The big opportunity: How to grow brands in recession

by Rita Doherty, Chief Strategy Officer, FCB Africa

 

Recessions suck, but there is a major opportunity for brands that only comes around in a recession. Brands that maintain advertising exposure when competitors are cutting back, can grow their market share at lower costs than during times of growth. This is because market share is cheaper in a recession. If you maintain, while others cut, you can emerge from a recession with a bigger piece of the pie and boosted volumes.

 

FCB Africa has identified 10 tips for growing in a recession, as well as 36 tactics for boosting your  value proposition by making it easier for people to afford you (without compromising your margins). This article focuses on the 10 strategies for growing in a recession and part 2 will focus on how to boost your brand’s value proposition – which is critical in cut-throught recessionary environments.

 

  1. Maintain Marketing Spend

 

Brands that maintain advertising exposure when competitors are cutting back, can improve market share at lower costs than during good economic times. This enables you to emerge from the recession, stronger and more profitable.

 

For example, if the category spend last year was R50 million and your marketing spend was R10 million, your investment would buy 20% share of voice. But if the category spend shrinks to R40 million and you maintain your R10 million spend, then your investment will now buy you 25% share of voice. In this example, the cost per share drops by 25% making it chaper for brands that maintain marketing spend to grow their market share.

 

  1. Chase Share, Not Volumes

 

Companies need to be realistic with their sales targets. You’ll struggle to maintain the same volume growth you did when the economy was growing. So adjust volume growth targets down. And adjust market share growth targets up. When markets are growing, chase volumes. When markets are shrinking, chase market share.

 

  1. If You Must Cut, Substitute

 

If you must trim your budgets, try maintain your reach and frequency by cutting down on ad length or substituting for cheaper high reach mediums.

 

  1. Invest In High Reach

 

In a recession, there are less shoppers, buying less, and less frequently. You need to invest in high reach media to protect sales volumes. Reconsider low reach investments, or find a way to amplify their reach.

 

  1. Focus On Light Buyers

 

On average, 80% of buyers are light buyers. Light buyers interact infrequently with your brand and easily forget about you. They need advertising to remind them.

 

For example, Steers is a premium burger brand which targeted heavy users in LSM A. A year ago Steers ran two identical promotions within a month of each other  – the first promo targeted their traditional heavy users, while the second promotion focused on a bigger audience of light users in LSM B. The second promotion increased sales by 196%.

 

In general, we recommend investing two-thirds of your budget on light buyers and one third on heavy buyers. This is a general rule-of-thumb only, and the competitive environment should ultimately guide you. But beware of over-spending behind your heavy buyers – this is a defensive action that throttles growth in the long-term.

 

  1. Prune Portfolios

 

Recessions are a good time to clean house – re-forecast demand and prune weaker products. Think twice before launching a new product unless it addresses the new consumer reality and explore master-brand efficiencies.

 

For example, Coca-Cola maximized masterbrand efficiencies by taking four different, but related brands– Coke, Light, Zero and Life – and putting them together into one Coca-Cola brand, underpinned by functional differences.

 

Another example comes from Toyota. In 2008 the car market crashed, and Toyota cut budgets drastically. We could no longer afford to advertise each car model individually, and developed a brand platform with a brand character called Buddy the Talking Dog. Cumulative Buddy campaigns achieved noting scores 400% above the category norm. This enabled Toyota to maintain effective share of voice, despite radical budget cuts.

 

  1. Measuring ROI is more important than ever

 

Chief Financial Officers are especially suspicious of vague marketing promises in times of recession. Invest in measurement and learning so you can justify your marketing spend.

 

  1. Research your consumer

 

Instead of cutting the research budget, you need, more than ever, to find out how consumers have changed. Be careful of using research from when the economy was growing, as consumers might have changed their spending habits.

 

  1. Find the right message

 

Focus on quality, durability, stability, endurance. Reframe from negative to positive. Make people feel good, hopeful and happy. Replace images of aggression, with images of togetherness. Replace fear with humour.

 

  1. Be Brave

 

In summary, re-set investor expectations by lowering your volume targets and increasing your market share targets. Then maintain marketing spend while others cut and you can grow your market share at lower costs. This means that when the market grows again, your volumes will be boosted.

 

But it takes a brave marketing organisation that is prepared to balance the short and the long game. Most organizations take the easy but treacherous route through a recession. They fail to adjust investor expectations, and try to hold on to short-term margins by cutting the marketing budget – which is often seen as the most expendable. But marketing leaders that want to build robust, iconic brands, will readjust gears and use a recession to grow.

 

What are you going to do? Cut and shrink? Or maintain and grow?