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Innovating through Recession

"When the going gets tough the tough innovate."

"Innovating through Recession" is the title of an article by Prof Andrew Razeghi who advises that in times of recession business owners would do well to listen to the market, improve communication with customers, offer them greater value and use judgment to prune "bad costs". He also recommends moving longer-term projects forward in an attempt to grab market share as quickly as possible.[source]

Recessions are dominated by uncertainty and in these periods it makes sense to focus on that which can be controlled like budget. But businesses which want to increase market share and profits need to increase advertising expenditure and upgrade their sales force if possible. The research company Meldrum & Fewsmith demonstrated conclusively that aggressive advertising in a recession not only increases sales but also profits - a fact that has held true for all post-World War II studies by the American Business Press.

"It's quieter when it's less crowded."

Organisations which are constantly looking to see what the competition does cut back on advertising when everyone else does. But proactive companies forge ahead, increasing exposure while others lie low. As Professor Razeghi correctly observed, "It's quieter when it's less crowded." Less noise obviously implies more attention to well marketed brands and a greater return for their ad spend.

Peter Sukonek, CEO of branding firm Big Gravity, expands on the foundational marketing principle of differentiation which in child English means "being different in a good way". Innovation implies new ways of thinking, breaking stale dead-end habits, breaking traditions and finding new and creative ways of communicating and connecting with customers. Of getting talked about.

Hyundai America announced a 14% increase in sales

One of the more recent examples of innovative differentiation in the marketplace came from Hyundai earlier this year. Since the start of the American recession in Dec 2007, 5.7 million jobs have been lost according to the US Bureau of Labour Statistics. Significant as these job losses are, there are still 300 million American residents who have not lost jobs but who live in fear of such an outcome.

In response to this nation-wide paranoia, Hyundai introduced a new marketing strategy in January 2009. "Buy a Hyundai, and if you lose your job within a year of the purchase, the company will cover the next three months of lease or loan payments. And if you're not back on your feet by then, you can return the car - no strings attached. How's that for assurance..."

Joel Ewanick (VP-marketing at Hyundai) went on to explain, "This is a recession of fear. We realised that the elephant in the room was the fear of losing your job."

The reaction to this innovative marketing strategy was overwhelming and the proof lay in the January sales. Hyundai America announced a 14% increase in sales compared with January the previous year, while the rest of the automobile industry experienced the worst January since 1963. Sales for General Motors dropped by 49%, Chrysler 55% and Ford-Lincoln-Mercury by 39%. Hyundai's story is a perfect example of listening to the needs of the market and offering increased value to customers.

depression and innovation aren't good bed-fellows

Closer to home, Nando's out-of-the-box advertising campaign in the run-up to the South African elections was a stroke of genius too. An irreverent advertisement depicting a political leader resulted in such an outcry from his party that hundreds of news items, thousands of blog postings and over R 250 000 worth of free editorial coverage ensued over the following two weeks.[source] Nando's followup advertisement perpetuated the furore as brand awareness soared.

Harry Truman is reputed to have said, "It's a recession when your neighbour loses his job; it's a depression when you lose your own." Depression and innovation aren't good bed-fellows, but for those who can keep their heads clear and humorous creativity flowing in times of world-wide fear and depression the long-term benefits are immeasurable.

May 2009 (reposted in May 2020)

A Nando's advertisement held up "thigh" on a Citilite billboard by South Africa's internet celebrity, Vernon Koekemor

"Good advertising does not just circulate information. It penetrates the public mind with desires and belief."
[Leo Burnett]


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