
are investing money in the right media vehicles. They are weighing all the options and
maximizing returns. With the Indian Web space packaging a mix of both online and offline
advertising solutions, brands want every penny’s worth at this time of recession. The Indian
online space is booming with new and innovative websites/portals. Economic woes are not
expected to spell disaster for the Internet advertising industry due to a few key factors that
will create spending buoyancy.

Measurability with better

understanding of the audience
More effective ad placements
Better targeting
Wooing audiences through
video advertising and reaching
that vital audience following
eyeballs.

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 RECESSION MARKETING

According to a recent poll by marketing consultancy firm R3 of at least 50 marketers who

manage around 100 of Asia’s top 500 brands, 25% are planning on reducing their
expenditures.R3 however also says that at least 40% of Indian marketers said they were
going to spend more than originally planned on digital media, direct media and promotions.

Digital marketing is beginning to pay off for automakers since it allows them access to urban
well to do families and a recent article in Economic Times points out the payoffs from
internet marketing for cars

Maruti claims over a lakh cars it sold last year originated from digital marketing
initiatives
Tata Motors saw 4,000 customers booking its low-cost car Nano over the internet.
Around 17-18 % of Maruti's sales now are estimated to originate from digital
marketing from mere 2-3 % in 2005
Internet is responsible for 5% of Honda’s total sales in India.
Tata Motors’ dedicated website on Nano got a little over 30-million hits from the
date of launch of the car to the closure of the booking.

Digital channels can indeed drive sales. One mobile phone handset company in Asia saw
50% of sales coming directly from digital, while only 21% of their marketing money for the
phone model actually went to digital channels. Mobile based marketing is a part of digital
marketing which has come up as an innovative way to market in recession as every penny
spend is very important. HSBC conducted a mobile-based promotion with High Networth
Individuals (HNIs) at international airport’s departure lounges, offering them applications
that would be useful in the country they were travelling to—such as tips on communicating
better in the new language or locating a bank branch. According to Vinod Thadani, regional
head, mobile, Group M, South Asia, which conducted the campaign for HSBC, a valid
database of 14,000 was generated of which almost 30% was converted.

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 RECESSION MARKETING

Affiliate marketing is another technique to consider when you want fast, efficient activity. In
affiliate marketing, another advertiser posts your material on their (existing) website. When
people click onto your site from theirs, you pay them an agreed amount per lead, just as you
do with search terms. Software can manage this transaction, so this relationship – or
multiple relationships – can be managed efficiently. Simple, existing material can be used in
affiliate marketing.

Leveraging social networking sites

Social networks, such as Facebook, and a variety of other language equivalents, are now
also aggregating large audiences. These sites present the potential for brands to cost-
effectively reach very large audiences, often with little/ no costs associated. In marketing
through social networks, you can possibly re-purpose or produce very low-cost
communications material. As with video distribution, penetrating social networks requires a
clear strategy.

SPRITE’s latest campaign launched online before hitting TV

Coca Cola India is launching its latest campaign for Sprite, the second-largest selling
carbonated drink in India, on the Internet. This is the first time the cola major is breaking a
campaign for one of its brands online, giving TV a miss. This campaign is being done at
Network18's In.com site. Breaking this campaign online before hitting TV is a major
achievement and highlights why TV18 group seems most likely to emerge as India's best
organized online entity. The new campaign will see Sprite building on its Seedhi baat no
bakwaas proposition, with communication around Fridge Mein Jayega Bade Kaam Ayega for
the 1.25-litre fridge pack. For instance, the online contest will bring in interactivity as
internet users view eight seconds of the Sprite commercial and will have to complete the
rest. The first six participants who guess the ending would win Nokia multimedia phones.
The interesting point is that for the two days that the campaign is being aired online, Coca
Cola expects close to 4 million page views. This type of activity results in effective
advertising to millions of people and spend on it is very less as compared to other traditional
forms of advertising.

Trends in print advertising

This is an economic downturn and there is a sharp drop in marketing and advertising
budgets of various companies but this slowdown has caused some people to innovate and
adopt new strategies and approaches to traditional print advertising.

1. While there may not be a substantial drop in ad rates, media houses are throwing in
freebies and value-adds for consumers without changing the rack rate (officially
quoted maximum rates), resulting in an effective drop in ad rates which results in an
overall discount up to 10-20% through various routes.

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 RECESSION MARKETING

2. Big Bang Approach: There is a rise in new trend

that of going for big bang ads running full-page Selective Scheduling

ads, front-page flaps and cover jackets in

newspapers and magazines. In a twist of
selective scheduling, some advertisers are Big bang ads running full page ads,
front page flaps and cover jackets
looking at cutting down on frequency and in newspapers and magazines
duration of the ad campaigns and instead
running a few big ads during select periods.
BIG BANG APPROACH
3. Another interesting trend is in categories such
as consumer products that are choosing to
advertise in bursts at the beginning and end of the month, which may coincide with
consumer buying patterns, as opposed to running the campaign throughout the
month.

4. Another trend is the equality in ad rates for national clients and retail (local) clients,
traditionally retail rates are 40-50% lower than regular rates as they are applicable to
local businesses which may want their ads to appear only in a local edition. National
brands these days are, however, striking rates closer to retail rates for national
release.

Trends in television advertising

Due to the current slowdown there has been

substantial planning in TV ad’s to avoid
wastage. As the economic slowdown deepens
advertisers are trying to optimize their ad
spending by moving to targeted channels
known as frequency builders because they
offer advertisers the scope to air their ads at a
much higher frequency to select audiences.
Ad rates on general entertainment channels
are around 10 times those on channels
targeted at select audiences. Multiple airing of
an ad on a targeted platform would be much
cheaper than a single airing on an
entertainment channel.

