奥美TakingTheRoadLessTraveled037

1、taking the road less traveled byhow to increase your profits in asia, when times are tough james chadwick, regional account plannero&m asia/pacific, o&m singaporecontentsis this a recession?how consumers behave in recessionsthe decision: fight or flight learnings from historical studieschoos

2、ing to fight 5 strategic opportunitiestough times in asia - the debateis this a disastrous crash or a much-needed “reality check”?will this make asia more economically competitive again ? or are we entering a downward spiral?282818183939696960601919333334342222595968685656444431314040737363635858616

3、139394 4262617170 00 08 84 48 817172 20%0%10%10%20%20%30%30%40%40%50%50%60%60%70%70%80%80%90%90%100%100%malaysiataiwanchinas.koreajapanaustraliamalaysiasingaporephilippinesthailand2 years2 yearsw ithin 2 yearsw ithin 2 yearsw ithin 98w ithin 98spencer stuart, poll of over 400 asian corporate leaders

4、, may 1998ceos predicting recovery ratestough times in asia - the debatenobody knows for sure how tough it will get, or how long it will last.in the meantime, its time to develop a corporate stance towards the recession.how the mighty respond.douglas ivester, chairman coca-cola co. and how the rest

5、plan to cut back spencer stuart survey, 400 corporate leaders, may 1998avg planned % change is this a recession?textbook definitions“a decline in gnp for two consecutive quarters.” the us has suffered 28 slumps since 1854, approximately one every four to five years.”“short term growth lagging long-t

6、erm growth in your market by at least 4 percentage points” definition: strategic planning institute, usis this a recession?textbook definitions our definition “a decline in gnp for two consecutive quarters.” the us has suffered 28 slumps since 1854, approximately one every four to five years.”“short

7、 term growth lagging long-term growth in your market by at least 4 percentage points” if the consumer thinks she is in a recession, then she is.definition: strategic planning institute, usconsumer mood by countrypolandukmexicousbrazilgermanyitalythailands. koreawirthlin worldwide report, july-august

8、 1997, 7,833 interviewsquestion asked: “would you say things in this country are going in the right direction or the wrong direction?” wrong direction right directionangus reid/economist world poll, may/june fieldwork, 1997/8satisfaction with quality of life indexangus reid/economist world poll hope

9、 index, may/june fieldwork, 1997/8, 29 countriesasians are still the worlds optimists*composite score across 3 “future expectations” items5 out of 10 of the worlds most optimistic* countries are asian.but the japanese are the worlds least hopeful about the future.consumer confidence in singaporemast

10、erindex survey score, march 1998.masterindex score = 42impact of recession on asian consumer confidencemasterindex survey score, march 1998.impact of recession on asian consumer confidence0 0101020203030404050506060707080809090100100chinajapanindiaindonesiakoreathailandaustraliataiwanphilippinesmala

11、ysiahksingaporenzq 297q 297q 497q 497masterindex survey score, march 1998.singaporean consumer confidence trendmasterindex survey score, march 1998.changing confidence of singapore consumermasterindex survey score, march 1998.how do consumers behaveduring a recession?consumer spending does not alway

12、s drop in previous us postwar recessions, real spending continued to rise except 73-74 consumers still need necessities many consumers find they have more disposable income for everyday items than beforereduced high-ticket purchasingless wasteful behaviourrecessionary behaviour is complexgrand met l

13、aunched haagen-dazs when europe was in recession a super-premium (+40%) brand that created a new category of its own us$10m sales in 1990 to us$130m in 1994perhaps consumers need “little luxury” feel-good brands more than ever during recessionhow behaviour may change during recessionhow behaviour ma

14、y change during recessionhow behaviour may change during recessionhow behaviour may change during recessionhow behaviour may change during recessionsome international learnings* basic necessities hold up, or increase bread, soup, preparation ingredients, seasoning vices increase beer, cigarettes hig

15、h-ticket items postponed property, durables, holidays social class differences upper-class luxuries hold up middle-class comforts suffer*sources: ac nielsen, wsj, admapthai shoppers left category in past year, due to recession58585454464645454444343433332323151511113 30 02020404060608080100100fashio

16、n clothingnutrition supplementsmagazineswhiskyfilmfast foodjuicesnacksskincaremilkcooking oil% left c ategory% left c ategoryo&m thailand listening post study, april 1998. (206 bangkok shoppers)thai shoppers remaining loyal to brands, past year7575979793938080808072728080797980808989646450506060

17、707080809090100100hair colournutrition supplementsmagazineswhiskyfilmdetergentjuicesnacksskincaremilkcooking oil% b rand loyal% b rand loyalo&m thailand listening post study, april 1998. (shoppers still using each category)two paths - fight or flightflight recession as threat advertising the eas

