Just before Christmas we commented on various marketing stories in The Grocer of (19th December 2009 edition).

Chewing gum has been one of the surprise victims in recession, with sales plummeting.

We commented: “The drop in sales could also be down to hard-up consumers switching to nostalgic sweets. In this climate heart-warming appeal is a more important sales driver than functional branding”.

Alex Waters, our Director of Capabilities, commented in the ‘Top Products 2009: Survival of the Fittest’ feature by Catherine Dawes on brands, own label, chasing deals and new habits. He said, “These top brands are performing well because they provide reassurance. The biggest weapon brands have in the fight against own label is the trust they have built up over the years.”

Alex argued that people are happy to spend the extra for that reassurance, and that the brands that lose out, are those further down the table. “The big brands are doing well, own label is doing OK. The middle is the real danger zone”. In conclusion, he summised, ”the shifts in buying behaviour are here to stay. People have re-evaluated what they want to pay for and what they don’t. I don’t think shopping habits will return to those of the boom time.”

Read further comments from Alex and the full article on The Grocer online.

It’s the tensest moment in a poker game. The chips are down and you’re all in; one way or another it’s going to be a turning point for someone at the table. The chip leader could take a nosedive and you could find yourself leading the game.

And right now in brand-land the stakes have risen… because the barriers have fallen. Ad rates have dropped steadily as the economy has stuttered and businesses have adopted a frugal-minded attitude to their marketing activity. But the big boys need to stay alert. Because the short-stack brands at the table have suddenly got enough budget to make an impression.

Traditionally brands break down the journey to a greater share of the market into several stages, based on the role they play in consumers’ decisions. It works more or less the same way people (consumers) make decisions about which guests (brands) to invite to their party:

1.  Awareness: Do they know who you are?
2.  Consideration: Do they even think of you when they’re making the list?
3.  Preference: Are you one of the first they think of and do they like the idea of your company?
4.  Loyalty: Will they want to pick you first, time and time again?
5.  Advocacy: Will they be talking you up with their friends?

Loyalty and advocacy are the holy grail, and although they’re not unattainable goals, nobody really expects to generate mass-market advocacy. But all major brands do sweat and fret over increasing their preference against their old rivals. And they can normally afford to be quite short-sighted. They don’t worry too much about the smaller brands in their market which are forced to pursue niche marketing strategies around them, picking off mere morsels of loose share from the brand leaders. Until recently the chip-leaders knew the short-stacks weren’t a threat because they couldn’t overcome the hurdles of awareness and consideration. But with ad rates down, more and more brands on the fringes are setting their shoulders back and striding confidently into consumers’ consciousness.

Just take a look at the current Jameson’s Whiskey and Pets at Home spots. Neither are unknown brands but they have put themselves on TV either for the first time here or for the first time in a long time. As the Pets at Home Chief Exec., Matt Davies, says “We want to tell people we exist … There’s never been a better time to do a TV ad – rates have come right down and people are spending more time at home and watching more TV”

The Jameson’s ad looks an awful lot like the kind of communications routes Scotch whisky and bourbon brands like Johnnie Walker and Jack Daniels have been taking for some time. And for consumers who weren’t particularly aware of it, the taste-led proposition combined with its affordability could drop Jameson’s right into the consideration set against the likes of mainstream whisky brands like Bell’s and Famous Grouse.

The temperature at the table may turn torrid. And major brands in categories with middle-weight competitors should look at their position in the game. When they do, they should recognise that stacks of money won’t separate them from their competitors anymore. They’ll have to consider their brand proposition, their positioning and be honest about how sustainably relevant and motivating their point of differentiation is. They can no longer out-spend the competition; They’ll have to out-think it.

After looking at three recessions (1974-75, 1980-81 and 1991-92), there are a number of important lessons that we can draw.  

1. The effect of recession on most markets is typically fairly short; the short term imperative is survival

2. The longer term imperative is to plan for the “new” (post recession) market. The baseline assumption is for a continuation of pre-recession market development: typically towards increasing premiumisation and segmentation

Questions you should to ask to identify possible deviations from the baseline assumption:

• What is the likely nature of the recovery: vigorous or hesitant, with/without any “hangover” effects?
• How will the recovery be experienced by different groups within society; will there be “winners” and “losers”?
• Will government policy be consistent with pre-recession policy, or will there be a significant shift?
• What will the effects of the above be on public and private spending?
• Will any factors in the broader environment change significantly e.g. price/availability of raw materials; population migration; international trading framework?
• Will the thrust of underlying social attitudes and aspirations remain stable or will they change? Are there any signs of discontinuity in long term social trends?
• What are the most prominent developments in science and technology with potential for application over the next 5 years?

It is also worth analysing the current downturn as we have those previous. This recession also has its roots in problems with property and financial bubbles, and volatility on the oil markets, but was further exacerbated by the near collapse of financial system.

Initial indications of recessionary cycle suggest:

• Deep recession in 2009, with beginning of recovery in 2010
• Slow recovery thereafter as government debt has to be paid off and squeezes public and private spending
• Unemployment to rise towards the 3 million level

It is likely that the nature of recovery will be slow, hesitant, and constrained (closer to 1970’s than 1980’s/1990’s). The shape of post-recession Britain will be determined by responses across society, government and industry:

• Likely to be considerable variation of effects on different social groups, with the under-educated and under-skilled being increasingly disadvantaged
• Government will give greater emphasis on control/regulation; attempt to balance stability with dynamism
• Public and private spending will both be constrained; government policy will determine how the pain is spread across different income levels
• In the broader environment there will be a massive imperative for change, driven by depletion of energy reserves, global population growth and global warming; potential for conflict or co-operation within a shrinking globe
• The long term underlying social trends towards individual freedom and self expression that originated in the 1960’s have proved durable; expect them to continue
• Science and technology will be the most important dynamic force – continuing to evolve at an accelerating pace; the appliance of science to the major issues of resource depletion, population growth and global warming will be the defining feature of the post recession economy
• In terms of social attitudes, we should expect a pragmatic response from the UK public – knuckle down and get on with it – or in the words of a recently revived retro poster…

So with the benefit of hindsight, which businesses and brands are most likely to emerge as winners from any recession?

• Those who learn to work within a more regulated environment
• Those who deliver enhanced value to “cautious consumers” with less spare cash
• Those who operate in science-rich industries
• Those who find new ways to satisfy enduring consumer lifestyle aspirations

And in any recession who will be those who lose out? Those who focus exclusively on survival programs for the duration of the downturn and fail to look to the opportunities beyond…

Proving hopefully that whilst it’s always useful to look backwards, and forwards, we should never dwell too gloomily on the present!