A new study out by BIGresearch (From Cablespots 2/19/09) tells us what things consumers are and are not willing to give up when money gets tight. The top 3 things people won’t give up were all technology related:
- Internet Service 81%
- Cell Phone Service 64%
- Cable or Satellite TV 61%
Other items that were mentioned but below 40% were haircuts/color, fast food (really? ever watched Super Size Me or Fast Food Nation?), sit-down restaurants, charitable contributions, and vacations.
The expendable list showed much more agreement. The things people surveyed are most likely to give up were:
- Luxury Handbags 91%
- Satellite Radio 91%
- Specialty Store Apparel 91%
- High End Cosmetics 91%
- Maid Services and Facials 90%
- Fine Dining 89%
- Manicure/Pedicure 88%
- Upgraded Cell Phone Service 88%
- Club/Social membership 87%
Do you have products or services that fit in the “expendable” list? What are you changing about the way you do business to meet your customers demand for more basic things? If you have a compelling reason for people to use or visit your company now more than ever because of the population’s changing perspective on what they need, are you inviting them to do business with you?
Wal-Mart is seeing dramatic growth over their competitors who are viewed as more expensive and cite the success as a result of their substantial advertising increases. They will continue to take advantage of the current economic climate to get more ads for the dollar, spend more, and steal share away from the competition who have been cutting back on their spending. This is a change in direction for the conservative retailer who in the past was known more for it’s merchandising strategy rather than their advertising prowess, but the tables are turning and ad spending is proving to be a sound investment. (CableSpots 2/17/09)
This is more proof that spending the right way during an economic challenge can have a big reward. I wrote about this before and you can go to my previous post, “Advertising Lessons from Past Recessions” for a chart that shows historically how businesses have been able to validate their growth from spending more money on advertising during recessions and given them exponential growth in the years following the rebound.
Have Wal-Mart’s new ad campaigns had an effect on how you view the big box store? Do you find yourself shopping there more than in the past?
I was visiting with my friend, Larry Thomas, last week about how the recession is impacting local businesses. Larry and his wife own L.A. Floral and not only sell flowers, but “Larry the Botonist” takes care of the plant life in many office buildings in Kansas City. What was interesting about our conversation was that he reminded me that I should be telling my clients about the history of advertising during the depression. He said that historically, companies that advertise during an economic crisis increase their share and are better off than their competitors. Maybe I’ve been watching too much MythBusters, but the cynical side of me decided that I should find out if this is true and if so, take Larry’s advice and tell all of my clients about it!
- 86% of American executives agree companies that advertise in a down economy stay more top-of-mind when purchase decisions are made ( 2001 Media Life. , May 29, 2001 © )
- Companies that decreased or eliminated their advertising, saw their sales drop 4% in Year 1, 12% in Year 2 and 11% in Year 3. By Year 5, sales of aggressive recession advertisers had risen 256% over those that had not maintained their advertising. (Epoch Times, Dec 2008, McGraw-Hill research during the 1981-82 recession, n= 600 Companies)
- A MarketSense study during the 1989-91 recessionary period shows brands such as Jif Peanut Butter and Kraft Salad Dressing increased their advertising and experienced sales growth of 57% and 70% respectively.
- During the recession of the early 1990s, Nike tripled their marketing spend, resulting in profits nine times higher in the period coming out of the recession than prior to it. This eliminated Reebok as a competitive threat and built the platform for global dominance (Branding in a Recession, Interbrand Corp, 2003)
I have also read many articles that mentioned Kellog’s vs. Post cereal in the 1920’s-1940’s. According to legend, they were neck in neck and when the depression hit, Post cut their ad budget and Kellog’s increased theirs. After the depression Kellog’s became the leader and remains in that position to this day. There’s a similar story about Ford & Chevrolet where Ford was outselling Chevy 10-1 before the depression. During the crisis Chevy launched an aggressive campaign and ended up leading when the depression ended.