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 RECESSION MARKETING

WAYS TO RECESSION MARKETING

As explained before, the classification of customers and classification of consumers
according to priorities by sorting products and services in the section “Understanding
Recession Psychology”; the ways in which in which marketing could be done in recession is
different for different groups of consumers and different for different products and
services. This could be well summarized with the following table: -

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 RECESSION MARKETING

Some of the ways which companies could follow at the time of recession are: -

1. Increase the advertising budget. Increasing spending increases a company’s share of

voice. If your competitors cut back, your message has the chance to grow stronger.
2. Utilize sponsorships. This type of awareness advertising and promotion gives a
business valuable exposure to targeted, core audiences.
3. Stay in contact with loyal customers. Keep in touch and let them know what you
have to offer.
4. Product introductions. Don’t hesitate to introduce well-conceived and properly
marketed new products when the competition is weak.
5. Sustain awareness. Advertising works cumulatively—remind people frequently about
your brand or they’ll forget you.
6. Don’t “cheapen” your advertising. Trying to save on creative or production costs can
be a kiss of death, and customers will notice.
7. Enhance product and company publicity. Maintain a media presence with a smart,
effective, ongoing public relations program. Strengthening relationships with key
media will provide long-term financial benefits.
8. Be more aggressive in marketing your products so that you become the choice for
consumers even in the tough times of the consumers.
9. Start sponsoring. This type of awareness advertising gives your business valuable
exposure to targeted, core audiences.
10. Maintain continuity to sustain awareness. Advertising works cumulatively so you
have to remind people frequently about your brand or they'll forget you.
11. Step up public relations efforts. Be sure to maintain a media presence with smart,
effective PR programs.
12. Keep an eye on the competition and don’t panic.
13. Concentrate on your core brands and products.
14. Don’t price promote unless you can cut costs or live with lower margins.
15. Don’t cut on the quality of your products for cost-cutting because this could hamper
your brand image and if known by the consumers would result in loss of sales of your
product.
16. Focus o perfect segmentation of the market and positioning of the brand.
17. Make your creative work harder.
18. Review on the budget allocation of your product basket.
19. Have a more effective communication with the customers for retaining them.
20. Spend more on media dollars, less on overheads. Need in the recession is to focus on
your current results rather going for long-term results.
21. Use digital marketing software tools for finding whether or not the particular
advertisement would give the desired results, even before implementation, which in
a way helps in reducing cost. Some of the tools to measure results are: -

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 RECESSION MARKETING

Ad Server for Advertisers.

Ad Server for Publishers.
Web Analytics.
e-Mail Marketing.
Mobile Analytics.
Mobile Ad Server.
Web Server Statistics.
e-Survey Systems.
Feedback Systems.

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 RECESSION MARKETING

MARUTI-SUZUKI: AN AUTOMOTIVE MASTERSTROKE

Maruti Suzuki is an example of the automobile sector, which lies in the one of the
badly hit sectors during the time of recession. This sector goods and services lied
under the groups of “Postponables” as explained in the classification of goods.

The automobile sector has been divided in four major segments:-

1. Economy.
2. Mid-range.
3. Premium.
4. Luxury.

It caters more to the urban population of India, directly linked to disposable income.

In this sector, the critical success factor has changed from price to price-value.

Maruti Suzuki is one of India's leading automobile manufacturers and the market
leader in the car segment, both in terms of volume of vehicles sold and revenue
earned – a people’s car for the middle class India.

Until recently, 18.28% owned by the Indian government, and on May 10, 2007, it
sold its complete share to Indian financial institutions.

The parent company is a globally renowned for its mini and compact cars for three
decades, its technical superiority, power and performance into a compact,
lightweight engine that is clean and fuel efficient.

Maruti has been labelled as an “employer of choice” for automotive engineers and
young managers.

The company vouches for customer satisfaction.

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 RECESSION MARKETING

Maruti has segmented its cars in the following segments:

Segment
Segment

Segment

Segment
• M800 • Omni • Alto • SX4 • Gypsy
• Versa • Wago • D'zire • Grand

MUV
n-R Vitara
• Zen
A1

• Swift

A2

A3
C

• A-star
• Ritz

It seems, changed gears just in time to survive and thrive despite the slowdown.
They revitalized their brand despite and in spite of the slowdown by simply
emphasizing its core brand proposition – value for money, fuel efficient cars – and
increasing its value!

But managing their brand portfolio well is

not Maruti’s only claim to the marketing
fame.
Over the last quarter of stagnating sales, the
motor company went on an overdrive to
enhance its market penetration.
For one, instead of restricting its annual
dealer level discount scheme till the end of
December (as it does every year to clear year-
end sales), Maruti
1. Extended the lucrative cash discounts way into February;
2. Next up is their strategic tie-up with Corporation Bank to finance Maruti Suzuki
vehicles on an all India basis to enable credit access at a time when banks are
antsy about lending too easily; and
3. Finally, proactively embracing the ‘voluntary disclosure of fuel economy’ to drive
home the message to consumers about their leadership in making highly fuel
efficient cars.
As per Shinzo Nakanishi, MD & CEO, Maruti Suzuki India Limited, the move “would
enable customers to make an informed choice when purchasing a car in the market.”
So this was the way Maruti-Suzuki tackled recession without showing any kind of
negative impacts in the sales of their products.

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 RECESSION MARKETING

Sales of MARUTI-SUZUKI after implementation of their marketing strategies during the

times of recession till and in July: -

Analysis of sales data:

Severe impact on A1 segment car (Maruti)

as shift of customers to newer brands and
cars which give them similar facilities and
are new in the market at similar prices;
No impact on C and A2 segment cars with
new implementation of strategies and
getting more and more new cars in the
segment for getting customers go for
something new.
Though not completely unaffected by the
slowdown (the market leader posted a
decrease in sales for all three months in the last quarter), in January 2009, Maruti
Suzuki bucked the trend and reported a 5.59% increase in domestic sales.
A closer look at their figures reveal that their recent additions to the A3 segment
(D’zire and SX4) is what is making the numbers look so cool. The segment saw a two-
fold growth, selling 6,590 units (even higher than their cash cow Maruti 800) as
against 2,939 units in the same month last year.
High sales seen due to the marketing strategy implemented by the company in the
A3 segment cars.

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 RECESSION MARKETING

SX4 was launched in May 2007 and D’Zire in March 2008.Both the cars are runaway
success ever since they have been launched in India and they have kept the A3
segment unaffected.
Overall, recession has not adversely impacted the passenger car segment.

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 RECESSION MARKETING

VODAFONE: GO THE “ZOO-ZOO” WAY

One of the best campaigns seen so far is the Vodafone's ZooZoo campaign. Never in
the history of Indian advertising, had we witnessed a campaign that generated so
much interest and curiosity among all the segments of the society, be it young or
old. So much has been written about ZooZoo in various media.
ZooZoo was created to promote the value added services (VAS) of Vodafone.
Vodafone was trying hard to capture the VAS space because it is a potential cash
cow for cellular companies.
Vodafone also wanted to make the most of the IPL Season2. Although IPL is a crowd
puller, it is also a marketer's nightmare because of the clutter. IPL attracts all the
deep pocket advertisers and to standout, one needs to think out of the box.
Thus ZooZoo was born. ZooZoo is a semi alien semi-human character living in an
earth-like place (lot of which is left to the viewer's imagination).These are very
simple beings who are very expressive. They laugh aloud, cry loud and have a child
like simplicity around them. Thus have an emotional and personal attachment with
all the consumers.

The success of ZooZoo is the success of minimalism and simplicity. Although the
production process of ZooZoo ads are not simple, as a consumer I was attracted to
the simplicity of the concept and the execution. ZooZoo also highlights the power of
storytelling. Each ad tells a very simple story. After all brands are made through
story telling.