18、iest budget to slash economic headlines are disastrous competitors cutting back - so can i consumers wont be buying anythingtwo paths - fight or flightfight recession as opportunityflight recession as threat advertising the easiest budget to slash economic headlines are disastrous competitors cuttin

19、g back - so can i! consumers wont be buying anythingdominate media reframe brand valueslaunch new products, packaginguse portfolio smartlyleverage consumer insightsstudies suggest fight not flighta number of academic and business organisations have studied this subject “is it worth advertising durin

20、g a recession?”all studies have reached similar conclusions a strong correlation exists between investment during recession and subsequent sales/share growth a recession is a time of opportunity for growth for longterm players that can spendthe economists argument uk economist c. oherlihy, 1980 arti

21、cle advertising is a variable cost with direct impact on sales measured trade-off between the cost of advertising/contribution to sales & profits 50 brands, 20 categories calculates 100 tvr points = 1% sales growth in recession hypothetical example: recession slashes sales volume 10% profits fal

22、l faster than sales, due to fixed costs conclusion: slashing ad investment puts profits in jeopardyus$ 000before recession33,00010,00019,8007002,5007.6%danger of slashing: hypothetical example us$ 000before recession33,00010,00019,8007002,5007.6%fiance dept. assumed impact of ad cut . (only recessio

23、n affects sales)30,00010,00018,00002,0006.7%danger of slashing: hypothetical example us$ 000before recession33,00010,00019,8007002,5007.6%fiance dept. assumed impact of ad cut . (only recession affects sales)30,00010,00018,00002,0006.7%what actually occurs during recession (impact of loss from ad cu

24、t)27,00010,00016,20008003.0%danger of slashing: hypothetical example us$ 000before recession33,00010,00019,8007002,5007.6%fiance dept. assumed impact of ad cut . (only recession affects sales)30,00010,00018,00002,0006.7%what actually occurs during recession (impact of loss from ad cut)27,00010,00016

25、,20008003.0%impact during recession if budget had been left intact30,00010,00018,0007001,3004.3%danger of slashing: hypothetical example implication of economists argumentadvertising can be regarded as an investment, not just a cost.due to fixed costs, profits slide faster than sales. how can you se

26、rvice your fixed costs better?if fixed costs are particularly high in your industry, can you afford not to fight?study 1: harvard business review, 1927hbr article, 1927, author roland vailestudy of 200 companies and performance during and after 1923 recessionstrong positive correlation between adspe

27、nd and sales growthstudy 2: lab for ad performance, 80-85mcgraw-hill subsidiary, laboratory for advertising performancestudy of 600 companies advertising spend and sales performance, 1980-85strong positive correlation between adspend and sales growth over 5 years.average sales growth for those who i

28、ncreased adspend was 275%, against 19% for those who cut backadspend and sales, 1981-2 recessionsales index (1980=100)source: laboratory for advertising performancestudy 3: spi/crd, 1990 studystrategic planning institute/centre for research and development, using the pims (profit impact of market st

29、rategy) database, 1990.pims database of 749 large european & us companies examined, allowing correlation of adpend with sales/roi results339 database observations of companies during recessionsdivided into 3 groups, by reaction to recession:1. cut adspend (average 11% cut)2. increased spending u

30、pto 20% (average 10% inc.)3. increased spending over 20% (average 49% inc)study 3: spi/crd, 1990 studyalmost all businesses earn reduced profits during recessionbut businesses that cut ad expenditure (group 1) suffer roi reduction equal to those that increase adspend upto 20%companies increasing ads

31、pend during recession gain greater market shareopportunity of gaining share through increased adspend is greater when total market is softstudy 3: spi/crd, 1990 studygroup 1companiescut adspendgroup 2companiesincreasedadspend upto20%group 3companiesincreasedadspend over20%change inroi duringrecessio

32、n- 1.6%-1.7%- 2.7%change inmkt. shareduringrecession+0.2%+0.5%+0.9%note: to put these figures into perspective, a single share point in the us car industry is worth over us$2 billionstudy 4: dentsu inc, japan 1985-6investigation of 874 listed companies, with adspend over us$800,000companies divided

33、into 3 groups:1. cut adspend (320 companies)2. unchanged/moderate increase (265 companies)3. increased adspend (289 companies)positive correlation beteween adspend and growth in sales, market share and profitslong-term leadership sustained after recession by those that spentaffects of adspend during

34、 recession recession recoveryexpansionmarket share growth %source: dentsu inclong-term advantagesstudy results suggest long-term advantages for those who support brandswhy? brand considered more permanentconsumers trust them virtuous circle of spending createdmore sales, bigger budget, etc. new habi

35、ts formed during recessionsconsumers stick with habit during recoveryour recommendation: choose to fightfight recession as opportunityflight recession as threat advertising the easiest budget to slash economic headlines are disastrous competitors cutting back - so can i! consumers wont be buying any

