Recession: A Time to Innovate | SalesAndMarketing.com
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Recession: A Time to Innovate

Everyone has talked about the terrible recession we're mired in. But can you find a positive term in this dreaded, negative term? Actually, this word does have an underlying positivity. It transforms into "recess is on." Recession is a time to take a "recess" from the conventional. It is a time to get the gray matter thinking. This is a time of umpteen numbers of opportunities. It is a time to be innovative. It's time to be cautiously aggressive. The use of the terms, "cautious" and "aggressive" in the same sentence may sound paradoxical, but this paradox is the main essence marketers need to master to tide successfully over the adverse economic scenario, and emerge leaders when the upturn happens.

The cautiousness in a marketing endeavor is required at the strategic level, and aggressiveness at the tactical level of implementation.

At the strategic level, recession calls for more than a generic knee-jerk reflex of cutting on marketing budgets and cutting down on brand promotion. It calls for a systemic review and drill down approach in formulating a marketing strategy. The consumer psychology has undergone a sea change during this recessionary period. Hence, the first step in innovation is identifying a new way of segmenting, targeting, and positioning of the company's product. Recession is a time to depart from the conventional way of segmenting based on demography and geography to one that is more comprehensive and consumer-centric. Based on consumer psychology, the following segmentation model may be structured for segmenting the market at the time of recession.

For the consumer psychology segmentation table, click here.

Marketers' strategic intent requires innovation in terms of the consumer psychology segmentation model to place their product into the most appropriate category. They then need to assign the right resources and methods, to target and position their products into the minds of consumers.

Horlicks, a nutritional drink for children, has been one of GSK's most popular products. Traditionally, it has been regarded and positioned as a "pleasure" product in the consumer's mind, and has been specifically aimed at the "penny-wise and buoyant" target audience. However, the pleasure product market for these two segments was severely hit during the current economic crisis, as people belonging to these segments look to cut their spending budgets and concentrate only on "necessities."

Thus, GSK developed a marketing strategy based on the above segmentation, and positioned Horlicks as a "necessity" rather than as a "pleasure" product. It achieved this by positioning its product as an essential component of the daily requirements of every child's nutrition. This was based on the fact that no parent would compromise their child’s requirements. Appropriate advertisements highlighting this strategy backed the product.

It is said "Necessity is the mother of innovation." Answering the tradeoff between product visibility and tight marketing budgets is the prime necessity of marketers. This has led to marketers designing innovative ways of marketing in a recession. One of the best examples of this, is the implementation of affiliate marketing by the Indian aviation company, Jet Airways. The significance of this step by Jet Airways becomes even more evident when we consider points unique to the Indian Aviation industry.

For the table comparing aviation status in India, click here.

For the marketers' tradeoff diagram, click here.

Jet Airways is in the service-oriented business, with its consumer profile ranging from the buoyant class to the blithe class. Its affiliate marketing technique mainly was targeted toward the blithe and in-the-money class, who faced the impact of recession the most. This is because the service offered by Jet Airways is always categorized by this segment of population as a superfluous expenditure. Affiliate marketing gave Jet Airways an opportunity to tap into a varied and expanded customer base in a cost-effective manner.

Affiliate marketing is a digital marketing technique akin to creating a virtual field force. However, this virtual field force is paid only when it creates sales for the source company (Jet Airways). It is an application of crowd sourcing.

Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, e-mail marketing, and, in some sense, display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.

Click here for a diagram displaying the features of Jet Airways’s affiliate marketing.

Have you heard about guerilla tactics? Marketers have adopted guerilla marketing to defeat the recession. Guerilla marketing places ads in unexpected places, in the most bizarre manner possible. The successful implementation of this technique was demonstrated by a luxury chain of hotels named Morgan Hotels. They mostly serve the blithe class, with their services being categorized as superfluous. The successful implementation of Morgan's "F@#k the Recession" campaign with the help of guerilla marketing, resulted in full house for its New Year Bash in 2008.

Conclusion:

The current recession has left a heavy bruise on the entire world market, a bruise that will take its time to heal. As suggested by the consumer segmentation model, consumer psychology undergoes a considerable shift, and, thus, will require innovative marketing strategies to identify the right market for the right product. But using the most innovative marketing ways to promote brands and increase product life in the market and in the mind of the consumer, is probably the best way to come out triumphant, not only during, but more importantly after the recession.

Students consisting of Rohit M Bagri, Dhaval Dave, Utkarsh Gandhi, Darshan Mehta, and Anand Maheshwari are in their fourth year of the MBA program (Pharmacy Technology) at the School of Pharmacy and Technology Management (SPTM) in NMIMS (Deemed University), Mumbai (INDIA). Dr. Amit K. Sinha is associate professor at the School of Business Management at NMIMS.