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 RECESSION MARKETING

Another factor that aided the success of

ZooZoo is the scale of the campaign. Reports suggest
that there are around 25 different ads of ZooZoo to
be aired during this IPL season. This unprecedented
scale has kept the curiosity high among the viewers. It
has infact dwarfed all the other advertisers in this
season.
There is lot of risk being taken behind this
campaign. The Vodafone managers who okayed this
campaign may have risked their jobs to bring out such
a massive campaign.
The agency also risked their credibility. One
should appreciate the creative talent of O&M and
Nirvana Films who proved that Indian Advertising has
come of age.
Vodafone has taken ZooZoo beyond advertising.
The fan club in the facebook page of ZooZoo has already touched 316,572 and
counting.
All these has transformed into a great viral movement. There are already a plethora
of mail forwards and blogposts celebrating ZooZoo.

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 RECESSION MARKETING

ZooZoo is a great marketing story. Vodafone has benefitted immensely by this

campaign. It caught the attention and fancy of the consumers, aroused curiosity, told
stories and made people retell the story.

Marketing Guru Seth Godin always emphasized that Brands should be

Remarkable. He defined remarkable as "Worthy of Making a Remark
about "

The ZooZoo is a classic example of being Remarkable.

Sales of VODAFONE after implementation of their marketing strategies during the times of
recession of the month of June 30, 2009: -

Vodafone reported an increase of 23 percent in revenue at constant exchange rates, and 33

percent, taking into account exchange rate fluctuations. The revenues included a 7 percent
benefit of revenue from their stake in Indus Towers.

Data revenues for Vodafone remained flat quarter on quarter, but were up 30 percent year
on year. Strangely enough, messaging (SMS) revenues declined quarter on quarter.

However, much like Bharti Airtel and Idea Cellular, Vodafone India reported a decline in
ARPU, impacted by the mobile termination rate cut.

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 RECESSION MARKETING

In terms of Minutes of Use, Vodafone clocked 10% higher minutes of use, at 71,775 million
minutes, up from 65,276 million minutes used in Q4-09.

Of its Total Customer Base, 93.2 percent was Pre-paid. The company’s average customer
base grew by 56 percent year on year, on launching in seven new circles.

Net additions for the company declined quarter on quarter - Vodafone India added 7.68
million subscribers in the quarter, as opposed to 7.83 million subscribers added in the
previous quarter.

Much like other operators, Vodafone India has suggested that usage per customer declined
on account of multiple SIM usage, which is being attributed to the free minutes and free
SIM cards being given by operators, particularly in new circles.

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 RECESSION MARKETING

The above picture clearly depicts how the ZooZoo advertisements have helped in increasing
the customer base for Vodafone in the last quarter with a sharp increase of 3.8%, from
17.5% to 21.7%.

Vodafone reports churn on an annualized basis, and the company saw a pre-paid churn of
26.3 percent churn for the last four quarters, with a Pre-paid churn of 26.4 percent, and a
post-paid churn of 25.3 percent.

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 RECESSION MARKETING

HORLICKS STRATEGY DURING RECESSION:

Horlicks has a significant presence in over fifteen countries. Today Horlicks is the best
known brand in the health foods category in India. The brand enjoys the trust of generations
of Indian mothers and this relationship has been nurtured by the brand by fortifying the
product from time to time. Today, Junior Horlicks contributes 11% to Horlicks’ total sales
turnover and has been one of the fastest growing product extensions to the Horlicks brand.
But it isn’t just product development that Horlicks has concentrated upon. It has also
created new attractive packaging options including jars, refill packs and sachets. Horlicks
was the first brand in India to introduce a refill pack option and also the first to shrink-wrap
bottles. In a way, there’s a Horlicks pack for every occasion and mood.

Indian health drinks market is still in its infancy due to the lack of awareness among the
population. In value terms, the health food drink market is around Rs 1, 400 crore and in
volume terms around 65,000 tonnes per annum. Glaxo Smithkline (GSK) with four brands -
Horlicks, Boost, Viva and Maltova - is the leader in Indian health drink market. Complan,
Glucon D from Heinz India and Cadbury India’s Bournvita are also popular among the Indian
health drink brands.

Examination time (January-March) every year is a great time for health drink powders like
Horlicks and Boost, Glaxo Smithkline’s (GSK) flagship health drink powders for kids. It is
GSK’s peak sales period, following which demand slumps by about 10-12%, thanks to a near-
halt in hot drinks by consumers in the ensuing summer months. And so begin the good
times for kids and bad times for brands like Horlicks. In the last summer however marketers
at GSK decided to challenge these bad times head on. They launched a cold-consumption
campaign for Horlicks – first by teaming up with the launch of the successful movie Ice Age 2
in India and then by roping in the Taare Zameen Par child star Darsheel Safary and adding
summer variants to their portfolio. The chilled drink positioning for Horlicks not just
translated into red-hot national sales for Horlicks during the summer; but also gave the
brand a chance to keep its visibility high throughout the year.

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 RECESSION MARKETING

SOCIAL MEDIA MARKETING:

“Social media is an umbrella term that defines the

various activities that integrate technology, social
interaction, and the construction of words and
pictures.” Marketing has been inside-out (one way)
approach – to broadcast the product message to
the consumer with & expect the user to listen,
consider purchase of the product. Social Media
Marketing is use of media that is capable of two
way communication, engage consumer in a
dialogue, hear their review comments, spread your
product message among their network – along with
increase in product sales, you would also get
feedback from consumers.

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 RECESSION MARKETING

TRADITIONAL MEDIA:

Television, Radio, Print are the traditional media, currently used for marketing the products
or services, characteristically it adopts the “law of few” (scarce resource) that leads the
products to fight for limited media available to broadcast their message, pricing. Demand to
Price elasticity is driven by the quality of the program on the media. So many brands have
fewer channels to advertise in a particular slot of time.

SOCIAL MEDIA:

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 RECESSION MARKETING

Internet & Mobile Phones are the two main constituents of Social Media and it differs in
availability of scale, does not have the problem of few, less elastic demand curve compared
to traditional media. Specific and narrow target user social media channel can be found or
created to market the product, a new channel creation has lower entry barrier. Here fewer
brands have a lot of channels of advertising so they can reach a wider audience in effective
ad spending.

There are many ways to brand development. One such way is brand extension wherein a
company extends its brand to various categories. One such brand in league of brand
development is what is done by Horlicks. Horlicks was introduced in market as a health
drink. It then extended into biscuit category. Now it has extended to another class of
products namely functional foods category with its new Horlicks Nutri-Bar in the time of
economic slowdown. This energy bar is positioned as a ready-made healthy solution to
hunger.

