Much has been written in the press about the recession and its effect on spending. There is no doubt that there has been a major slow down and decrease in consumer confidence. So, the question is how can retailers survive? This is a topic that will be seen in a marketing exam or business exam this year.
One way is to cut prices and bundle products together. So a typical offer is to buy a shirt and get the second one half price. However there is more to it. Look at the thousands of people who go shopping and the numbers that return home with bags. They look and some buy and some walk away.
If you are a marketing professional or marketing student,look at the way in which you can excite customers. The marketing lessons are to offer something of interest. It needs to be up to date, not too expensive so buyers can justify it and ease to match into an existing wardrobe. So your display would be Key Trends for Autumn. If you read the millions of fashion pages in magazines that is the story. Yet shops have rails of stuff and you have to work out what goes with what. So outfits or rooms where you can see how it all works together.
Take the marketing case study of Next. The online directory shows, trends and rooms. It is easy for the consumer to see how that wil work for them. You can also shop by product such as shirts or tops. Try then to reflect how someone lives. So is it Saturday night outfit? Smart business suit. Or maybe something you can wear for both? If you watch the house makeover programmes they style a house so somebody can see themselves living there.
The lesson for marketing students, is to excite the consumer, show what is new but not too different. Make choices simple so that consumers can see themselves in that skirt or buying that latest shade of bedding. By doing this we are removing the risk. The key point is to ask what stops someone from buying? Typically it would be cost or will this look right on me? What will my friends think and will it work with that shirt I bought last week.
The marketing questions are to understand the need to really get inside the mind of the consumer and not just think about shifting rails of product.
Strategic marketing is something that is often talked about but rarely implemented. It can be seen to be very clear cut and simple as a process but the challenges and choices offer huge and exciting opportunities and introduce great complexity.
Strategic marketing is the long term view of the organisation and where it wants to be seen by its customers. That is only part of the picture. Customers are central, but other stakeholders such as suppliers, funding bodies, banks and indeed competitors all want a piece of the action.
The process of strategic marketing is structured and includes clear elements of order and content. At least , when it is presented as the direction of the business. Achieving that is a much more complex process. The strategy is like the swan gliding on the lake, yet below the water working furiously against the tide.
The process of strategic marketing will be outlined to provide a clear guideline for a range of organisations. It will show the essential components from the analysis of the current situation to the strategic choices. The current trends in the environment, such as the economic situation, the development of social media all offer new challenges. The issue is to determine the difference between a trend and a fad.
There are also new ways of conducting business. No longer is a customer always a customer, they maybe a supplier, a partner and in some cases a competitor. In times of higher risk and more restricted resources collaborations and networks are popular.
The strategic choices will be to examine the opportunities and match with the resources of the organisation. Then, for the organisation to position and differentiate itself to build competitive advantage and offer value to the consumer.
Tese complexities must be explored to show how they can offer small organisations the opportunity to build a solid platform for the future and create a sustainable business.
For SMEs there are huge challenges but also great opportunities. Resources for all organisations are tight but those smaller businesses can respond more quickly and be innovative in the ways, in which it goes to market. It can test and try, work with others and collaborate. A key message is to be clear about who your customer is and where you compete. Don’t try to be everything but be the very best in your market, make your customers the happiest, offer superb value, do something special.
The strategic marketing process is a coat hanger, but it is the clothes and accessories that make it this season and next and that is the challenge and the fun.
The posts on the blog show how marketers are developing some really clever ways of creating interest for their business. The earlier posts with videos on Lego and T- Mobile, for example show innovative ways of gaining attention.
The lessons and challenges for marketing in the recession are:-
To stand out from massive competition. Some competitors will cut price, that is tempting but will cheapen the brand and lower the profit from each sale. Try to offer better value and bundle products such as buy your house insurance and buy car insurance at a discount.
Ensure that the customer is loyal and sees your business as a solution to their problem. Remember people buy the benefits not the product. Its not that the speed of the processor is or the size of the engine is. What does that mean? So I can access internet quicker, use less fuel in my car etc
Add real value for the customer. Make life easier, so you can connect the phone to the PC, downlaod pictures and print in one click.
Be clear who that customer is, don’t try to target everyone. If you are selling clothing, is the customer the younger trendy girl who wants something different and new every week. Or the classic buyer who buys one or two key pieces each season. Is it the techie guy who wants all the latest in mobile phones or someone who just wants emergency calls.
So the lessons are to offer a really fabulous deal and to keep that customer happy but the competitor scared
There has been a great deal of debate over marketing spend during the recession. It seems that advertising spend has declined. Recent GroupM research found although global advertising spend is expected to fall 5.5% this year to £253bn but sponsorship will see a year-on-year increase of 2%, the only discipline to see growth. The reasons are interesting. Sponsorship of football for example will give the sponsor may hours of prime time coverage. Especially if you sponsor one of the top teams. Cost of sponsorship have declined and it is a buyers market at the moment.
Sponsors are looking for proof that there is a payback. This can be difficult to judge and here companies are looking for direct links between sponsoring a football team and meeting longer term brand building objectives. It is a little easier to tie sponsorship into shorter term tools such as specific product promotions.
The difference is that with sponsorship we are actively watching the sport and can spend hours at a time watching the game with the sponsors’ brand in full view. If the sponsor had to pay for 90minutes of advertising that would be a huge cost. The issue is that many people avoid adverts. Especially since the development of television recording such as Sky Plus. Whereas with the sponsorship we are not avoiding adverts.
The recession has much to answer for and that is shaping the marketing budget and the increased focus on marketing metrics and ROI
Waitrose is seen as the luxury end of the supermarket industry in the UK. It is part of the John Lewis Partnership, which furnishes and clothes us in some style.
It was not immune to the effects of the recession which was biting into sales. Even the more well heeled customers were buying less per visit and also leaving to shop at less expensive retailers.
The challenge for Waitrose was to stop the exodus without damaging the brand. This is tricky, if you cut price it takes away the very base of the brand. Waitrose took the challenge and launched its Essentials range. According to Marketing Week, the chain expected sales of the initial 800 products labelled ‘essential Waitrose’s to hit a target of 15% of sales by October.
A direct marketing and outdoor media campaign was launched and sales are way ahead of estimates. Targets have been hit 3 months early and beat even the most optimistic of forecasts. The plan is now to expand the range to cover around another 600 products.
The Marketing Lesson here is the avoid damaging the brand. The launch was an addition but if too many products become ‘essential’ this could devalue the brand as the overall balance moves away from the core brand values