The Marketing Grades for 2009

Tough times bring out the best and worst in people -- and companies, too. I have always believed this, and my research into how companies have been striving to keep consumer trust and loyalty throughout the perils of the past year substantiated that belief. Trust and loyalty are two concepts tossed around liberally in marketing circles, but both demand more than simply cutting prices. Retaining them means understanding consumers' current mind-set and, in man cases, relieving their anxiety. Over the past year, many name-quality brands found their authenticity questioned as never before. As I've observed, some brands were able to weather the rough seas; others took on water. The methods that the former used were as creative and intriguing as they were varied, but all furnish marketers with lessons.Unsurprisingly or no, the company that led the pack was Walmart, and it did so with strategy that was counterintuitive for these times. The Bentonville behemoth increased its advertising spending this year by $300 million, which added to its success as a low-cost leader and disproved the axiom that the first thing that should go during a recession is advertising. Walmart demonstrated that increasing advertising during lean times -- even, or perhaps especially, when the competition is cutting back -- can improve market share and return on investment.Some brands didn't have to do much; they were smartly positioned for the times already. Take Kellogg's, which is already associated with a low-cost but hearty breakfast -- just the message for a populace eating more of its meals at home. Yet Kellogg's was hardly complacent. Its ad campaign capitalized on the tendency to retrench and draw comfort from hearth, home and family when tough times come to call. Its ads emphasized that cereal can cost just 50 cents a bowl (including milk), and the punch line said it all by promising "an excellent economic value and one of the best deals in nutrition."Other brands did one better than launching a new commercial by rolling out a new, recession-friendly product. Under assault from the penny-pinching masses, Procter & Gamble quietly introduced Tide Basic, which though it lacks some of the cleaning might of its iconic namesake also costs 20 percent less. Indeed, as less-expensive private-label brands steadily usurped market share, P&G began offering cheaper versions of several products including Charmin and Bounty. P&G also managed this without reducing product size or package count.For its part, California Pizza Kitchen, which has been selling its branded pizzas in supermarkets since 1998, began shipping new microwaveable Flatbread Melts sandwiches to supermarkets through a licensing arrangement with Kraft Foods. Last year, as the economy worsened, grocery sales for California Pizza Kitchen increased almost 20 percent to $159 million. Kraft pockets the bulk of the revenue and pays California Pizza Kitchen an annual royalty, which last year amounted to $6.6 million.Focusing on value proved to be another winning approach. Savvier casual-dining chains introduced all-you-can-eat promotions under the various monikers of "bottomless," "endless" and "never ending." Case in point: Darden Restaurants reprised its Endless Shrimp promo at Red Lobster for $15.99, while at its Italian concept, Olive Garden, the Never Ending Pasta Bowl lured the hungry masses with a head-turning $8.95 ticket.Meanwhile, still other brands retained their core product offerings but suggested affordable ways of using them. As imbibers abandon the bar for home consumption, liquor giant Diageo focused on in-store displays that tutored novices on how to mix cocktails. The company, whose brands include Johnnie Walker scotch and Guinness beer, is also developing displays that encourage drinkers to buy its products in liquor stores and supermarkets -- the implicit message being that the drink is the same, but drinking is cheaper at home. Central to this thinking is a scheme to introduce large refrigeration units that will permit stores to sell the beer cold. Diageo also plans to release premixed, bottled cocktails in the U.S. this year. The results are already in: Even as spirits sales sagged, Smirnoff's numbers grew. Credit Suisse analysts said the figures suggest that Diageo's campaign will help it get through the recession with a minimal loss of sales. Clearly, this is not an exhaustive list. But these and similar strategies demonstrated over the past year how brands can prosper in lean times by honing their marketing executions according to the psyche of the customer. As for those who stuck -- and continue to stick -- with the business-as-usual approach, they may soon be wondering where all of their customers have gone.Lerzan Aksoy is associate professor of marketing at Fordham University and the author of Why Loyalty Matters. Reach her at Aksoy@Fordham.edu.

Brand Marketing

The Marketing Grades for 2009

Lerzan Aksoy, Marketing Prof., Fordham U.

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Lerzan Aksoy, Marketing Prof., Fordham U.