Challenges: Marketers should not get infected by Competition Myopia, wherein the
marketers view the competitors too narrowly. In this case, Horlicks Nutri-Bar may see itself
as the pioneer in cereal bars category, but they are not the only one in ready-to-eat hunger
satisfying food class. In this context or category, they have a major competitor, namely Mars
Snickers, which has a positioning similar to Horlicks Nutri-Bar, though it comes in
confectionery category. Horlicks Nutri-Bar is a recently launched product, while Snickers is
an established player. Horlicks has to identify its competitors, and strategize accordingly to
highlight its POD (Point Of Difference) and gain SCA (Sustainable Competitive Advantage).

The rural market is growing at a fast rate and GSK has taken it as a strategy to expand its
distribution in the rural area to expand in sales and fight the recession and increase its
sales. In an aggressive ‘Go to Market’ approach, it created a second layer of distributors in
the smaller towns to supplement the existing chain of around 500 big distributors. The
current market reach of GSK Consumer Healthcare is about 25 percent and the goal is to
reach 40 percent.

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 RECESSION MARKETING

The Internet is a good way to connect with kids. So, there are tips posted on examinations
on the website — “Exams ka bhoot bhagao” (Drive the exam demon away). Besides, the
company has also reached out to children with Wizkids, a contact programme that provides
a platform for schoolchildren across 25 cities to showcase their talent.

Positioning: In the minds of the consumer it is communicated as a Value-for-Money product

while its competitors like Complan are perceived to be more expensive. So compared to its
competitors it is the best money proposition and the consumer gets value for the money
spent. Parents even in a slowdown are not ready to compromise on the nutrition of their
children. They are willing to spend more for their children. This allowed the company in
succeeding to even increase its price by about 5 percent.

Target for Horlicks Nutri-Bar: “Young working adult” as the growth market.

To conclude GSK Consumer Healthcare for its product Horlicks has done good innovative
marketing so as to maximize the return on the money spent during the economic downturn.

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 RECESSION MARKETING

JET AIRWAYS – SOARING HIGH

Introduction:-

Famed investor Warren Buffett once joked that a generation of Wall Street investors would
have been served well if someone had shot down the Wright brothers as they attempted
their historic flight. Indeed, it’s been a tough decade for the airline industry and their
investors. The same can be extended to the Indian Aviation industry which has seen a
double digit growth in the recent decade but has also borne the brunt of recession. Soaring
fuel costs, aging fleets, dwindling number of passengers are the every day challenges that a
manager in an airline industry has to deal with. The recent recession wave that took the
world by storm has even added to the woes of the aviation industry.

"We are bleeding. Everybody is bleeding. Giving a helping hand to the airline industry is done
all over the world,", Naresh Goyal of Jet Airways said while asking the government for a
‘rationalization of taxes’.

Let’s have a look at the comparison of Indian aviation industry:-

Disadvantage India:-

ATF price in India 60-70% higher

Sales tax in India averaing at 26-30%

Airport charges, landing and parking fees high

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 RECESSION MARKETING

As a result of the cumulative effect of all the above mentioned effects the airlines in India
have a huge amount of operating cost which adds to the woes of the airlines industry in
India. Adding to this is the current economic slowdown that has hit the world. The airline
industry is in tatters worldwide as the recession has squeezed purses, forcing people to look
for cheaper modes of transport. This has not only stung the high cost, luxury airlines but the
low cost, no-frills one also.

Jet Airways strategy:-

Jet Airways, has been a stalwart in adopting new marketing strategy to attract new
customers, to maintain visibility. Jet Airways has always been a forerunner in the Indian
aviation industry in adopting unique ways of marketing which has in part helped the
company attain and retain number uno position in the sector. To combat the economic
slowdown Jet Airways has adopted a new Digital Marketing Strategy known as “Affiliate
Marketing Strategy.” Jet airways is a pioneer in this regard. Though Affiliate Marketing is a
tried and tested technique in US and European countries, Jet Airways has pioneered this
technique in India, atleast in the aviation sector.

Understanding Affiliate marketing:-

Affiliate Marketing is an Internet-based marketing practice in which a business rewards one

or more affiliates for each visitor or customer brought about by the affiliate's marketing
efforts. It is an application of crowd-sourcing.
The Affiliate Marketing industry has four core players at its heart: the Merchant, the
Network, the Publisher and the Consumer. The market has grown sufficiently in complexity
to warrant a secondary tier of players, including Affiliate Management Agencies, Super-
Affiliates and Specialized Third Parties vendors.
Affiliate marketing overlaps with other Internet marketing methods to some degree,
because affiliates often use regular advertising methods. Those methods include
organic search engine optimization, paid search engine marketing, e-mail marketing, and in
some sense display advertising. On the other hand, affiliates sometimes use less orthodox
techniques, such as publishing reviews of products or services offered by a partner
Merchants favor affiliate marketing because in most cases it uses a "pay for performance"
model, meaning that the merchant does not incur a marketing expense unless results are
accrued (excluding any initial setup cost). Some businesses owe much of their success to this
marketing technique, a notable example being Amazon.com. Unlike display advertising,
however, affiliate marketing is not easily scalable.
Affiliate websites are often categorized by merchants (i.e., advertisers) and affiliate
networks. There are currently no industry-wide accepted standards for the categorization.
The following types of websites are generic, yet are commonly understood and used by
affiliate marketers.

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 RECESSION MARKETING

 Search affiliates that utilize pay per click search engines to promote the advertisers'
offers (i.e., search arbitrage)
 Comparison shopping websites and directories
 Loyalty websites, typically characterized by providing a reward system for purchases via
points back, cash back
 CRM sites that offer charitable donations
 Coupon and rebate websites that focus on sales promotions
 Content and niche market websites, including product review sites
 Personal websites (This type of website was the reason for the birth of affiliate
marketing; however, such websites are almost reduced to complete irrelevance
compared to the other types of affiliate websites.)
 Weblogs and website syndication feeds
 E-mail list affiliates (i.e., owners of large opt-in -mail lists that typically employ e-mail
drip marketing) and newsletter list affiliates, which are typically more content-heavy
 Registration path or co-registration affiliates who include offers from other merchants
during the registration process on their own website
 Shopping directories that list merchants by categories without providing coupons, price
comparisons, or other features based on information that changes frequently, thus
requiring continual updates
 Cost per action networks (i.e., top-tier affiliates) that expose offers from the advertiser
with which they are affiliated to their own network of affiliates
 Websites using adbars (e.g. Adsense) to display context-sensitive, highly-relevant ads for
products on the site

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 RECESSION MARKETING

Jet Airways and Affiliate Marketing: -

Features of Jet Airways Affiliate Program:-

Customer Promotion Marketing

Commision Keyword policy
Demographics Methods Resources
•CPS:- Rs.12,500 •Gender:-men, •Restricted •Organic Search •Banner
•Recurring women. keyword access. Engine •Text Links
permanent •Target optimization.
Countries:-All, •PPC Search
especially India, Engine.
Australia, New •Contexual
zealand, Advertising
Malaysia. •Blogging/Forum
postings.
•Own/Publisher
Website.