I remember a client that I talked to in December of 2008 telling me that he’d rather start turning off more lights in his store before cutting off the “lifeblood” of his business being his advertising. While I don’t wish for any of my clients to start bouncing payroll, I do recommend taking a lesson from history and stealing some share during our current financial challenge knowing that when things turn around, you’ll be stronger for it!
What changes is your company making to remain competitive this year? How has the economy affected you or your competitors ad campaigns?
Research is often one of the most neglected steps of the advertising process. Far too many people allocate their ads based on their gut, or what they like to watch/listen to, or what they think will be exciting (like the Super Bowl). I can remember early in my career visiting with a client who sold high-end granite counter tops. I worked at a news talk radio station that according to Scarborough, reached affluent homeowners with the disposable income to make a purchase like this for their home. The company ended up buying a country music station because that’s what their installers listened to and they wanted those guys to know that the company was investing money in advertising. Sound crazy? It happens more than you know and yes, that counter top company is no longer in business.
I heard Jim Doyle talk about one of the reasons why auto dealers liked to advertise in the newspaper was so that they could tape up their ad inside the dealership and show all of their sales people what the sale current promotion was and so they’d know that their GM is spending money on ads. To quote a fellow Shawnee Mission North alumn, Dr. Phil, “How’s that workin‘ out for ya?”
I thought that this would be a great opportunity for me to share the kinds of research tools that I use with my clients to help determine where their targets can be found.
- Nielsen- Nielsen is TV’s ratings service that currently uses a cross between diaries and hard-wired boxes to tell us what people are watching. Arbitron does this for radio. With the Nielsen quantitative info we can find out what the top programs are and can filter that information by parameters like age and sex. So, what did 18-49 year old women watch last week? Nielsen can tell us.
- Scarborough- I have a program by Scarborough who sends out diaries to each market and gives us qualitative information on the quality of TV viewers. How much money do they make? How many children are in the home? Do they plan on buying a car in the next 12 months? What kind of job do they have? Where do they like to shop? Do they go to concerts? Scarborough tells us about the lifestyles of TV viewers and then tells us right where to find them. I can pull rankers on the top TV networks watched by a certain demographic. Want to know what channels men who like to water ski watch? Scarborough can tell us.
- Media Monitors- Ever wanted to know where your competitors are spending their ad dollars? I guess you could try to read the local paper, listen to 20+ radio stations, and watch a handful of local TV stations until you burn out your retinas, or you could just call your ad guy! I have access to media monitoring software that can tell me where certain advertisers are placing their ads. What stations do they buy, approximately how much money do they spend? This competitive information is extremely valuable and I don’t even charge my clients for it. It’s part of the job of making sure my clients get results by advertising in the right place. Never assume that your competitors know more than you, but don’t don’t assume they don’t. Maybe they have a nephew that sells media for a particular TV or radio station and feel obligated to advertise there. Unfortunately for me, I don’t have any rich uncles that own a business! Sometimes you’ll want to compete for ad space with your rival and other times you’d like to avoid fishing for new customers in the same pond as your competitor. Media monitors can help us figure out what other companies are doing.
- Interactive/Social Media- Twitter, Google, Blogs, News Stories, MySpace, Facebook can all be fantastic sources of consumer information. It can be seriously unscientific, but can also be incredibly genuine. I recently read an article about Circuit City’s demise and the most interesting thing I found was the comments left by people who were glad the company had gone under! People shared their poor experiences with Circuit City and were upset that the company had let go of experienced employees for a cheaper, inferior retail staff. If you have a twitter community, you can throw out all kinds of questions about products or services and people will really tell you what they think (in less than 140 characters). I have also found an abundant amount of information by simply querying google.
So, tell your nephew that you need to reconsider your media plan and stop advertising to your sales staff because they don’t need to buy your product! Put your ad guy to work researching the best places to find your new customers or clients and you’ll start to see better results in your campaigns.
What sources of research have you found helpful in your marketing and advertising efforts?
