When there is a slowdown in business, when ware-houses begin to overflow, the first sacrifice to appease the gods of recession is Advertising. On the face of it, the logic appears flawless – if people aren’t buying, why advertise?

But as for every marketing battle, overcoming business deceleration requires bold strategy. And sometimes, being contrary helps. Longitudinal analysis of household panel data shows that during periods such as these where there is negative consumer sentiment, consumers tend to buy less, trade down the price spectrum and appear to prefer brands that offer a better value proposition. It has been observed that premium brands are particularly vulnerable during such periods and need advertising and marketing support to prevent its equity from being wasted away. Advertising enhances salience and keeps the brand alive in people’s minds. When the economy recovers and the sentiment turns positive, the advertising done during the recession will yield enormous benefits.

Another compelling reason is that media costs are typically lower during a business slow-down (and can be negotiated down further!). Competition is usually following conventional thought and cutting back advertising and therefore the share of voice is considerably greater. Both these factors combine to enable a small investment to build a sizeable brand presence in the marketplace.

It is also customary to resort to promotions during a slowdown to boost sales. However, if used indiscriminately and for long periods this can seriously devalue the brand property. The nature of promotion too needs to be selected with care. Consumer evaluation of offers such as cheap sunglasses and refrigerator door magnets need to be weighed against offers like 2 +1 free or 20% extra.

We have found that tracking consumer sentiment is very useful for identifying the point of inflexion, the point at which consumers have got over their recession mentality and are more optimistic of the future. We also have attempted using attitudes to the purchase of some durable categories as a bellwether of consumer sentiment. A continuous track helps in getting an advance warning of impending change well before it gets reflected in the ringing of cash registers.

As we begin the new millennium, may the ringing of sleigh bells and cash registers continue to be heard. Best wishes from all of us at IMRB.

Thomas Puliyel
President, IMRB

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