Marketing in the time of Coronavirus
The new Marketing Week webinar series, The Lowdown, last week featured Professor Mark Ritson’s views on marketing in the time of Coronavirus.
Having heard the straight talking, Marketing Week columnist speak on numerous occasions at the Festival of Marketing event in London, I was keen to hear his advice on the current situation.
During the hour-long webinar, he discussed the impact of the coronavirus pandemic on marketing, the economic impact of the outbreak and how marketers need to adapt their approach and work smarter.
Ritson also looked at some of the brands that have adapted well to the situation, he took us through his predictions for the next couple of years and explained what brands can do to gain competitive advantage during the uncertain times ahead.
Ritson’s prediction for the coming period is that we will see three distinct stages:
1. COVID crisis (where we are now)
2. False Pneuma
3. Exogenous Recession
1. COVID Crisis: Marketing in the here and now – tactical challenges
The Crisis stage, however long it lasts, is a time where brands need to make quick tactical decisions to adapt to an ever-changing situation.
According to Ritson, brands tactical responses to the Coronavirus crisis fall into three groups:
Flex: Companies who are less affected and even seeing sales growth, such as the supermarkets.
Fix: Companies who need to change to survive, still going but shifting to different ways of doing business. For example, garden centres offering deliveries of plants.
Freeze: Companies who can’t do anything but batten down the hatches and try to keep their business afloat.
Ritson commented that a lot of brands are getting the crisis stage wrong – at a time of such seriousness he thinks brands have forgotten the key lesson that they are a small part of customers’ lives. According to Ritson, “the best thing marketers can do is make money for companies, value for customers and help companies to pay their employees.”
Ritson used the example of Corona as a brand who are handling the crisis particularly well, stating sometimes the best action is no action at all. He also highlighted Uber Eats, adapting its product by allowing independent restaurants to join without fees, paying them daily rather than weekly, doing cross-promotional work to consumers and altering the app to enable doorstep delivery without human contact.
When referencing these brands, he also reminded us that the basics of marketing have not changed, and Product, Price, Place, Promotion are still the levers you pull to attract consumers (Uber Eats using all four). However, he states the problem is that many marketers now only have control over one of these levers – Promotion, and because at the moment, it’s the only one they can reach, they have been pulling on it too much, which is the wrong approach for the crisis phase.
A tactical challenge but a strategic opportunity
Mark Ritson stressed that while the crisis phase of Covid-19 is still ongoing, marketers and businesses face the challenge of how to respond tactically during the coming months but urged them to use the time to think ahead.
“Covid-19 represents a tactical challenge but also a strategic opportunity,” said Ritson, saying the silver lining for marketers is the chance to formulate strategic plans and advised,
“you’re going to get a strategic time-out – a time to think, to ponder what your longer-term strategy should be. Make the most of this time.”
Marketing is essentially about the generation and communication of value and this is an opportunity to do things of great value to society, make money but create value for customers.
2. The False Pneuma
In ancient Greek, pneûma means breath or wind and Ritson used it to refer to the post-crisis ‘breath of fresh air’ which people believe will bring in a new era of humanity.
However, Ritson dismissed the idea that the pandemic will bring in a completely new way of life and that the marketing and media landscape will change completely. “It’s not going to change – the world will quickly go back to normal.”
He added: “People have been building their cognitive systems for millions of years; they’re not going to change because they can't go outside for a few months.”
Trends change, they move in and out and there will be some changes around ways of working and meeting, however Ritson predicts that small changes will be over stated massively.
Although not a direct comparison, he referred to the BSE outbreak, commenting, “ If you were living in England in 1996 you’d have sworn we’d never eat beef again – very quickly we forgot, and we returned to our previous behaviours.”
Ritson expects, we are likely to see a period of optimism after the Crisis stage ends, but this False Pneuma won’t last long, and soon unfortunately we are likely to find ourselves in a global recession.
3. Exogenous Recession
Ritson predicts that an exogenous recession (caused by external factors) is probably on its way and that during a recession, marketers have two weapons - their brand equity and advertising spend. Brand equity is crucial in a recession as when it hits, strong brands drop in value like everyone else, but it’s once the recovery starts that the strongest brands shine through.
Maintaining or even increasing advertising spend could be the best defence for brands during the expected forthcoming recession, according to Ritson, who pointed out that advertising has a long and short term impact, spend a pound now but see a return in the longer term. Although it will be a tough time, it could be the ultimate time to grow market share.
Ritson said: “Brands are not much defence when the shit hits the fan, but brands and brand equity are useful in the second phase where we begin to see, at the end of the recession, a move towards growth and normality.”
“The reason why you should maintain your advertising budget during a recession is that recessions are ultimately short lived. It will leave you in a stronger share position for many years afterwards, once things settle down.”
At a time when businesses will be looking to rein in spending, Ritson cautioned that marketers must stay in control of their budgets.
“I cannot stress the point enough that marketers must be in control of their own purse strings in the next 12 months – decreasing your advertising budget during the recession ahead will not hurt your sales yet but you will pay a price for every year after that recession. Maintaining your budget through this recession and seeing the long-term picture will grow your market share significantly as we come out of it."
Using the data from lots of studies on recessions in the past, Ritson made the point that a recession is a great opportunity for brands to grow market share, and reminded us that marketing is an investment in the business not a cost.
He concluded by advising us to be smart and bold enough to increase spend in order to benefit in the long term.
Although these are unprecedented times, and it’s very difficult to predict the future, this really was an insightful session, whether operating in a business to business or business to consumer market.