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 RECESSION MARKETING

Why Affiliate Marketing by Jet Airways: -

As mentioned above, the company, due to the economic recession was facing dwindling
profit margins and reduced occupancy. But at the same time, the airline was aware of the
fact that, the brand of “Jet Airways” need to be in people`s mind. If they cut down on their
marketing, any competitor who aggressively markets in this economic slowdown will get a
large share of people`s mind. So major reason for Jet adopting affiliate marketing was that
this strategy gives the company a large economical “Virtual Field Force”, so as to say. The
marketing strategy gives the airline many other advantages like:-

1. Increased cost effectiveness:- Due to the Activity based pricing, the affiliate can
realize his commission of Rs. 12,500 only when a sale is materialized through the
affiliate site. This drastically cuts down the marketing cost of the company as
spending on inefficient traditional marketing ways are reduced.
2. Greater visibility:- Today many potential customers look at the internet as an
ultimate source for all their problems. So by adopting this strategy, the company is
increasing their visibility in the digital world, akin to hoardings in the real world. This
increased visibility results in instant recall by the customer, especially in untraded
waters of Australia, New Zealand, and Malaysia.
3. Tapping the younger generations:- This digital strategy which also encompasses
contextual advertising, gives the airline to reach to the younger generations, which
are becoming a high revenue earner for any airline. This strategy gives the airline to
be present where it matters. Because of contextual advertising used by the
traditional publisher and more effectively by the affiliate the airline gets presence on
social networking sites such as MySpace, Facebook.
4. Reporting:- Since the site of the affiliate is connected to the Jet Airways main site
through Shoogloo network, the potential customer can easily book tickets from the
site of the affiliate. Also for Jet Airways, it results in increased validity of sales and
better tracking of sales.

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ALASKA AIRLINES

Strategy to overcome recession: Focus on two areas

1. Discounted airfare deals
2. Frequent flyer program bonuses.

Go all in with double miles, for all flights, on all routes; in all classes of service make those
double miles qualify for elite status. Times like these call for bold measures

This offer won't overcome the effects of a worldwide economic meltdown exacerbated by a
stage-5 swine flu epidemic. No promotion would, or could. But Alaska's offer will prompt a
few more people to fly, and give those already committed to flying a reason to book on
Alaska rather than on another airline. It will reinforce and reward Alaska's customers'
loyalty. And—perhaps most importantly—it will force other airlines to seriously consider
mounting similar promotions

One thing that would have done differently: Rather than the somewhat timid seven week
promotion period, it has put the bonus on offer for a solid three months or more.

Booking strategy by airline industries to overcome recession

American Launches Elite-Oriented Promotions

With business travel still in the doldrums, American is offering double elite-qualifying miles
and bonuses to maintain the loyalty of its most profitable customers.

Consumers Win With Booking Fee Elimination

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With online travel agencies eliminating booking fees, how do their fares compare to the
airlines' offerings? The results of our comparison tests may surprise you.

New US Airways Offer: Up to 50,000 Bonus Miles

For those whose normal travel and spending patterns put significant bonus miles within
reach, this promotion lives up to its "Grand Slam" moniker.

American Discounts Annual Airport Lounge Memberships

With American's discount on airport lounge memberships, flyers can buy peace and quiet for
less. Infrequent flyers should steer clear

At Your Service: Online Cruise Reservations

As cruise lines expand options for online reservations, cruise travellers can spend less time
queuing up onboard and more time enjoying their vacations.

Starwood Extends Bonus Points Offer Through November

The latest bonus offer for stays at Starwood hotels may push other hotels to extend
bonuses through the fall as well. It's yet another reason to cheer the travel slump on.

Double American Miles, for New Yorkers Only

American's new double-mile promotion applies to all flights, through the end of the year.
But to qualify, travellers must live in the New York area.

US Airways' Mileage Sale Rates a 'Buy'

With US Airways' 100 percent bonus, the economics of buying miles from an airline turn

Combine Cash and Priority Club Points for Hotel Nights

Priority Club Rewards' new Points and Cash feature lets members combine points with cash
for award nights at any of more than 4,200 hotels in the Intercontinental Hotels family.

New Club Med Program Offers Few Rewards

If a trip to Club Med isn't its own reward, the new loyalty program isn't likely to be a
difference-maker. The hurdles are high and rewards only so-so.

Frequent Flyer strategy

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Consumers Win With Booking Fee Elimination

With online travel agencies eliminating booking fees, how do their fares compare to the
airlines' offerings? The results of our comparison tests may surprise you.

Southwest Adds Wyndham Hotels to Its Loyalty Program

While Southwest's program remains somewhat anemic, adding the Wyndham Hotels
network is at least a down payment on a brighter future for Rapid Rewards members.

United's New Credit Cards Offer Unique Benefits

United has three new credit cards that offer extra mileage and extra benefits for frequent
travelers. But are the high annual fees worth the bonuses?

US Airways Discounts Caribbean, Europe Awards

Looking for cheap frequent flyer award tickets to the Caribbean or Europe this fall and
winter? If your miles are in US Airways' Dividend Miles program, you may be in luck

New United Credit Cards Offer Elite Miles for Charges

For some travellers, the $375 annual fee for United's new Mileage Plus credit card may be
more than offset by the card's perks, making it a high-flying bargain.

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 RECESSION MARKETING

MORGAN HOTELS – “F@#!ING IT OUT”

Introduction:-

The hospitality industry is in the business of serving to even the enemies. The biggest enemy
that the US hospitality industry facing is the economic slowdown. If the hospitality
industry is a measure of the wealth in people’s pockets then the news is very bad indeed.
The industry is facing one of its worst times in memory as pubs, clubs and restaurants close
at an unprecedented rate. Insolvencies in the sector have risen by 95% in 2 years as people
opt to stay at home and preserve their cash rather than splurging on luxuries like nights out,
meals and other entertainment.
A report by consultancy PricewaterhouseCoopers (PwC) showed that there were
281 business failures in the third quarter of this year, up from 175 last year and well ahead
of the 220 insolvencies reported in the first quarter and the 212 recorded in the second. It
was almost double the number reported – 144 - in the final quarter of 2006.
This data clearly points out to the fact that people have indeed stopped spending money on
these vices and are looking to invest the money rationally.
Certain comments made by the pub owners especially in US, points out to the fact of
branding and brand image during the slow economic conditions.

