The document discusses how companies can adapt their marketing strategies during economic downturns. It recommends setting marketing budgets that anticipate economic cycles, cutting spending on brand building during downturns while maintaining spending on profitable promotions, and increasing brand spending during upturns. It also provides checklists to help companies prioritize marketing research that focuses on sales and customer insights over soft brand metrics, to better navigate the economic cycle from downturn to upturn.

1. RIDING OUT THE
ECONOMIC CYCLE
- Setting the new agenda for
marketing and market research
Professor Robert Shaw
www.Demand-Chain.com
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2. Agenda
1. Global Recession, cycles and uncertainties
2. Downward and upward pressures on marketing spend
3. Riding out the cycle from downturn to upturn
4. Return on Ideas: an action plan for marketing and marketing research
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3. The Global recession
Outlook
• Worst global economic crisis since the 1930s
• Worst financial crisis ever
• Uncertainty
• Complete collapse of confidence throughout the
industrialised world
• Significant risks of further financial meltdown
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4. The Global recession
World economic growth
Annual % change
7%
6%
5%
4%
3%
2%
?
1%
0%
71
73
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
-1%
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
Source: Bryan Finn, Business Economics
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5. The Global recession
Origins of the crisis
• Cheap credit
• Financial innovation
• Lack of transparency
• Corporate greed
• Business ethics
• Regulatory failure
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6. The Global recession
Financial derivatives
Derivatives: A $700+ Trillion Bubble Waiting to Burst?
$ billions
?
Source: Bryan Finn, Business Economics
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7. The Global recession
Imbalances: Surplus countries
$ billion 2008 Bryan Finn, Business Economics
Source:
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8. The Global recession
Imbalances: Deficit countries
$ billion 2008
Source: Bryan Finn, Business Economics
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9. Agenda
1. Global Recession, cycles and uncertainties
2. Downward and upward pressures on marketing spend
3. Riding out the cycle from downturn to upturn
4. Return on Ideas: an action plan for marketing and marketing research
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10. How it affects Marketing
The Marketing cycle
Source: Bryan Finn, Business Economics
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11. How it affects Marketing
Advertising to Sales ratio
Source: Bryan Finn, Business Economics
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12. How it affects Marketing
The Profit cycle
Source: Bryan Finn, Business Economics
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13. How it affects Marketing
Advertising to Profit ratio
?
Source: Bryan Finn, Business Economics
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14. Downward pressures on spend
• Revenues reduce
– Implies lower spends for the same Spend to Sales ratio
• Customers become more price sensitive
– Implies margins and Gross Profits reduce
– Implies lower spends for the same Spend to Gross
Profit ratio
• Media costs reduce
– Implies less spend required to obtain the same impact
(GRPs)
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15. Upward pressures on spend
• Greater switching in the market place
– Customers are less loyal and more opportunistic
– This is a chance to attract new trial purchasers
– But it will need new marketing spend
• But, in the short-term, the balance of spend may change:
– Away from brand building
– Towards “Call to action” & “Point–of-sale” messages
– Especially to communicate discounting, promotional
offers, New Product Developments
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16. Agenda
1. Global Recession, cycles and uncertainties
2. Downward and upward pressures on marketing spend
3. Riding out the cycle from downturn to upturn
4. Return on Ideas: an action plan for marketing and marketing research
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17. Riding out the cycle
Summary of spend pressures
Reduced Lower media
revenues costs
s
ure
s
s
pre New trial
d
r
Reduced wa s
ure purchases
n s
ow
profits
re s
D
dp
r
a
pw
U
Discount, More
promote, switching –
NPD less loyalty
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18. Riding out the cycle
Peak
•Plan for the downswing
•Evaluate priorities
•Set optimum budgets for the cycle
•Beware being locked into high
media rates
Downswing
•Cut spending on brand Upswing
•Maintain spending on profitable •Increase spending on brand
short-term marketing •Maintain spending on profitable
short-term marketing
Trough
•Plan for the upswing
•Evaluate priorities
•Set optimum budgets for the cycle
•Take advantage of low media rates
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19. Agenda
1. Global Recession, cycles and uncertainties
2. Downward and upward pressures on marketing spend
3. Riding out the cycle from downturn to upturn
4. Return on Ideas: an action plan for marketing and marketing research
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20. Professional bodies united over need for action
- Market Research will provide vital strategic answers
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21. So is this business as usual?
• NO
• Different mix of research answering new questions
• Clients and research firms need to work together defining
this new research agenda
• Return on Ideas report provides checklists to help define
the new research agenda
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22. Return on Ideas report
– Setting the New Agenda for Market Research
• More than 100 organizations talked candidly
about what works effectively or not
• Some are much better at demonstrating and
improving marketing’s value than others
• Best cases marketing is the beating heart of
growth and the driver of performance
ACTIONABLE RECOMMENDATIONS
• Key questions for discussion
• Checklists
• Case examples
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23. Return On Ideas
– the infinity model
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24. An Action Plan for Marketing Research
Specific action points
• Imagine
– Spend for the next phase of the economic cycle
– Where to cut spend and where to increase it
– New mix of consumer spending
– Product innovations and portfolio realignment
• Predict
– Demand, Revenue, Profitability
– Taking into account best estimates for the economy
• Demonstrate
– What has worked, what has not worked
– By type of spend
– By product and region
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25. IMAGINATION CHECKLIST
• Can we really afford NEW STUFF?
• Are we hunting for AFFORDABLE
ALTERNATIVES? New mix of
Research
• Are we doing TOO MANY marketing will help
activities or TOO FEW? provide
vital
• Do we have the right MIX of affordable
answers
marketing activities and ideas?
• Are we PAYING TOO MUCH for Ideas
and have we sought cheaper sources?
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26. PREDICTION CHECKLIST
• Do we insist on rigorous predictions of the
financial contributions of all new
marketing ideas?
New mix of
• When we predict, do we do enough:
Research
– Historical analysis will help
provide
– Testing and experimenting?
vital
– Observing customers? answers
– Searching for analogies with existing
situations to provide clues about how
the future will unfold?
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27. DEMONSTRATION CHECKLIST
• Do we insist on post-implementation
reviews of every marketing prediction?
• Are we using good practice analysis New mix of
methods to link marketing activity to Research
customer activity? will help
provide
• Do we have financial models linking
vital
customer activity to sales and profit
answers
figures?
• Do we investigate cost-efficiency and
drive down waste, scrap and re-work?
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28. NEW RESEARCH PRIORITIES FOR RIDING DOWNWAVE
MORE LESS
• Hard Edged Sales & Churn Analysis • Soft Insights
• Depth Research on Consumption • Brand Tracking Studies
• Pricing and promotions studies • Image and Awareness
• Econometric Modelling • Brand Positioning Research
• Customer Acquisition Cost Analysis • Nice-to-have studies
• Media Cost Optimisation
• Conjoint and Product Choice Models
NOT: cutting costs or quality
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29. PUTTING IT INTO PRACTICE
• Keep calm and carry on researching
• Take the time necessary to define the new agenda –
don’t let finance force it on you
• Use the Return on Ideas checklists to guide discussions
between clients and research firms on the new priorities
• Run workshops to define new priorities for research
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30. KEEP CALM AND CARRY ON RESEARCHING
IT’S FREE
DOWNLOAD IT FROM
www.Demand-Chain.com
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