Recession Is in the Eye of the Beholder

Don't Just Sit There -- Do Something

By Published on .

Bart Cleveland Bart Cleveland
I recently read a great article about the recession. It was based on research on how consumers deal with spending during recessions and how marketers should take advantage of consumer behavior while avoiding mistakes that can cost you brand image and profits.

Certainly ad agencies are sharing the pain their clients are enduring. But our particular pain is going beyond decreased income and spreading into the solidity of our relationships. Clients are desperate for answers and many are not in the right mind-set to consider solid advice. It is an agency's job to bring clarity to the situation and options to weather the storm. Agencies should be able to show clients that there is still potential for them to fare well and improve the strength of their brands.

It occurred to me that much of an advertiser's panic is due to agency lethargy. We can be as reactionary as our clients and that is not good for business. I realize that some companies are less able to do something about their circumstances. If consumers aren't spending, then there isn't a lot that can be done. Or is there? Helplessness is not nearly as prevalent as one might believe. While GM and Chrysler claim bankruptcy, companies like Hyundai roll out a "We'll help you" marketing plan. The product quality of these three companies is virtually the same. We saw other carmakers soon follow Hyundai's lead, but Hyundai reaped the brand-building opportunity by being first.

Another company that's been making smart marketing moves is McDonald's. While Starbucks is closing stores and dropping prices, McDonald's is rolling out McCafe in 70% of U.S. stores, each investing a hundred grand per store to sell a very comparable product as Starbucks does for considerably less. It is early but McDonald's appears to have struck gold. Deutsche Bank thought so when it downgraded Starbucks to "sell" from "hold."

The irony here is that Starbucks made everyone upgrade their coffee offerings. Now the competition seems to have figured out the quality part and returned fire on Starbucks by showing quality doesn't have to cost as much.

It seems apparent that the difference in these companies is how each viewed the present world as compared to the future one. Where Starbucks perhaps tried to remain on autopilot, McDonald's looked over the horizon. There is some luck involved: A nasty recession coinciding with the launch of McCafe certainly helped McDonald's, while hurting Starbucks. And it has been observed that the harder you work, the luckier you are. Perhaps McDonald's was working a little harder than Starbucks to be relevant to customers.

So it makes sense that we help our clients peer over the horizon in a proactive way, rather than reacting when times become difficult. Better yet, we agencies should be looking at ourselves. Are we relevant to our customer's needs or are we living in the past, using old marketing models rather than creating new ones designed for the future? Like the person who came up with Hyundai's proposal, we must know the circumstances facing the consumer. That person deserves a raise. Once the economy improves, of course.

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