calamity: marketing your way out of this recession
DESCRIPTION
This presentation was given at The Economist Conference, March 17th, 2009. It discusses the reality of the Brand Bubble and how to build brand value in these challenging economic times.TRANSCRIPT
CALAMITYpresented at the 7th Americas Marketing ForumThe Economist and Young & Rubicam Brands17-18 March 2009St Regis Hotel, San Francisco, California
please use with permission only, just ask, we’re happy to grant
John Gerzema
CALAMITY:MARKETING YOUR WAY OUT OF THIS RECESSION
SOURCE: CONDE NASTE PORTFOLIO, JANUARY 2009Copyright John Gerzema/Young & Rubicam
Copyright John Gerzema/Young & Rubicam
RESULTS 1–10 OF ABOUT22,200,000 FOR RECESSIONAND MARKETING
2
FUNDAMENTAL SOCIETAL SHIFTFROM A CREDIT TO A CONFIDENCE CRISIS
SEA CHANGES IN CONSUMER BEHAVIORS
COMPANIES MUST CHANGE HOW THEY CONNECT WITH CONSUMER
Copyright John Gerzema/Young & Rubicam
MANAGING FOR AN UPTURN
SUPERIOR CASH FLOW AND SUSTAINABLE GROWTHALIGN BRAND AND BUSINESS STRATEGYACQUIRE TALENT AND QUALITYDO MORE WITH LESSSHARPEN MESSAGING AND ROI
RETURN TO YOUR CORE
FACE YOUR CUSTOMER
3 Source: Y&R Strategy, HBR: Anthony T Jan, John Quelch Copyright John Gerzema/Young & Rubicam
HALF OF ALL GLOBAL WEALTHHAS EVAPORATED
$36 TRILLION DOLLAR LOSS WORLDWIDES&P 500 DECLINED 64.4% FROM 200045% OF AMERICAN WEALTH FROM LOSS OF EQUITY AND HOUSING VALUESAVERAGE RECESSION IS 6-12 MONTHS. THIS IS A MARATHON
5 Source: Bloomberg, Iconoculture March 2009 Copyright John Gerzema/Young & Rubicam
UNEMPLOYMENT
HOUSING VALUES
EQUITY MARKETS
INTEREST RATES ?
COMMODITY PRICES
IN(STAG)FLATION ?
BAILOUT ?
THE NEW FEAR ECONOMY
6
NATIONAL DEBT
DETROIT
CURRENCY VALUATION ?
PROTECTIONISM ?
BANK LENDING
FACTORY & HOUSING STARTS
CREDIT CARD EXPOSURE
CONSUMER CONFIDENCE}
Copyright John Gerzema/Young & Rubicam
THE LARGEST U.S. BUDGET DEFICIT POST WWII
8 Source: Board of Governors of the Federal Reserve System Copyright John Gerzema/Young & Rubicam
VISUALIZING THE BAILOUT
9 Source: The Atlantic Copyright John Gerzema/Young & Rubicam
HOUSING VALUES CONTINUE TO DECLINE ACROSS THE U.S.
10 Source: “Irrational Exuberance”, 2nd edition, 2006, by Robert J. Schiller Copyright John Gerzema/Young & Rubicam
11
A GROWING REALITY:
19
A MORTGAGE IS FOREVER
Source: Copyright John Gerzema/Young & Rubicam
AMERICAN’S HOMES NO LONGER PERSONAL LINES OF CREDIT
11 Source:Us Department of Housing and Labor, 2009 Copyright John Gerzema/Young & Rubicam
WHILE THE CREDIT CRISIS HAS HALTED HOUSING STARTS
12 Source: www.calculatedriskblog.com Copyright John Gerzema/Young & Rubicam
INTO THE GREAT WIDE OPEN
UNEMPLOYMENT 8.1%; HIGHEST IN TWENTY-FIVE YEARSTHIRD STRAIGHT MONTH OF 600,000 JOBS LOST
4 Copyright John Gerzema/Young & Rubicam
THIS PERIOD MARKED BY MOST JOB LOSSES, WEAKEST RECOVERY
13 Source: Change in Nonfarm Pay rolls, Reported Monthly, Bureau of Labor Statistics, U.S Dept of Labor Copyright John Gerzema/Young & Rubicam
15
MILLIONAIRES HAVE LOST ONE-THIRD OF THEIR NET WORTH.
