Marketing in the turbulent times

The world is reeling from shocks in geopolitics, energy, and economics.

Consumers have changed. The way we travel, the way we work, and the way we consume goods, services, and media have drastically changed. Some are hyperbole, but most of these changes are here to stay.?

COVID has been a catalyst in our digital transformation journey, accelerating how we live our lives by 5-10 years. As central banks worldwide simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging markets and developing economies, according to a comprehensive new study by 世界银行 .

Brands are facing a plethora of uncertainty.

With inflation,?businesses may need help to maintain their profit margins. In addition, consumers may cut back on their spending, leading to lower business sales.

Economists have penciled in a recession in their forecasts for next year, but views vary on the timing and severity, and brands need to be prepared for a downturn economy.?

Sharing a few of?Les Binet's?insights and my learnings on how?brands can build winning marketing strategies in turbulent times

Get your pricing right!

Less mentions that many of us believe marketing is only about communications and advertising. Pricing is the most commonly overlooked P of the 4Ps of marketing. Brands should monitor the following variables to respond as we may move from inflation to recession.?

Price elasticity. Econometrics can measure your customer's response to changes in price.

My Learning: Most incumbent brands would have sophisticated models running in the background, but for SMEs, it is harder to get access to these sophisticated tools.?

Refer to HubSpot's article on forecasting effectively, structuring a sound pricing strategy, and building a responsive, successful company.

Tweak your pricing, and optimize your promotions.

Les emphasizes that, on the face of it, price promotion is a powerful tool for incrementing sales. However, the spike in sales volume from promotion is an illusion. Econometrics can show the authentic value brands achieve from price promotions. According to him, the spike is because of the following:?

1.?Subsidized sales: Giving away discounts to loyal customers who would have bought the product or service.

2. Time Shifted: A chunk of the sales is time-shifted, bringing sales forward at the expense of future sales.?

3. Relocated: Moving promotions from one platform/distributor at the expense of other distributors.?

4. Incremental: Unfortunately, only a tiny share of the spike is incremental.

My Learning: The push of continuous promotional tailwinds. The downside for sellers is that the marketing tailwind of a significant discount isn’t confined to their products alone — it often spills over to competitors.

Pedro Gardete recommends that marketing managers do a better job of monitoring shoppers’ responses to price discounts in real-time so they can make adjustments along the way.?

My Learning: Effectively and profitably linking pricing and promotions together in this analytical method can?increase revenue and profits.

Treat advertisement as an investment and not a cost.?

Les Binet says, advertisement should be treated as any other financial investment. To maximize shareholder value, short-term and long-term investments should be dialed up and down depending on these five factors:?Profit Margins, Growth Prospects, Investment Costs, Risk Premium, and Investment efficiency.

Here are few of my learnings from Les's video coupled with my own research on how marketers can leverage these factors:

1. Use the power of the brand to get fatter profit margins.

Brand advertising can help support pricing power and fatter margins. Les introduces the Kantar’s report, which states that consumer decision is richer and more complex than price alone.

My Learning: Analysis from Kantar BrandZ, shows how brands can keep winning during periods of inflation.

To do so, marketers need to understand the brand’s specific situation.

If your brand sits in the upper zones, it’s well-placed to defend its price and even has room to maneuver. The brands in the orange-to-red zones face the greatest risk under inflationary pressure.

The Kantar report emphasis that communication at this time needs empathy more than a rational emphasis on price or benefits. The most effective business will respond with value, empathy, and understanding in unsettling times of inflation.?

Make sure your brand has a voice and use it to reassure, empathise, and show concern. If prices have to increase, be open and transparent; explain how you’re doing it and why. Continue to build consistent memories of your brand through your actions, words, and tone.

2. Use search and data to understand your sector and find the right growth prospects.

In his video Les stresses on brands to understand their sector well through the use of search.

My Learning: I believe, social media listening tools allow brands helps companies understand the conversation surrounding their brand and the products and services they offer.

Social media listening tools allow you to understand exactly how customers and potential customers think about you by analyzing what they say on social channels. You can also learn what they think about the competition.?

Real people actively talk about your brand and your industry online.?Monitoring conversations around the industry also uncovers a ton of insight about what’s working—and what’s not—for existing and potential customers. This information is a?gold mine for your customer service, product development, and marketing teams.

3. Exploit cheap media.

Les mentions that media prices tend to soften during the economic downturn.?With cheaper advertising costs and higher ROI, it can be an excellent time for brands to build a higher share of voice.

My Learning: In my research I found that brands that cut their marketing budgets during a recession leave themselves at a long-term disadvantage. Staying the course, however, offers much greater rewards.

Analytics partners shows brands that increased paid advertising saw a 17% rise in incremental sales; those that cut spending risked losing 15% of business to competitors that boosted their spending.

Short-term thinking might make some shareholders happy at the next earnings report, but it undermines growth, margins, and true shareholder value over the short and long term.

4. Marketers can dilute risk with thorough research.

My Learning: One of the many benefits of market research is that it helps mitigate uncertainty and can often reveal opportunities in price, competitor intelligence gathering, new markets, customer satisfaction, product development, target groups, and overall demand.

Understanding why customers buy from you is vital for any brand to know and understand. A deep understanding of why your target audience chooses a competitor brand over yours is equally important.

Competitive Intelligence or CI research gathers information about your competitors so that brands can improve and make smarter strategic decisions.

Brands may have hundreds or even thousands of competitors during a burgeoning economy. When the economy shrinks, so does demand, making the market smaller. Brands that understand how to differentiate themselves from their competitors can withstand economic ups and downs.?

5. Don’t slash budgets; invest and measure efficiently

In his video, Les stresses on why brands should measure their advertisement’s effectiveness.??

My Learning:?With actionable insights, brands are powered to supercharge future advertising strategies

Evaluate the true impact of your campaign against your goals with GWI ’s end-to-end campaign measurement in practice study.

In his video, Les advises brands to optimize their media efficiency by geography, product, variant, timing, and channel. I believe brands must find the right sweet spot between short-term media goals and building long-term brand awareness.

Let’s quickly re-cap how to win your marketing strategy in turbulent times.?

• Explore economic impacts on your audience segments.
• Rethink your brand story.
• Refine your marketing experiences.
• Measure your performance—and act on what the data tells you

Marketing during?a?recession?requires adaptability, perseverance, and strategic decisions. With this, my time is up; See you in the next edition.?

Source: 世界银行 | HubSpot | Stanford University Graduate School of Business | 麦肯锡 | Adage | Marketing Dive | Kadence | 凯度 | GWI | CNBC

Please refer to?Les Binet's full video for more insights.?