Tuesday, January 20, 2009

Marketing During a Recession

The auto industry is a mess. The world is diving into a recession. Consumer sentiment is weary as people continue to cut spending. In this context would you change your marketing strategy? Would you innovate or cut costs?

For a quick lesson on Marketing During a Recession let's compare two companies from one of the guilty industries in this mess - the auto industry.

Situation 1:

The Local Name
: Your the local market player. You've been around for years and you employ 8 million local people. This recession is starting to impact your ability to cope with the boat load of debt that has been accumulating over the last 10 years.

The Strategy: You need financial assistance - so you go look for handouts. In the meantime, you continue to advertise cheap financing. Consumers love cheap financing. It sells cars. Also, let's not forget about low, low, low prices. Consumers do love low prices. Other than that, you might put out a television ad promoting a tough truck that growls and climbs mountains (don't forget low financing).

The Result: For decades you've been losing market share. For decades you've made excuses on the reason why. Your consumer strategy hasn't changed. If you continue to market the same thing, in the same way, to the same people, why would you expect a different result? This is the simplest response, for a problem that plagues the majority of companies with history. Probably even yours.

Situation 2

The Import:
Your a foreign player. Unlike the other 'foreign models' in the market, you're not considered a leader in luxury or quality. Your like the Nissan of the 1970's. Some people don't trust you but you're growing very fast.

Strategy: You know that in this tough economic time, people need to feel assured. Consumers want to know that the brands they deal with really represent people who have their best interest in mind - not an anonymous shareholder. So you talk to your consumer. You reassure them that your business is built on their loyalty. You improve the quality of your product, and even increase the pricing to match the value. Then you make that first gesture that says "we want your trust" (notice it doesn't say "sale").

The Result: You'd be Hyundai. You'd have just launched the Hyundai Assurance campaign - promising U.S consumers that you are there for them, even in these uncertain times. If they give you their trust and buy your car and suddenly find themselves without a job - you'll let them return it. While your competitors are blaming their problems on the people, you are building a generation of fans.

Gaining trust, speaking to your fan base and moving quickly to reassure all consumers is just good marketing. It just looks better in a recession because most companies cut costs and point fingers.