Mistakes Shape Recession Marketing

Jack TroutMay 12, 20094 min

With everything seemingly going wrong with the world economy, it’s not the best time for marketers to expect good news. Today is no exception my friends. I’m afraid that marketing is in a terrible mess. Hope lies in the fact that most marketing problems can be solved with a certain amount of commonsense.

The crux of the issue is that marketing is shadow-boxing, when companies should be ‘in search of the obvious’. Marketing people spend too much time tinkering with new ideas and really don’t focus on the one thing that they should be focusing upon — brand differentiation. In all this fooling around with new ideas, marketing executives are forgetting the basics of how to separate their brand from the competition. What marketing folks need to look for is that simple, obvious strategy and not get bogged down in the complexities.

Given the avalanche of new products hitting the market, creating differentiation is becoming increasingly difficult. The arrival of so many products also puts the emphasis back on the need to be different. You are getting into a market with an army of competitors out there. You have to face that fact and say, maybe there’s no room for me unless my offer is something different. The trouble with marketing people is that hope springs eternal. And for clear differentiation, the marketing program has to inevitably start with the competition. What you want to do is what your competition will let you do.

The biggest challenge facing the marketing fraternity today can be summed up in two words: Wall Street. Financial statements are pushing companies to grow and be everything for everybody. Companies, in their insatiable desire to grow, lose focus and move away from a simple idea. Beware of Wall Street. Plot your growth strategies carefully and do not take the brand where it does not make sense. You cannot be everything to everybody unless you are a Wal-Mart. That said, even Wal-Mart discovered, much to its discomfort, that it cannot be everywhere. For example, the chain could not successfully compete in the up-market retailing space against Target, the retail chain that sells “fancier stuff for less.” Another example: Home Depot tried smaller neighborhood formats to retail hardware, but failed because local retailers had deeper insights into local market needs. From a retailing perspective do experiment with multiple retailing formats, perhaps under a separate brand.

The economic downturn spells bad news to most marketers, but a slump also presents an opportunity to build brands.

You need to have a pretty good idea how to ride the downturn. Take the example of a US real estate company which is exploring a strategy for selling houses in an environment tainted by the sub-prime crisis. Real estate is always priced on wishful pricing. It’s time for realty to adopt reality pricing. You need a strategy that fits with the times. Back to Wal-mart, the best thing that happened was a recession. The retailer, too, was faced with a prospect of a slowdown in sales, but because consumers began downgrading, the recession worked to Wal-Mart’s benefit. You should shift your product message to fit the times. You need not change the whole strategy; just change the packaging and messaging to suit the times.

Toyota’s hybrid fuel cars are another example of future-focused innovation. Their hybrid cars have found a lot of interest as more consumers are moving away from gas because of spiraling fuel prices and sympathy for the environment. When the entire auto industry is in a decline, Toyota is marching ahead. Rival General Motors continued to sell its big cars to focus on profit and satisfy Wall Street. But as customers are moving away from gas guzzlers, GM’s erstwhile star-models like the Hummer are on the block. Toyota proves that sometimes it’s better to be first, than be better.

It’s easy to see, R&D needs to be closely connected with marketing but in most cases the R&D team sits in a different place. Take P&G’s toothpaste brand Crest, which offered protection from plaque and cavities, but not gingivitis (gum inflammation). Soon Colgate’s Total came and stole the show. Sometimes it’s better to walk up to R&D and insist that this property must be there in a product. In most cases, R&D lives in a different world. Not occupying a space or need-gap is a mistake that marketers can end up paying for dearly; but vacating a hard-earned space is a cardinal sin. Volvo’s positioning of ‘safety’ is well documented and well respected. But the company decided to extend its product portfolio to convertibles. Big mistake. So when Volvo was working on convertibles, its Japanese competition was working on the next safety idea — electronics safety. Volvo should have been working on that and not on convertibles. The convertible goes against Volvo’s ‘safety’ position.

With so many examples of bad marketing decisions available in the public domain, it stands to reason that marketers would have learned from these mistakes and gotten better at their craft. Yet, marketers routinely dig themselves into the next marketing mud hole. One of the biggest problems is having the right people in marketing meetings. If you cannot have the top people, it’s just not worth it. The CEO is the CMO. You cannot push marketing as a function to be executed by someone who’s far below in the pecking order. Apple’s head Steve Jobs and his iPhone is a good case in point. He is the CMO. One who understands the key role of the CEO — find a differentiator to win the day.

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Jack Trout

2 comments

  • bharat ram

    May 15, 2009 at 1:14 pm

    “I’m afraid that marketing is in a terrible mess. Hope lies in the fact that most marketing problems can be solved with a certain amount of commonsense.” True. The problem though is common sense seems to be least common amongst a majority of the top execs, who also seem to think that simplicity is an insult to their intelligence.

  • atul chatterjee

    May 18, 2009 at 6:15 am

    There is one major factor missing in your analysis. Costs. There should be an all round effort to cut costs and reduce prices to either increase sales, keep them at the same level or build customer loyalty.
    The philosophy of cutting costs should go down the organisation till the shop floor. An example is the Japanese auto industry which has done it, while the US car makers have been busy trying to produce heavily differentiated products.
    While Wall Street obviously is starved for growth, US companies are no less to blame.
    Increasing profit with stagnant sales seems to be an impossibility.
    They should look at what Tomas Bata did during the Great Depression.

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