“The majority of pubs suffering distress are wet-led community pubs

losing out to supermarkets. Some have also found the competition from
well known pub chains has had a detrimental effect as brand and
familiarity become more important to consumers when personal
expenditure is under pressure.”- Mr. Stephen Brown, the hospitality
and leisure director of PWC.

Thus we clearly see that the brand image and familiarity in the minds of people become an
important factor during crunch time. This only reinforces the fact that recession is not the
time to cut back on advertising spending but time to spend the marketing budget rationally.

Shown below is a graph depicting HIP index of the US hotel industry. The Hotel Industry
Pulse, or HIP for short, is a hotel industry indicator that was created to fill the void of a real-
time monthly indicator for the hotel industry that captures current conditions. The indicator
provides useful information about the timing and degree of the industry’s linking with the
U.S. business cycle for the past 40 years. Simply put, it tracks monthly overall business
conditions in the industry, like an industry GDP, and points in to the changes in direction
from growth to recession or vice versa.

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The composite indicator is made with the following components: revenues from consumers
staying at hotels and motels adjusted for inflation, room occupancy rate and hotel
employment, along with other key economic factors that influence hotel business activity.

We infer from the graph that the HIP has declined to a figure of 83.1 in year 2009, which
shows that the hospitality industry is indeed facing a crunch in the past two years.

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Recession to Recess-is-on campaign:-

To combat this depressing situation in the economy and also to boost up its occupancy rate,
a high end hotel chain in America, named the Morgan Hotels came up with a campaign
titled “Fuck the Recession, Attitude is Everything.” The campaign was a bold move on the
part of the marketing team at Morgans as it is not easy for a top brand to put its whole
existence at stake by shouting aloud what people say in private.

The campaign was of the same magnitude as the magnitude of the problem at hand. Also it
kept in mind the frustration the people had in mind about all the crisis talk and moulded a
campaign which actually gave vent to people’s anger. The company knew that people were
frustrated with all the crisis talk and wanted to break away from it. So the mentioned tagline
garnered great interest and brought cheers on the peoples face.

This was only the one part of campaign. The other part which said “Recession” actually told
people that the economic slowdown is not the time to complain but a time to play. It
painted in the peoples mind the idea that at Morgans, there is no crisis, that Morgans
presents an alternative reality, where everything looks exactly like in the real world, except
when you see a guy with an eye on his forehead passing by.

“We like to offer our customers a different point of view. We like to take a
dare and be provocative. We want to talk to customers in an authentic way,
to look ’em in the eye and tell them we have a soul as a brand.”

“Come ride it out with us and you’ll have a better time than with anyone
else.”

Says Scott Williams, chief marketing officer

At Morgans

Target audience:-

An internal analysis of the Morgan hotel revealed that the biggest revenue generator for the
hotel was the pub and the restaurant business which garnered maximum revenue for the
company. So the Recessison campaign as targeted towards the young affluent crowd of the
American society. When the campaign was initially launched by the company it was
targeted all the average people in the American society. They did this by getting average
people in the American society to endorse the FTR campaign. This was the easy part to do.
But an average American endorsing for a hotel which charges $800 for a weekend getaway
does not look authentic. This average American story did not add any value to the FTR
campaign.

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Challenges:-

The major challenge faced by the marketing team was to convince the people that fear is for
small minds. In a century where people have become more aware of the resources and the
importance of the economical use, an ad campaign which urges people to have a risk free
approach towards life becomes very difficult to accept for the people.

Strategy:-

Feeling guilty about ordering that $14 capiranha while headlines trumpet economic collapse
in every quarter? Morgans Hotel Group has a message for you: "F&%k the Recession!"

That’s the sentiment adorning

the back of the bartenders’ T-
shirts at the posh new Mondrian
here in South Beach. The front of
the shirt urges guests to forget
the collapse in retail sales, the
burgeoning foreclosure figures,
the potential demise of the Big
Three automakers: “RecessIsOn”
they say.

It’s a campaign that New York

branding consultancy Ito
Partnership concocted for the
hotel chain as a way of dealing
with the dissonance travellers
might feel about booking
themselves into a hotel known
for the chandeliers in its showers
instead of a monk-like Motel 6.

“The strategy behind

“RecessIsOn” for Morgans is:

1. Keep cool (maintain the vibe and image that our guests expect)

2. Give the guests permission to enjoy the brand, even in negative economic times,” says Ito
Partnership’s CEO, David Melancon, at a party celebrating the Mondrian’s opening during
Art Basel Miami.

“The first phase was about instantly connecting with customers by verbalizing the pungent,
slightly off-color thought that we all have: F#*k the Recession. We did that through guerrilla
media tactics (video projections, wild postings and some other outdoor media.)” Morgans

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had wanted to buy print space, but couldn't find a way to do that would sufficiently convey
their feisty sentiment in a family-friendly way.

They also launched a YouTube channel -- RecesIsOn -- that has a short video with images of
caviar and people flipping the bird alternating with screens trumpeting, “Attitude is
Everything” and “F$%#k the Recession.”

It has asked various celebrities to talk about “what they want to tell the recession” and will
continue to post their responses as they come in.

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PARLE AGRO’S STRATEGY:

The competition for the Indian beverage market has been at its peak in the recent years.
The two traditional rivals, Pepsi Co. And Coca cola ltd have been at each other introducing
innovative marketing ways to drive customers towards their products. However the recent
slowdown of the economy has brought out another competitor in this market. Parle Agro
which is a subsidiary of Parle Ltd. came out with an aggressive marketing strategy to
introduce new products as well as advertising them aggressively. As an industry pioneer,
Parle Agro was the first to introduce fruit drinks in a Tetra Pak in India, the first to introduce
apple nectar and the first to introduce fruit drinks in PET bottles. Its brands like Frooti and
Appy are successful and have created their own niche.

The battle in the beverage market has been in the carbonated beverages so much so that
the non-carbonated beverage market has gone unnoticed. However simple market research
proves that traditionally the simple “nimbu-pani” has been the drink of choice for the
average Indian household. Hence Parle realised the importance of this segment and during
the recession launched their lemon drink
brand “LMN” which was the sms short
form for Lemon.

The striking green and yellow color makes

the pack noticeable and increases its shelf
appeal. In the PET offering, the unique
bottle design of “LMN” makes it stand
apart from the rest. LMN differentiates its
appearance from common carbonated
lemon drinks like Limca and Mirinda.
“LMN” also takes a refreshingly fresh take
on lemon, with a catchy tagline – “The
Emergency Lemon Refresher”.
Interestingly, "LMN" was everywhere into
the market much before its TV
commercial.

