Lessons from Marketing during Economic Turmoil and why Hyundai became Marketer of the Year

It is a pleasure to open a newspaper these days and realize that the media finally spreads more optimism for the times ahead. Is the end of the recession the start of golden times for us marketers? Well, it depends on the point of view.

Undoubtedly, the prevalent reaction of most companies to the uncertain times has been to slash the marketing budget. On the other hand, media sellers would often argue that it’s a big opportunity to spend more and grab market share. Consequently, two companies within the same category can approach these times in two different ways. Take the airline industry in Europe. Easy Jet would be drawn towards a more conservative stance, approaching the situation with more care by trying to save costs wherever possible. Others, such as Ryan Air, would argue that they love recessions because it is a golden opportunity to have a higher share-of-voice and be heard in a marketplace of weak competitors.

Who’s right? It is difficult to say, as it depends on many circumstances and takes some time to tell. For me, the answer lies somewhere in the middle - the companies that see risk and opportunity in times of economic turmoil’s are the winners. The only way to counteract a CEO who wants to “cut costs across the board” is to prove that marketing is actually what creates sales. Accountability for our marketing actions, projections on how they might affect ROI is more important than ever. And, in fact, many brands have succeeded in getting out of the recession much stronger than they were before.

Take Hyundai. What made them the marketer of the year for 2009 (Advertising Age) and gave them a sales increase of almost 40%? In my opinion there are two factors involved:

First of all, it has courageously continued to invest in marketing, while most other automobile brands have cut down on marketing expense. When looking at the car ads from the 60s and 70s, I wonder what happened to the business. This used to be an industry of dreams, of big ideas and emotions. In times like these, the industry needs marketers that don’t fall into panic mode, but show confidence to continue telling their brand stories and wheather the storm. Today, too many automobile brands still operate upon the “launch and leave” strategy, a symptom that has contributed to the fall of GM. They spend billions to develop and launch a new model, but then do not invest to transform them into strong brands through sustainable promotion support. And with a declining market share, it is difficult to give the vast product portfolio the attention that is so desperately needed. Hyundai, on the other hand, seems to build their brands similar to the Toyota of long ago- offering good value cars with a lot of marketing exposure. The new Genesis, which was promoted during the Super Bowl, can serve as an example.

Secondly, Hyundai applied what is the most fundamental rule of marketing: to understand the mind of the consumer. While most automobile companies desperately used sales promotions such as the “0% APR”, Hyundai said: “buy a car from us, and if you lose your job within one year, we will let you return it”. The message was clear, showed an empathy that resonates with consumers and systematically removed fear to strengthen their brand. The problem has not been the cars, but the anxiety of the consumer. People who fear losing their job simply are reluctant to make a big purchase. In these times, Hyundai was the automobile brand to grasp consumer psychology and could gain incredible momentum through the famous first mover advantage.

Some would argue that in spite of these short-term sales boosts, the brand still hasn’t established a concrete image in the mind of the consumer to ensure long-term viability. Undoubtedly, there are many instances where Hyundai doesn’t succeed, but that’s another discussion. In any case, the Hyundai example shows that no matter how turbulent times are, there will always be opportunities for companies which continue coming up with consumer-centric marketing programs that hit the mark.

Francesco Wesel
www.francescowesel.com
www.brandnewtimes.blogspot.com

Subway and the "$5-footlong" Beast

“$5 foot long”- that jingle of the Subway advertisement seems to have pursued me on nearly any of the rare occasions I switch on the TV. Was it a just coincidence and a great way of targeting; or was the media planning intentionally that bold to ensure highest frequency and reach? Surprisingly, my friends also knew the spot and could hum the melody easily. This makes me wonder: Is a big campaign around a simple sales promotion the new way of recession advertising? And is such exposure and ability to be recounted really favorable for a (short-term) sales promotion? I believe no.

First of all, with that jingle still ringing in their ears for a long time, consumers might become accustomed to the new prices, and expectations might shift- this is dangerous as the promotion is only for a limited time and because the $5 deal not even exist in all Subway franchises. Disappointment seems predetermined. Just as with any kind of sales promotion, a 5$ foot long is motivating and exciting the first time, and perhaps the second time. But eventually customers come to expect it, so companies must cut prices further to create excitement and drive sales.



The second danger is that it the campaign has nothing to do with promoting the Points-of-Difference of the brand and is destined to prompt a competitive reaction. In weakness there is strength for the competitor. One does not have to be a clairvoyant to predict that in no time somebody would come along and destroy the bold campaign, simply by negating the promoted advantage. And surprise, surprise: Quizno as well as Sheetz's now offer the $4 footlong.

And third, as with any kind of this sales promotion, the brand may weaken because brand-building programs were cut. That will force the Subway manager to implement more short-term programs, continuing the vicious cycle and sending the brand into a dangerous downward spiral. But even in these times, Subway marketing must balance building short-term numbers with building a long-term brand.
Subway could clearly profit from maintaining consistency in its messages in order to break the clutter with its “eat fresh” message. As market leader, it still has the pioneering advantage, and rather than engaging in price shouting matches, message consistency and a promotion of the sandwich category could be more beneficial.

