Dick Martin on How the Masters of Marketing Will End the Recession

The following is a guest post by Dick Martin, author of Secrets of the Marketing Masters, Rebuilding Brand America, and Tough Calls.

Samuel Johnson famously said, “Nothing focuses the mind like a hanging.”  Had he been an economist, rather than a man of letters, he might have said the same thing about a recession.  And had he been a marketer, he might have projected the same end result.

That’s more than gallows humor – in a bad economy, the chief marketing officer is often the first C-suite executive hung out to dry; marketing budgets get slashed even though everyone knows it’s a mistake.

But the masters of marketing – those few companies that see marketing as more than advertising and sales – don’t panic.  If anything, they double up on the five core practices that made them successful in the first place.

1.  They get even closer to their customers.

The masters of marketing keep even closer tabs on their customers in tough times, watching what they do rather than what they say, so they can anticipate and respond to trends before they show up at the cash register. For example, early in the current recession, spirits giant Diageo noticed that anxious, cash-strapped Americans were doing more of their imbibing at home, rather than in bars and restaurants.

That was a problem because people tend to drink beer and wine, rather than mixed drinks, when they kick back at home.  So Diageo shifted its promotional spending from bars to liquor stores.  It began promoting its ready-made cocktails at point-of-sale.  And it completely over-hauled its web site – http://www.thebar.com — to teach basic bar skills with over 750 recipes and 100 how-to-videos.  As a result, even in a slowing market, Diageo continues to out-perform its major competitors.

2. They ask themselves the Power Question – how do we improve people’s lives?

Improving people’s lives sounds high-falutin’, but for some companies, it’s the secret to innovation. P&G researchers came up with two of the company’s most successful new products – Crest Whitestrips and the Swiffer WetJet – by following consumers around, watching what they did, and asking themselves that question. Consumers didn’t know they needed bleaching tape for their teeth or a broom with an absorbent pad.   But once P&G researchers saw Dad check the shine on his teeth in the bathroom mirror and Mom struggle to get dust bunnies into a dustpan, they saw an unarticulated need that – once fulfilled – would make their lives just a little better.  Not coincidentally P&G launched both products during the last U.S. recession.

3.  They don’t cut prices; they match price to value.

When people pinch pennies, marketers often cut prices.  But the masters of marketing understand the danger of devaluing their brands.  Instead, they create new products with a different value proposition.  For example, many fast-food restaurants cut prices to increase store traffic.  Lines didn’t get much longer but customers did learn to expect their favorite burgers at a lower price. Quiznos took a different approach. Instead of discounting its menu, it introduced a new, sandwich designed – and priced – to sell for a lower $3 or $4.

4.  They gain share of mind and market.

P&G’s Chairman, A. G. Lafley, sees the recession as an opportunity to steal business from competitors. “When times are tough,” he says, “you build share.”  With declining advertising prices, a company can increase its share of voice just by maintaining spending.  And a recession is the perfect time to enter markets that operate under high price umbrellas.  That’s why McDonald’s chose the middle of a recession to challenge Starbucks coffee with a lower-priced brew.

While their mix of spending may change – shifting promotional spending from network television to in-store displays, for example – masters of marketing like P&G, Diageo, and Wal-Mart have all maintained or increased their marketing budgets.  They also set aside money for experimentation.  For example, now is the perfect time to test social media. It’s relatively inexpensive and, according to Harvard’s John Quelch, perfect for the times.  “In a recession everybody wants to hug everybody close,” he says. But working with sites like MySpace, Facebook, and YouTube isn’t the same as buying a banner ad. It means joining a community, which takes the kind of expertise that can only be acquired over time and with experimentation. Now’s the time to build it.

5.  They’re already preparing for the post-Recession world.

Sociologists say the recession may have permanently changed consumers’ values and behavior.  Historians warn that generation gaps often widen after a recession as younger people look for new ways to express themselves and older people just want to go back to things as they were. Jazz took off after the Great Depression of the ’20s; punk rock took root after the recession of the ’70s. Who knows what new trends in music, fashion, or technology are in store for us?
The masters of marketing have the peripheral vision to see where the public’s changing needs and values intersect with their companies’.  And the business savvy to capitalize on it.

That takes more than advertising. GE’s “ecomagination” initiative was an internal business program to expand the company’s clean energy businesses long before the first ad was hatched.  GE’s CEO, Jeff Immelt, is unapologetic about his motives.  “Green is green,” he says.  And now GE is targeting the cost, quality and availability of healthcare in a program dubbed “healthymagination.”

Economists may declare recessions, but it’s the masters of marketing who end them.

Dick Martin (Summit, NJ) was formerly executive vice president of public relations and brand management for AT&T. He has written for such publications as the Harvard Business Review, BusinessWeek Online, Chief Executive, and Leader to Leader. Read more from Dick at his blog.

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