The creative was dreamed up by local

agency Creativeland Asia. They were tasked by Parle Agro with launching a new lemon drink
– and had to find a way of branding the drink to make it stand out in the marketplace. As
well as creating and designing the LMN look, they also had to come up with a spot that was
funny and different but had mass appeal. The idea was a play on the fact that the human
body is 80 per cent water – wouldn’t really thirsty people become 20 per cent of their usual
size? “The thought of a pint-sized man running around, dragging his pants in panic,
searching for LMN looked and sounded hilarious. While the film has strong youth

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undertones, strategically the commercial has to appeal to people from various social and
economic backgrounds across various languages in India. A powerful visual metaphor and
the humour helps cut across languages and various socio-economic segments in a huge
market like India.

Although Parle faces stiff competition from the Pepsi Co. lemon drink brand “Nimbooz”,
which was launched just after the launch of LMN, it still has fairly less players in the entire
market of non-carbonated beverages. Hence Parle has created a niche market for itself and
it will still take time for others to enter it. Parle responded to the other challenges by also
launching “Grappo Fizz”, which is a carbonated grape flavoured beverage. It has been
positioned as an extension of the
successful “Appy Fizz”, so as to
ensure that people connect the
two brands. In fact so much effort
has been put in to ensure a
connectivity that Parle recently
launched an online “friendship
election” pitting Appy Fizz against
Grappo Fizz and calling the entire
exercise “Survival of the Fizzest”
and the world’s first friendship
election.

Such an exercise will surely ensure

the continual presence of Parle
whilst it consolidates itself on the
success of its current products.

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IMPACT OF RECESSION ON FMCG (FAST MOVING

CONSUMER GOODS) MARKET
The Indian FMCG market has been rather immune to the current recession. This is not
because the FMCG goods do not take a hit during slowdown, but this has been possible due
to the aggressive marketing strategies that have been adopted by the Indian FMCG
companies. The following table gives us some interesting information.

Table 1 Consumption movement from June '08 to Dec'08

The FMCG market grew at record levels of 18 and 25 per cent in the last two
quarters of 2008.
Listed retailers selling apparel, accessories and electronics saw sales growth down to
15 per cent in the December quarter, from 61 per cent two quarters earlier.

According to the recent reports, India's fast moving consumer goods industry has so far
been resilient to the slowdown in the economy and a dip in consumer sentiment. If we go
by the numbers for the past few months, the growth only seems to have got better when
compared to the earlier months. The sector may not be recession-proof but it is recession-
resilient. This statement on the whole stands strong for most the leading players in the
FMCG sector. So let’s take a look at some of the marketing tactics adopted by them

Trends:

Targeting the rural market: the rural economy is yet to be hit by the slowdown, and
demand from this side may prove resilient for a while. The increased efforts from
both the large MNC’s and Government in the rural sector have increased the
potential market for the FMCG marketers. So this has somewhat negated the effect
of recession on this sector because of the expanding customer base.

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The essential nature of groceries and FMCGs means that these areas may not see a
slowdown, and spends on wellness, nutrition and food may continue, though already
suspected ‘down-trading’ — foregoing purchase of a premium brand in favour of a
cheaper one — may increase. Hence to counter this FMCG companies introduced
strategies such as “Buy more to save more” – by offering customers more goods at
premium prices to project an increase in savings. GCPL’s promotional offers, for
instance, include one free cake of soap on purchase of three, and discounts on
purchase of linked packs.

FMCG companies have employed “tactical promotions” in order to promote their

products, as promotions help boost sales and as and when a price reduction is
possible, the benefit is passed on to the consumers. E.g. Nivea India.

Introduction of “bundled offers” in the market has been a strategy that has yielded a
lot of success in the consumer goods market. For instance, a few of Emami’s
schemes include Emami Pure Skin worth Rs 22 free with Boroplus Advanced
Moisturising Lotion worth Rs 98; five pieces of Sardija Cough drops worth Rs 5 free
with 100 ml of Sardija Cough Syrup worth Rs 50, among others.

Another important tactic that

FMCG companies have
undertaken is highly aggressive
marketing campaigns which
include high spending on
advertising and promotions. This
ensures the continuous
presence of their brands in the
consumer’s minds and helping
them choose the right products

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when they shop. This figure somewhat explains the approach of FMCG and
consumer durables. The ad spend by the two sectors are 33% and 22% i.e. they both
contribute about 55% of the total ad spend. This explains the sustained growth
because of the ad investments in the recession period.

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MARKETING OF “FINANCE”
Superior Customer relationships and a Customer Centric Strategy

One of the biggest blunders:

– Branded financial products in the hope that it will create a differential in the
marketplace.

– But it is easier to remember the brand name of a soap than that of a financial
service.

– Can’t touch, see, smell, taste the promise of future gains.

– Branding commoditised products does not produce customer - centricity

Branding commoditised products does not produce customer – centricity

Are Banks truly marketing savvy and customer centric?

• Myth 1 – The larger the range of

products, the more customer-
centric I am.

• Myth buster – The range of

products has emerged from
being competition-centric.

Myth 2 – Launch a product and the customer will start using

instantly.

Give a customer a card and he will learn how to play with it

immediately

Myth buster – Customers need to be educated too…

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Myth 3 – Just advertise and - You will sell.

Myth buster – Advertising will only sell,

Not retain customers.

The real differentiator of customer – centricity in a commoditised world of financial

products - Customer Service!

Keeping Your Bank Brand Alive During a Recession

Recent news coverage of the cosmetic name change from AIG to AIU at the failed
company's New York headquarters reminds us that a brand is a precious asset. The value of
any brand asset depends upon whether it has delivered on its past promises and is believed
likely to do so in the future. It takes years of effort to build brand trust but only a few
months--or minutes--to squander it. A brand that has lost consumer trust is no longer a
brand; it is merely a name.

Merrill Lynch is no longer a brand. Both before and after the collapse of the Internet bubble,
Merrill and its commission-based executives were challenged by investors and government
regulators for hyping stocks and other questionable practices. The last CEO spent over one
million dollars to redecorate his office and pushed through $3.6 billion in executive bonuses
the day before he agreed to a takeover by Bank of America. The Merrill Lynch brand is now
close to worthless. It drags down Bank of America's brand every time it is mentioned in the
same breath. The Merrill Lynch brand is unlikely to ever recover and Bank of America
should drop it.

