The last decade-and-a-half have seen boom time for most product categories, and a number of companies rode the wave exceedingly well – telecom, mobile phones, durables, infrastructure, packaged goods, you name it.
When consumers felt ebullient about their own future prospects, marketers naturally had a great run, for they had to be aggressive and smart enough to create value propositions that suited an optimistic target audience.Without saying that it was all easy, smart initiatives executed well invariably met with success.
Big Downside to boom time
But there was a downside. An entire generation of marketers grew up in boom time, and that set of managers is struggling when it comes to marketing in a slowdown. Why is that? It’s because the way consumers perceive propositions during pessimistic times is very different from how they react when things are looking up.
We are too used to creating propositions for consumers as individuals. However, every offering must be seen in the context of prevailing socio-economic conditions. So, while we marketers of late 1990s & 2000s learned to perfectly cater to the consumer as he appeared, we did not learn to cater to the changing context and background in which the consumer lived.
The new reality is that consumers are watchful, wary, untrusting, averse to risk taking and even stingy. The context is corrupt authorities, perceived greedy corporations, rising inflation and interest rates, cash crunch, low salary increments and newspapers full of bad news about a slowing economy.
In this scenario, consumers are just not stepping out to buy as much as they did 5 or even 3 years ago; they are cutting back or postponing purchases of discretionary items.
How is the marketer reacting?
Most marketers are doing one of two things:
• Holding prices and cutting marketing and other spending
• Increasing prices, but giving more tactical offers
Look at newspaper adverts or walk into stores and see for yourself. If you have access to the media data, look at advertising spending of categories that were on a high-growth trajectory till recently. Many categories are spending 50% of what they were last year.
Does this work?
No, it doesn’t. Fact is, in this scenario any of these tactics is unlikely to pull people out of their homes to buy your products. If a consumer has decided to postpone or cut his purchase of say a Rs. 50,000 product, a Rs. 2000 offer will not persuade him to come running to the store. This is a boom time tactic, when a nudge will get the fence-sitters tumbling to you. It’s not suitable for a slowdown scenario, when the consumer is firmly on the other side of the fence, not sitting on it.
The marketer in this scenario must cater to the wider context first, and to the consumer second. The focus must shift to convert more among those who are ready to buy rather than pull those who’ve decided not to. Yes, price and promo offers can be big factors, but ask any CEO and he’ll tell you it’s no joy selling truckloads at a discount and see the P&L bleed. Hence, the focus must be on product and experience. We have to remember that in the end analysis, a consumer buys a product for what the product does for him, not for the freebie he gets at purchase.
The following, therefore, are paramount:
• Great product quality & performance – Communicate these
• Reassuring brand – Build trust online and offline; in media and in shops
• Right price-value equation – Do not overprice, but definitely don’t underprice
In terms of conversion, the marketer has to ensure:
• Consistent brand building on specific unique propositions related to product performance
• Fantastic in-store presence (including quantity and quality of display)
• Salesmanship that goes beyond selling – consulting for “right product for you”
• Overall, reduce consumer’s perceived risk of making the wrong choice
A slowdown will give lower growth. That’s a fact of life. But it’s also a fact that most consumers will pick a brand that has the right price for value rather than the lowest price.
Understanding the consumer psyche through his context, and marketing to that need will be the difference between modest growth and decline.
“Authored by Lakshmikant Gupta - Chief Marketing Officer, LG Electronics India. This article is originally published here".
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