36、thingdominate media reframe brand valueslaunch new products, packaginguse portfolio smartlyleverage consumer insightschoosing to fight - 5 opportunities 1. managing a budget positively tough times communications 2. reframing brand values to new context 3. fast marketing 4. using brand portfolio stra

37、tegically 5. leveraging consumer insights better to save communication costs1. managing a budget positivelyspend upfront at start of year to stimulate a virtuous circle of sales avoid a vicious circle, always chasing money1. managing a budget positivelyspend upfront at start of year to stimulate a v

38、irtuous circle of sales avoid a vicious circle, always chasing moneyincrease share of voice media inflation tends to slow timid competitors cut back companies with strong resources can dominate share of voice, often for lesswhat happens when competitors stop spending?1958 in the uk, consumers chose

39、between soft toilet paperandrexdelseyother hard toilet paper and flatpackby 1963, most consumers had turned to soft toilet paper increasing retail pressure, more competitors pressure to cut adspend, shift to promotionsuk toilet paper, adspend analysis343410516476465454596362295205160146uk sterling,

40、000delsey reduced, then stopped advertising, 1963-66andrex dominated sovuk toilet paper, volume shares%andrex volume share steadily grew through periodwhat happens when competitors stop spending?andrex continued to speak directly to consumers when key competitor stopped rewarded with 30% volume shar

41、e by 1969 stronger loyalty, able to charge a premium andrexs attribute ratings for “soft” and “strong” rose steadily, as delseys declined andrex leads uk market todaymilo in malaysian recession, 1985-89during 85-88, nestle increased milos adspend from rm2m to rm3m, while competitors cut back or fluc

42、tuatedmilo increased adspend through recessionrm 000milo in malaysian recession, 1985-89during 85-88, nestle increased milos adspend from rm2m to rm3m, while competitors cut back or fluctuatedsov increased from 55% to 70%past 3 month usage share increased from 65% to 70% and now stands at 80% nestle

43、 now maintain 80% share usage with only 55% sov1. managing a budget positivelyspend upfront at start of year to stimulate a virtuous circle of sales avoid a vicious circle, always chasing moneyincrease share of voice media inflation tends to slow timid competitors cut back companies with strong reso

44、urces can dominate share of voice, often for lessevaluate new vehicles - cinema & printevaluate new vehiclesduring recent australian recession print readership increased cinema attendance increased“consumers needed a bit of escapism during the tough times, and we had to reflect that in our creat

45、ive work as well as our media buying”philip beck, md of the network (now mindshare), aus/nzchoosing to fight - 5 opportunities 1. managing a budget positively tough times communications 2. reframing brand values to new context2. reframing brand values to new contextfit new mood & new habitshow c

46、an i reframe my brand to exploit this? not “how must i change direction?”michelin changed from “expensive, but worth it” to ziploc emphasized a-1 steak , not just sirloin steaksaucevolvo2. reframing brand values to new contextnew contextreduced outingsreframing opportunity“home is where the heart is

47、”2. reframing brand values to new contextnew contextreduced outingstightening beltsreframing opportunity“home is where the heart is”“treat yourself a little”2. reframing brand values to new contextnew contextreduced outingstightening beltsselfish climatereframing opportunity“home is where the heart

48、is”“treat yourself a little”“a brand that cares” 2. reframing brand values to new contextnew contextreduced outingstightening beltsselfish climatenational crisisreframing opportunity“home is where the heart is”“treat yourself a little”“a brand that cares” “lets all pull together”choosing to fight -

49、5 opportunities 1. managing a budget positively tough times communications 2. reframing brand values to new context 3. fast marketing 3. fast marketingfast marketing was popular in last uk recession (cadburys, schweppes)basic premise = during recession. make use of idle capacity, spare workforce lau

50、nch fast, short-term roll-out lines or variants in categories where novelty sellsnew chocolate bar, ice-cream, shampoo, etc. aim for fast pay-back (e.g. a year) make use of vacant space in trade pipeline focus adspend up-frontfast marketing - getting novel packaging innovations out before competitor

51、sbigger “economy-size” packaging save money, store at homesmaller “little luxury” packaging consumers still need little luxuries, perhaps even more than ever, but may not want to spend the full amountchoosing to fight - 5 opportunities 1. managing a budget positively tough times communications 2. re

52、framing brand values to new context 3. fast marketing 4. using brand portfolio strategically4.using a brand portfolio strategicallya broad brand portfolio allows flexibility support strong brands with thematic advertising use others as tactical fighting brands flank your competitors either sidekao used portfolio strategically during early 90s japanese recessionchoosing to fight - 5 opportunities 1. managing a budget pos