Source:
AN EQUAL OPPORTUNITY RECESSION
Copyright John Gerzema/Young & Rubicam
AFFLUENT MORTGAGE RATE DEFAULTS
16 Source: LPS Applied Analytics Copyright John Gerzema/Young & Rubicam
THE ONLY CERTAINTY IS UNCERTAINTY
22 Source: Copyright John Gerzema/Young & Rubicam
18 Source:New York Times
ONE STORY IN THE AMERICAN NIGHTMARE
Copyright John Gerzema/Young & Rubicam
MASLOW UPENDED: MARKETING MUST MOVE FROM PASSION TO COMPASSION
17 Source: American Progress.org February 2009
2007
2009
Copyright John Gerzema/Young & Rubicam
2123
TECTONIC SHIFTS IN CONSUMERISM FROM THE CULTURAL LOSS OF TRUST
Copyright John Gerzema/Young & Rubicam
2433
FAILURE OF REGULATORS
Copyright John Gerzema/Young & Rubicam
25
TAXPAYERS ARE NOW SHAREHOLDERS
30Copyright John Gerzema/Young & Rubicam
26
DECAYING INFRASTRUCTURE
Copyright John Gerzema/Young & Rubicam
2728
LACK OF PERMANENCE
Copyright John Gerzema/Young & Rubicam
28Copyright John Gerzema/Young & Rubicam
29Copyright John Gerzema/Young & Rubicam
30
Source: Millward Brown Optimor 2007
Copyright John Gerzema/Young & Rubicam
31
THE 250 MOST VALUABLEGLOBAL BRANDS ARE$2.197 TRILLION DOLLARSWHICH EXCEEDS THE GDPOF FRANCE
Copyright John Gerzema/Young & Rubicam
32
BRAND ESTEEM ANDREGARD IS DOWN 12%
BRAND AWARENESS HASDECLINED BY 20%
PERCEPTIONS OF BRANDQUALITY HAS ERODED 24%
TRUST IN BRANDS HAS DECLINED BY 50%
Copyright John Gerzema/Young & Rubicam
TRUST IS DESIRABLE, BUT IT HASN’TDIFFERENTIATED
35 Source:BrandAsset Valuator 1993-2007 Copyright John Gerzema/Young & Rubicam
Base: BAV USA Q4 2007, Q4 2008; All Adults
IN THE PAST QUARTER, A ‘TRUST VIRUS’ INFECTED MANY CATEGORIES
36Copyright John Gerzema/Young & Rubicam
“I SCREWED UP”37 Source: Barack Obama Press Conference, February 2009 Copyright John Gerzema/Young & Rubicam
CONSUMERS ARE BEGINNINGTO OWN THEIR PROBLEMS
38 Source: Time Magazine Copyright John Gerzema/Young & Rubicam
SAVINGS RATE HAS RISEN IN PAST FIVE CONSECUTIVE MONTHS
40 Source: U.S. Department of Commerce: Bureau of Economic Analysis Copyright John Gerzema/Young & Rubicam
Q4 SPENDING FELL 3.7% FROM Q3 - STEEPEST DECLINE IN 62 YEARS. $3 TRILLION IN SPENDING STOPPED IN Q4, WAS SUSTAINING US GDP
41 Source: www.calculatedriskblog.com Copyright John Gerzema/Young & Rubicam
3939
CREATE COMPETITIVE ADVANTAGE NOW
EVERY RECESSION ENDS...EVENTUALLY
CONSUMERS MOVING FROM ANXIETY TO ACTION
HOW YOU ACT NOW WILL SHAPE YOUR FUTURE PERFORMANCE
Copyright John Gerzema/Young & Rubicam
44
THE NEW RULES OF ‘POST-CRISIS CONSUMERISM’
NEWCONSUMER BEHAVIORS
NEW CULTURAL VALUES
NEWMANAGEMENT PRINCIPLES
Copyright John Gerzema/Young & Rubicam
41
POST-CRISIS CONSUMERISM RULE #1
CULTURAL VALUE = INDESTRUCTIBLE SPIRIT
CONSUMER STRATEGY = DURABLE LIVING
MANAGEMENT = BRAND THAT PRINCIPLE LASTS
Copyright John Gerzema/Young & Rubicam
DURABLE LIVING
•CONSUMERS ARE DRIVING AND DINING OUT LESS
•USE OF COUPONS IS UP 300%
•PRIVATE LABEL UP 12%
•“SWISHING” PARTIES TO EXCHANGE CLOTHING
•REPAIR FOR SHOES, CLOTHES AND CARS IS UP 22%
•AMERICANS SPENDING IN ‘RETURN TO HOME’
•68% OF AMERICANS NOW CARRY A LIBRARY CARD
•SPICES BEING USED IN LIEU OF EXPENSIVE FOODS