Merrill Lynch was one of 25 financial services brands that appeared on BrandZ's 2008 top
100 most valuable brands list. The rival 2008 Interbrand ranking of the top 100 global
brands included 13 financial services brands. Citi appeared on both lists. Today, with its
brand reputation seriously damaged, Citi's stock price is in the doldrums and the bank is all
but insolvent (depending on how much credibility you place in the bank's valuation of its
assets). Why then has there not been a run on the bank? Being too big to fail is hardly a

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solid basis on which to build brand equity. The true answer to the question is that retail
depositors who do not trust Citibank do trust the Federal Deposit Insurance Corpopration.

Today, the FDIC is the most important ingredient brand in the world, way more important
than Intel. Trust in the FDIC and the United States Government enables consumers to
confidently deposit up to $250,000 in any insured bank in the USA. In these uncertain times,
only FDIC insurance persuades consumers across the nation to deposit funds in higher
interest CDs in Puerto Rico banks and in non bricks-and-mortar low cost Internet banks such
as ING.

Financial brands today must address the most basic of consumer concerns: will my money
be safe with this company?

So long as they are not triumphalist, large banks like JP Morgan Chase and Wells Fargo that
were less involved in chasing too-good-to-be-true sub-prime returns have a differentiating
advantage. But it's hard to rebuild consumer trust based on the fact that as Jamie Dimon, JP
Morgan's CEO, has stated: "We suck less." Especially since the reward these banks and their
consumers and shareholders earned for being prudent was being forced by the United
States Treasury to absorb the failed banks, Washington Mutual and Wachovia, respectively.

In any recession, consumers focus closer to home. They become more local and less global
in outlook. So these are times of opportunity for the thousands of conservatively run
community banks that have never held any exotic financial instruments and continue to
assess accurately the risk profile of each local customer seeking a loan. As advertisement of
PNC Bank states: "Now more than ever responsible lending is everything."

When consumers are uncertain, they need to have their hands held.

They need to feel that the brands they use identify with their predicament. They consult
their friends and neighbors more than ever. Advertisement that captures these mood shifts
is more effective. Thus, in Kansas, billboards use the first person to proclaim "I trust Intrust."
Charles Schwab's two year old advertising campaign focusing on retail investor pain points is
perfect for the recession. In one recent ad, a consumer says: "I've got a lot less cash and a
lot more questions." The voiceover then invites the consumer to "Talk to Chuck." Investors
are also searching around longer before making a purchase decision. That leads a niche
player like TD Ameritrade to extend a similar invitation: "Why not talk to TD Ameritrade?
There's never been a better time for a second opinion."

Advertising by financial services firms in the USA is down around 40% year-on-year. Should
financial firms continue to advertise when media stories of trips and bonuses remind
consumers of their extravagance and malfeasance? For consumers to change banks is
burdensome but they can easily move assets among their accounts at different firms. No

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advertising by a brand might be interpreted by consumers as indicating guilt, lack of

customer care or financial weakness.

Financial brands should continue to advertise but with messages that help customers now
with recession-relevant product and service offerings.

Useful, full-page ads in national newspapers were placed recently by NatWest Bank in the
United Kingdom. Signed by the head of retail banking, the ad itemized four ways in which
NatWest aims to help property owners, mortgage holders and all customers, with an
invitation to "talk to us" and a practical promise of "extended opening hours" at retail
branches. NatWest was acquired about ten years ago by Royal Bank of Scotland (RBS). RBS
has been fiercely criticized and is perhaps the worst UK example of bad bank behavior
surfaced by the current crisis. RBS advertising these days is minimal; advertising is being
placed behind the acquired NatWest brand, uncontaminated by the scandal and previously
on a slow glide path to oblivion. The RBS brand, like the Merrill Lynch brand, is dead. We
may well see RBS branches rebranded NatWest and NatWest become the dominant
surviving retail brand within what was the RBS group.

The turmoil and distrust in the financial services sector is an open invitation to other non-
financial companies to exploit the brand vacuum created by the demise of the likes of
Merrill Lynch and RBS. Look to Tesco, the leading retailer in the United Kingdom, to extend
further its reach into financial services. Look to trusted brands like Wal-Mart and even
Google in the United States to do the same. After all, the financial services industry is crying
out for a brand that promises to "do no evil."

Deliver functionally and engage emotionally

Truly successful customer relationships should be mutually beneficial and long lasting. To
achieve this, brand owners need to deliver their brand promise to their customers
consistently across the various touch points and over time. Equally important, they must
also be able to evaluate their customers’ experience and proactively manage their
relationships with them.

The problem is that, until now, no one has looked at customer relationships as ‘real’
relationships with an emotional component. Customer relationship measurement in the
financial sector (and elsewhere for that matter) has been focused on gauging ‘customer
satisfaction’ or ‘loyalty’. However, a satisfied and loyal customer is not necessarily a
profitable one, and could well be spending more with a competitor.

Consequently, a new approach is needed. To this end, we need to remind ourselves of what
makes a successful relationship. The truth of the matter is that business relationships are
basically the same as personal relationships, and it is a combination of both functional and

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emotional elements that make a successful relationship. It is not only ‘what do I get?’ but
also ‘how do I feel?’ As a result, the essence of customer relationships must be evaluated
from the perspectives of both the functional and emotional promise of the brand (see chart
below). Let us take a look around: why do Chinese consumers pay a super-premium for a
cup of coffee at Starbucks? Why do they line in endless queues at the checkouts of Ikea
stores? The answer is simple: because both Starbucks and Ikea know exactly what their
value customers want from the experience at their stores, and focus their resources on
delivering precisely that unique experience across the various touch points and over time.

Our own work in the financial sector shows that different strategies are needed to move
customers from one level to the next, depending upon their departure point on the
relationship ladder. Unfulfilled customers complain about the staff at their banks not having
a particularly friendly attitude, about having to wait in long queues, and about the lack of a
comfortable waiting area. These are all basic functional aspects of the service that, if
addressed, can help turn unfulfilled customers into satisfied ones. On the other hand, the
main differences between satisfied and connected customers relate to the softer side of
service: being offered solutions suitable to them, being serviced by staff with sound expert
knowledge, and being treated as valued customers. Improvements in these areas would
help turn satisfied customers into customers that are also emotionally connected with the
bank.

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CONCLUSION
Noted billionaire Warren Buffet once said,

“Somebody told me that recession is coming. I decided not to take part in it.”

This statement, in a way, sums up this project. Recession is not the time to cut back on your
sales and marketing expenditure and save for the future. In today’s dynamic environment
and a consumer driven market, the biggest share to capture is the mind share of the
consumer. Any company which lapses in this regard is out of this rat race. Recession is
actually a wonderful opportunity for start-up firms to expand their operations, to pull up
their socks and gain a larger piece of the market pie. Recession marketing is all about finding
innovative means to capture the consumers mind and to rule the roost.

To put our sentiments in a nutshell, the team quotes Mr. Buffet again,

“Make hay when others are wary and be wary when others rush in”

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