Business Case Studies, Executive Interviews, Richard Rawlinson on Marketing in a Downturn

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Executive Interviews: Interview with Richard Rawlinson on Marketing in a Downturn
July 2009 - By Dr. Nagendra V Chowdary

Richard Rawlinson
Vice President of Booz & Company.

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  • You have observed (in “Consumer Products: Some Brands Win”, s+b) that “consumer anxiety had been building throughout 2008, but only in the autumn did this anxiety show up in day-to-day buying habits.” Booz & Company also conducted an indepth survey of 1000 households in September 2008 in the US. Can you give us a few insights from this research as regards consumer confidence and what lessons do you think that research has for the companies?
    At that stage of the recession consumers had already cut back on a set of high expenditure, less structured areas—staying at home more, shopping frugally, and driving less—even though they value many of these activities highly.Deferring the purchase of durables had just begun at that stage and was most pronounced in automobiles—more than 20% of US consumers had deferred automobile purchases, while some 15% traded down to cheaper or more fuel-efficient vehicles. Consumers planned to make incremental saving decisions in the areas where they had already cut back and in addition were beginning to reduce expenditures on personal durables (clothing), indulgences (coffee chains, alcohol), household durables (electronics) and services (salon treatments, house cleaning). Nearly half the respondents expected their savings to decline and their debts to increase. In the UK, which was one of a number of countries where we conducted similar survey, a striking trend was the change in shopping habits, favoring discount stores instead of the UK’s predominantly high quality, relatively high price supermarket shopping environment. The UK consumers were worried about falling income, the risk of unemployment and declining asset values... but even more by the price rises they saw the previous year in utilities, food and petrol... rises which in many cases have been reversed this year as inflation has plummeted in the face of declining demand.

    For companies, the key lessons are to

  1. Keep very current with their consumers’ priorities, which in economic uncertainty change very quickly
  2. Reoptimize their brand, product and SKU portfolio, working together with their distributors and retailers
  3. Match the marketing mix to tighter budget and to the retail channels that consumers currently favor most
  4. Adjust costs and capacity to survive a prolonged downturn.
  • Let’s look for a moment on Interbrand’s top 10 brands of the Global 100 Brands (for 2008) – Coca- Cola, IBM, Microsoft, GE, Nokia, Toyota, Intel, Microsoft, Disney and Google. How should these brands manage and build brand value?
    By combining the long-established fundamentals ofmarketing with some of the new opportunities created by changes in consumer and technology. Brands like these were built by consistent delivery of a distinctive promise that consumers found relevant to them . A brand is built by stimulating and reinforcing the consumer’s experience with the product – marketing and advertising is just a part of the totality that makes up the consumer’s experience. What’s changing in marketing is the consumer’s move to electronic and interactive media and the development of more and smaller segments of demand, that it is now practical to service the customers economically. Brands will continue to be built by using new techniques of segmentation and communication to achieve objectives that have been the bedrock of branding since branding began./p>

  • You have observed that, “companies that have successfully built up a distinctive combination of brand value, customer loyalty and savvy pricing can now use their success as a launching pad for further growth”. Can you give us a few examples of organizations that have executed this strategy successfully?

    In the UK, the Virgin brand is probably the best-known example of a distinctive brand positioning successfully migrating from one category to another. Starting in music retailing, and then in airlines, the Virgin brand was successfully positioned as a challenger to established incumbents, offering youth, personality, a fresh approach and better value – with a twist of sexiness. Once established, that formula has been applied to everything from rail service to wedding arrangements, with mobile phones and soft drinks in between. Some businesses have succeeded and some have not, but the brand has worked consistently across a wide variety of categories.

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