•VALUE RECIPES GROWING MORE POPULAR
•CRAIGSLIST POSTING 100% INCREASE IN TRAFFIC
46
CULTURAL VALUE = INDESTRUCTIBLE SPIRITCONSUMER BEHAVIOR = DURABLE LIVING
MANAGEMENT PRINCIPLE = BRAND THAT LASTS
Copyright John Gerzema/Young & Rubicam
43
BRAND THAT LASTSCULTURAL VALUE = INDESTRUCTIBLE SPIRIT
CONSUMER BEHAVIOR = DURABLE LIVINGMANAGEMENT PRINCIPLE = BRAND THAT LASTS
Copyright John Gerzema/Young & Rubicam
44
POST-CRISIS CONSUMERISM RULE #2
CULTURAL VALUE = ETHICS AND FAIR PLAY
CONSUMER STRATEGY = EMPATHY AND RESPECT
MANAGEMENT = VALUE AND PRINCIPLE VALUES
Copyright John Gerzema/Young & Rubicam
•SEEKING BRANDS THAT SUPPORT SIMILAR BELIEFS AND CAUSES
•BE TRANSPARENT (WHITEHOUSE.GOV)
•USER REVOLT AND RESPONSE (FACEBOOK)
•ENCOURAGE CONSUMER PROBLEM SOLVIN (LEGO)
•CONSUMERS EXPECT YOU TO Don’t stop believing
•GOING GRASS ROOTS AND GREEN (TRUE NORTH)
•CULTURAL SHIFT TOWARD SCORNING GREED
•CONSUMERS EXPECT TO BE REASSURED DURING A CRISIS
•ENRICH COMMUNITY TO CLOSE SALE
50
CULTURAL VALUE = ETHICS AND FAIR PLAYCONSUMER BEHAVIOR EMPATHY AND RESPECT
MANAGEMENT PRINCIPLE = VALUE AND VALUES
Copyright John Gerzema/Young & Rubicam
EMPATHY AND RESPECT
46
VALUE AND VALUES
Copyright John Gerzema/Young & Rubicam
CULTURAL VALUE = ETHICS AND FAIR PLAYCONSUMER BEHAVIOR EMPATHY AND RESPECT
MANAGEMENT PRINCIPLE = VALUE AND VALUES
47
POST-CRISIS CONSUMERISM RULE #3
CULTURAL VALUE = LIQUID LIFE
CONSUMER STRATEGY = DÉCLASSÉ CONSUMPTION
MANAGEMENT = DOLLARS AND PRINCIPLE SENSE
Copyright John Gerzema/Young & Rubicam
48
DÉCLASSÉ CONSUMPTIONCULTURAL VALUE=LIQUID LIFE
CONSUMER BEHAVIOR = DÉCLASSÉ CONSUMPTIONMANAGEMENT PRINCIPLE= DOLLARS AND SENSE
Copyright John Gerzema/Young & Rubicam
49
DOLLARS AND SENSECULTURAL VALUE=LIQUID LIFE
CONSUMER BEHAVIOR = DÉCLASSÉ CONSUMPTIONMANAGEMENT PRINCIPLE= DOLLARS AND SENSE
Copyright John Gerzema/Young & Rubicam
50
POST-CRISIS CONSUMERISM RULE #4
CULTURAL VALUE = RETURN TO THE FOLD
CONSUMER STRATEGY = COOPERATIVE CONSUMERISM
MANAGEMENT = COMMUNITY PRINCIPLE ORGANIZER
Copyright John Gerzema/Young & Rubicam
51
COOPERATIVE CONSUMERISM
CULTURAL VALUE = RETURN TO THE FOLDCONSUMER BEHAVIOR = COOPERATIVE CONSUMERISM
MANAGEMENT PRINCIPLE= COMMUNITY ORGANIZER
Copyright John Gerzema/Young & Rubicam
52
COMMUNITY ORGANIZERCULTURAL VALUE = RETURN TO THE FOLD
CONSUMER BEHAVIOR = COOPERATIVE CONSUMERISMMANAGEMENT PRINCIPLE= COMMUNITY ORGANIZER
53
THE OPPORTUNISTIC CEO: BRAND MANAGER IN CHIEF
Copyright John Gerzema/Young & Rubicam
54
MARKETING IS NOT A COST, BUT A FIDUCIARY RESPONSIBILITYTO SHAREHOLDERS
Copyright John Gerzema/Young & Rubicam
65
BAD COMPANIES ARE DESTROYED BY CRISIS. GOOD COMPANIES SURVIVE THEM. GREAT COMPANIES ARE IMPROVED BY THEM.” —ANDY GROVE
THE CHINESE CHARACTER FOR CRISIS ALSO MEANS OPPORTUNITY
Copyright John Gerzema/Young & Rubicam
56
Source: Gerzema, Jacobson, Lebar, Mizik, Stanford and Poor’s COMPUSTAT over 1988-2003, University of Chicago’s Center for Research in Security Prices from 1993-2003. BAV 1993-2004
CONSUMERS REWARDBRANDS WITH ENERGIZEDDIFFERENTIATION
Copyright John Gerzema/Young & Rubicam
57Copyright John Gerzema/Young & Rubicam
58