Forbes: The Earning Power Of Recession

Economic factors can easily work for your brand. Many companies make profit out of it while recession. CEO and Managing partner of Depot WPF Alexey Andreev – on situational marketing for Forbes Russia.

 

Алексей Андреев

Alexey Andreev

CEO and Managing partner of Depot WPF 

The Earning Power Of Decrease: Why Recession Is Not About Saving

Доходность снижения: почему не стоит говорить об экономии в кризис

Sport brands use the marathons trend during recessionPhoto: RIA Novosti 

Economic factors can easily work for your brand. Many companies make profit out of it while recession.

Think about Tom Sawyer who promoted fence painting – a really hardly appealing activity – so well that everyone wanted to do it. Compare him to Ragout restaurant owners, who presented a new format of this spring – a neo-bistro, where «simple, but interesting food for everyday meals, with no costly ingredients and chemical experiments while cooking» is served. Sounds cool, doesn’t it? But the fact is that this culinary novelty is designed because of production cost-cutting and average bill decreasing. It aims to attract customers that lose money because of recession.

In some cases in marketing it is not worth revealing your secrets and telling consumers the real reasons for a company’s actions.

Your clients hardly want to hear that this inexpensive offer would suit them because they don't have a lot of money.

No one wants to be a loser. Instead, people like to feel trendy and forward-minded.

Global trends, such as «eating at home like in a restaurant» and «making SPA in your own bathroom», survived plenty of recessions and let many major brands develop. This year we witness a real hype around services that deliver ready-made sets for cooking lunches and dinners of restaurant quality at home, such as «Nuzhen uzhin/Need a dinner», «Uzhin doma/Dinner at home», Katerina.ru, Elementaree etc. Finished your meal? It’s time to have fun. And it’s better to stay home again because going to cinema or concert takes time and, moreover, is rather costly. Online cinemas, providers of content and other web services flourish. «Definitely, in the time of economic volatility the behavior pattern is also changing, colleagues from online-cinema ivi.ru comment. People turn to watching TV and online videos and chose cheaper entertainment. We don't compete directly with other entertainment providers, but in this case we surely expect that our income increases».

Sports brands that have recently pushed «free» street sport activities also play for high stakes on properly served affordability. Practice yoga in parks, work out, run along city embankments, explore new bicycle routes – that's what Nike and Adidas compete at. Brands engage celebrities for their campaigns, urging us to do jogging with other enthusiasts instead of going to an expensive fitness club. It means following the trend, getting more emotions and so on. And it is the way they sell their products successfully. In fact it is not an anti-recessionary measure but a common trend in the West. It's just that its appearance in Russia coincided with the crisis. «After all, such activities are held to attract younger audience, the one that a priori has limited financial possibilities», brand manager of Adidas Outdoor Maria Inyutina explains. Last year the number of participants of Moscow marathon sponsored by Adidas didn't exceed 5000. This year more than 15000 of participants have already registered for the marathon that is scheduled for September.

Handmade products trend together with sanction on western goods imports create a new market niche. Cheese Box project that launched in 2014 offers its clients to cook mozzarella, ricotta, chevre, haloumi - all by themselves, «fast and easy». Cheese Box was not the first to sell sets of ingredients for in-home cheese making, but they did it according to all branding rules: positioning, package, website design, social media marketing and so forth. The final product appears to be as expensive as a prohibited imported one, but its effect is that the customer is offered to create something that he could only buy at stores before – all by himself. This offer is not about sanctions or anti-sanctions, it's about simple magic and emotions. 

Major tour operators that had to focus on Russia this year avoid puffing out the price advantages of vacation at home. The leading travel agencies try to prove that holidays in Russia can be as good as abroad. Intourist invites you to improve your health, Pegas praises historical sights and reserves, Anex Tour tempts with comeback to «childhood memories», Sunrise tells about «beaches that heal you». Traveling through Russia is positioned as trouble-free tourism: there are no visas, long flights and language barrier.

All listed are examples of so-called situational marketing. It is based on timely analysis of constantly changing factors that influence a brand, such as product’s and service’s qualities, environmental effect, social and macro-economical trends, consumer's motivations and preferences. To be brief, situational marketing means the ability to turn latest market circumstances into promising directions of your brand development.

In response to economic recession the value of such marketing increases dramatically. Out of the box, more possibilities for designing strong brands appear. 

The most important is to remember that customer is a top priority.

Signs of crisis affect him as well as us. Give consumers what the crisis took away from them. But while enjoying the benefits of the situation think several steps ahead. Trends change. So before promoting, for example, trendy environmental friendliness (or geeky technology, or patriotism – underline as necessary) think: does it really fit the long-term strategy of your brand?