Marketing and the Credit Crunch Continued

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What marketing strategies have firms adopted during the Credit Crunch?

Marketing strategy has played a pivotal role during previous recessions and the current credit crunch. In order to deal with consumers spending less, reduced profit margins and an extremely competitive marketplace, businesses have relied heavily on marketing strategies. Common marketing strategies are summarised below.

Pricing:

The price of a product or service is important to consumers during this period of reduced income and reduced credit. Businesses have responded to this in a variety of ways.

Supermarkets for example introduced cheaper ranges or emphasise the low price of some of their products. In September 2008 Tesco introduced a price marketing campaign which included the strap line “Britain’s Biggest Discounter” and in the latter months of 2008 Aldi’s strap line of “spend a little live a lot” emerged in their marketing activities.

In addition to reduced prices the BOGOF (buy one get one free) offer moved away from the traditional boundaries of retail stores and into other businesses such as car manufacturers. In response to falling demand from consumers (holding onto existing cars due to redundancy, reduced income or fear of losing their jobs) some car dealers and car companies have been offering BOGOFS on brand new cars!!

Another common strategy is to add one day sales to the traditional retail shop sale calendar. During the one day sales most products in store are reduced by a certain percentage e.g. 20% of the current price. This strategy has proved very successful in the UK for companies like Marks and Spencers and Debenhams.

Retailers that offer the correct mix of price for perceived quality are doing well in the current economic climate. Primark and Peacocks (clothing retailers) have done very well because they have managed to control costs and pass the savings onto their consumer through pricing. Pounds store and non clothing discount stores are also expanding as consumers move away from their usual choice of retailer in search of cheaper options.

Relationship Marketing Strategies:

Whilst price is crucial in attracting new customers in the current economic climate, good customer service is essential for customer retention. For example UK store John Lewis has faired well during the credit crunch, excellent customer service promoted through a good staff training programme has ensured that customers still continue to shop there. Prioritising customer service will increase customer loyalty and not only support a business during recessions but also reap long-term awards as customers continue to shop with those businesses once the credit crunch is over and consumer spending ability/disposable income has increased.

Rationalisation:

Many businesses are cutting back on store numbers and staff in an attempt to reduce costs. For example in January 2009 UK store Zavvi has shut 22 stores so that they can pay back debt and keep operational costs low. Although not a marketing strategy, rationalisation is an important strategy if a firm wants to survive during difficult times, and focus its effort on surviving.

From Bricks and Mortar to Clicks and Mortar:

In addition to access to businesses through the telephone and premises, clients expect an internet website. However some stores have taken this a step further by transferring their whole business onto the internet in a bid to reduced costs in difficult business conditions. For example UK stores Dixon has moved from the high street and is now only available online. In today’s internet age, websites are a crucial way to reach customers as demonstrated by reports showing a decline in high street spending and increases in online spending.

An online business has many benefits including the ability to action amendments in real time and through lower costs than implementing change across “bricks and mortar” businesses. However from a marketing perspective a website business has its own challenges. In addition to the websites appearance and ease of navigation for the consumer “surfing” through the website, the site needs to be search engine friendly. An online business does not have the luxury of the consumer locating them (often inadvertently) whilst walking down the high street. If the website isn’t search engine friendly the site is likely to be visited only by consumers who know the website’s address. With the high level of competition in the online business world, a business is unlikely to survive without good search engine ranking or effective marketing strategies.

Firms are placing more emphasis on website marketing to maximise search engine listing and because their marketing campaigns can be targeted more efficiently through website marketing than conventional forms of marketing. Google AdWords is a popular service offered by Google where firms can pay to make sure their services are ranked in the top ten search listing when certain key words are searched for.

Public Relations:

Firms have to be economical with their marketing spend, public relations (PR) is becoming more popular during the credit crunch. Public relations is the process of getting the company brand into the media for little or no cost. This is becoming more popular as firms tighten their marketing budgets. Richard Branson with his Virgin brand is a company that uses this strategy regularly, from crossing the Atlantic in record time using the Virgin Challenger, to bungee jumping off a building.

How have governments supported firms with marketing strategy?

In Europe with the car demand falling, governments have stepped in and offered consumers cash for trading in their old car of 10 years or more, if a new one is purchased. In Germany this has increased demand by 45%, in the UK a similar scheme backed my the government has been very popular. In the UK 29796 cars have been sold to date from the scrappage scheme, while 87000 orders have been placed for June.

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