Businessmen will find themselves in unchartered waters as they head towards a stiff, covid19 recession. Countries are calling out to nationalism with “Make America Great again”, “Local Vocal in India”, “Let’s eat cheese in France”. At the same time consumers are expected to continue with social distancing impacting a generic way of life. This makes it an unprecedented, unpredictable event. As every business rewrites their business plans, it is smart for us to learn from others who have outsmarted earlier recessions and then apply it to 2020.
WHAT HAPPENED THEN:
One paper (HBR, 2009) detailing recession psychology warns against indiscriminate cuts in marketing costs, despite reality of consumer recalibrating priorities and reducing spends. It talks of mapping the business in a 4×4 matrix; with consumer types on one dimension and product types on the other dimensions.
The four types of consumers are:
1. Slam-on-the-brakes segment feels most vulnerable and hardest hit financially. This group reduces all types of spending by eliminating, postponing, decreasing, or substituting purchases.
2. 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.
3. Comfortably well-off consumers feel secure about their ability to ride out current and future bumps in the economy.
4. The live-for-today segment carries on as usual and for the most part remains unconcerned about savings.
The four types of Business are:
a) Essentials are necessary for survival or perceived as central to well-being.
b) Treats are indulgences whose immediate purchase is considered justifiable.
c) Postponables are needed or desired items whose purchase can be reasonably put off.
d) Expendables are perceived as unnecessary or unjustifiable.
The art of Tailoring your marketing tactics for each business basis which segment you are in is shown in the chart below:
It is imperative for each of us to figure identify as to which segment your business is likely to belong in a tailor your marketing tactics accordingly. Irrespective of which segment your business belongs to, it is important that recession is used to SPRING CLEAN your business to run an optimally efficient operation.
RECESSION 2020: Learning from the above paper is relevant and has to be used by every segment, but also carefully contextualized to the current environment which has two uniqueness; first socially accepted physical distancing leading to individualism of consumer and secondly digital offering an alternate route to keeping society together. Here are a few recommendations:
1. Plan for Gen-M (The Mask Generation): Coronavirus is here to stay and masks across various geographies are a reality. Innovations in products, pack designs and services which make masks wearing comfortable or beautiful or utilitarian will help.
2. Digital brand building: Today, most digital advertising is performance led with a view to sell. It has to move away from CPM and CPC to include brand i.e. mind measure. Of course, there will be many digital-only brands but, each one will need to consciously identify a mind positioning (something that many digital brands are not doing). Value-for-money will be a necessary but not a sufficient condition for success.
3. Build community brands: Whether digital first or other medium, the brand building has to be targeted to small communities, which will spring up on the back of active son-of-the-soil polarisation. Today mass marketing is built on the concept of least common multiple of different clusters. This will pivot to highest common factors between various communities.
4. Re-strategize go-to-market: All old benchmarks of research and marketing have also been rebooted. Hence businesses have to build new partnerships with technology-led business experts who can redesign organisational strategy. Usually, only internal team gets into group think which can lead to a quick brain freeze.
5. Brand ‘Trust’ is the most valuable IP: Problems of fakes and IP infringements may continue, but more than legal IP, it is brand IP which will determine success. Consumers will want to maximise value for their spend, hence most trusted brands will decelerate slowest and, in some cases, may increase sales, but in all cases increase market share.