The toughest sub competitor Domino which has waged war against subway itself (“Domino beats Subway 2:1 in national taste tests”) could even serve as an additional frame of reference : After the recent food scandal, the freshness value has once again become a serious matter of public concern. If Subway should have followed the No.1 branding rule to keep consistency. Even when times are difficult, it could now allocate the millions wasted on the $5 foot long campaign to really build on its selling proposition in a meaningful manner. It could further offer consumers a more abstract, emotional benefit related to how good and healthy the consumers will feel as a result of eating subway subs. “Eat fresh” is also linked to the fact that subway regulars have traditionally ordered their sandwiches in highly personalized ways. (“one 6 inch, sesame roll turkey sandwich, with extra olives and just a little honey mustard on top”). A trip to Subway can promise self-expression and self-indulgence in an otherwise unfulfilling recession day. Both are examples of how to embellish the brand positioning to changes in the time.

This laddering up from a tangible feature to a functional benefit to an emotional consumer benefit could provide a means of powerfully sustaining Subway’s position. If these points of differences were sustained and consistently highlighted in communication, the brand equity could rise to an extent where customers would not choose to go to Subway only because a footlong sandwich costs $5 instead of $6 for a limited period of time- loyal consumers would even be blind to it. In contrast, Subway needs to stay (at least slightly) higher priced than its competitors to highlight the perceived quality value. With the bold 5$-footlong campaign, Subway has weakened itself. And because it is less protected by a set of powerful, unique perceptions that define it, the brand made itself more vulnerable to direct attacks in the long run.

Francesco Wesel
Integrated Marketing Communication
www.francescowesel.com

CEO vs CMO

I recently read an article by Lloyd Truffelman titled "Blame CMO turnover on metrics mania" (originally published on June 18 edition of AdAge).

As markets, the media landscape and consumers are becoming more and more diverse, a strategic approach to marketing is fundamental. Undoubtedly, marketing and communication needs facts as a solid basis in order to be tailored to specific market segments and choose appropriate mediums from a wide variety of media channels if it wants to be successful.

Nevertheless, times have changed, making it difficult for traditional marketing difficult to be realized. The initial pure informational marketing efforts did not survive the constant social developments of time. An growing partial attention of the consumer due to the abundance of available channels, as well as an overflow of communication messages have created new challenges for the entire industry. It has become increasingly difficult for marketers to capture the attention of the audience, which is why creativity is has long been a buzz word in the industry. The common belief has been that marketing and communication needs to be creative, new and original in order to be successful. Consequently, while having a strong strategic fundament, today’s marketing needs to be of an entertaining or interactive nature and at the same time offer a strong emotional appeal.

In that context, it needs to be highlighted that marketing is not a battle of products, but a battle of perception, which often forms the major discrepancy between the mindset of a CEO and a CMO. People believe what they want to believe; and see what they want to see. Truth is illusive, making it impossible for marketers to change a consumers mind even if rational facts show promising focus points for their brands. Even though “fast” might be the major DMU to prefer one fast food chain over another, Burger King cannot use it as a central theme in it’s communication, as in the mind of the consumer the word is owned by McDonalds. Management however often focuses on facts, because they believe in objective reality. It is then of course easier to believe that truth is on their side. Armies of researchers are employed, focus groups conducted, questionnaires tabulated and what comes back in a two pound report is often a wish list of what consumers want. But if brands go after everything, they might risk standing for nothing. No two companies can own the same positioning in the mind of the consumer. It is therefore much more complex, involving a combination of issues and trends of the market and consumer environment with one’s own brand mantra. And that largely involves the intuition, the gut feeling of the CMO, in order to come up with a creatively original execution.

As the Trufelmans article rightfully points out, an “overreliance on metrics” can “crush creativity”. This pattern holds true for battles between general management and the CMO as for interagency dissension between –for instance- account planners and creatives. The big challenge therefore often consists of finding the right balance between strategy and creativity. If marketing was indeed like Jazz music, the musician would have to ensure that his music is unique and new, while being in line with the contemporary taste of the listener as well as general music market trends, in order to be successful.

Undoubtedly, a consequence from these constraints on the CMO is that companies often try to "communicate" when they should actually be trying to "position." And in today's over communicated society, it takes endless repetition to achieve this effect. For instance, as Al Ries repeatedly exemplifies in his columns, the BMW might not be the most fun car to drive, but with their consistent claim of “the ultimate driving machine” they have anchored the "driving" position in the mind. For a typical consumer brand to come to this point, that might mean years and years of advertising and hundreds of millions of dollars. Most companies don't have the money, vision and patience to do that and if immediate results are not visible, the marketing department is usually the first one to blame. Consequently, companies jump from one message to another, hoping for an eventual magic pick that will energize their brands. However, this approach does not work today. It appears as if Pepsi changes their logo, marketing messages and slogan continuously and with that never succeeded in surpassing “the real thing” Coca-Cola. The only thing that works today is the BMW approach of strict consistency. Integrated marketing Communication means not only a synergy of different marketing tools but also to have a brand with a common sound, look and feel over time. And that simply is not possible with an average CMO tenure lasting only 26 months. Marketing Managers need time, trust and creative freedom to achieve enduring success and strategic advantage in the market place.

For another interesting perspective on the subject, note this podcast episode of "The Ries Report" by Laura Ries:

Francesco Wesel MA
Integrated Marketing Communication
www.francescowesel.com
www.brandnewtimes.blogspot.com