Corporate attitude in downturn largely becomes pessimistic. Restructuring, attrition, voluntary retirements, outsourcingand sale of business, control of expenses and such other ‘Corporate Terms’ are synonymous with dismal outlook of business.

A very important question must be raised here: will such behavior help companies come out with flying colors and will theyemerge as winners? What will be their post recession ‘customer value’ perception and delivery with the gap and void inthe continuity of their positioning efforts and operational reinforcement of strategic initiatives? Will these be hindered andif yes, with what intensity?

According to a research, companies that only cut costs heavily during a downturn don’t flourish after it ends. 85% of marketleaders get dislodged during a recession. Research further shows that 9% of companies come out of a recession strongerthan ever.

In this background when consumers and the society as a whole are looking for ‘enablers’ in their difficult times, it will bequite pertinent to examine factors of upturn in downturn by looking into the possibility and benchmark of strategicmarketing efforts. Before we do that, let’s review what actually happens in panic:

COVER STORY

How Strategic Is Your Marketing?By M. Ekhlaque Ahmed

1 – Cost Cutting:Organizations cutcost across theboard. We haveseen in manycompanies evenban or sharpreduction intravelling budgetof marketing and sales staff. Othercommon area which is hit quitefrequently is advertising andcommunication expenses. On moregeneral terms, impeding salary increase,employee promotions, cutting othertrivial expenses also are in the cost cutlist.

2 – Restructuring:We also commonly observe‘Restructuring’ at the heart of defensiveattitude of many good companies.Cutting jobs, closing business units,

closing or sellingbusi-nesses havebeen alsocommon inrecessions;though may bejustified ongrounds ofshrinking revenue or profits. Even globalcompanies like IBM, Sony, Philips etc.,are in this list of embarking arestructuring program in economicdownturn by cutting several thousandsof jobs.

3 – Curbing Strategic Initiative:Another dangerous move in sluggishsales is the curb on strategic initiatives.These are postponing investment in newopportunities, new technologies, newproducts, new geographic expansion,new channel etc. Corporate managerswill justify all such measures by putting

one bold argument: “We need to putour income statement and balancesheet right to give positive messages toall our stakeholders”. Consumer centricand employee caring companies needto remember that in downturn, theyhave a greater obligation towards thesestakeholders. And if you opt not to standwith consumers’, they may not forgetthis. They will remember those betterwho stand with them and for them.Other pertinent question is: Do not wehave better strategic ways to upturn indownturn? We suggest the following 6ways:

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1 – Reinvent marketing both as afunction and as a philosophy:Marketing is largely being concept-ualized as a philosophy and a centralfunction connecting the organization asa whole to its most importantstakeholder i.e. customer. One strategicdefinition of marketing states:“Marketing is first and foremost themindset of ‘Business Leaders’.”

Success and failure stories of manyglobal companies connect to this singleline which is so true. It reflects back toIBM’s failing attitude in 1990:”Computer machine cannot be small.”And speaks louder for the success ofCannon: “Beat Xerox”, South WestAirline’s ambitious positioning: “Air travelat the cost of car or bus”, decision anddetermination of Kimberly Clark’s CEO,Smith: “to succeed with branding andinvest in brands like Huggies andKleenex selling the mill it owned (futurelies in branding to compete againstcompanies like P&G”). Taking examplesfrom Pakistan, revitalization successstory of Pakistan State Oil (PSO) showsthe ‘determination to win’ of its leadersbefore anything operational. Operationalchanges are continuously in the ‘changeagenda’ for PIA and Pakistan Railwaysbut not meeting with the intended yield(quantitative and qualitative). Theseexamples demonstrate it all.

When your cost goes up under thepressure of external factors (forced bygovernment or forces beyond yourcontrol) what do you do? Increase theprice next morning saying this is not ourfault? Or as an 80 year old ChiefExecutive from a local company in

Pakistan once told me: I go to my factoryand have continuous brain stormingwith my technical team, includingworkers (town-meeting) and do notcome back before getting a commitmentand a plan to save 10 paisa per unit ofproduct (produces and sells 100 millionpcs annually). Clean all dusts under thecarpet and save the consumer from theultimate pain. Because saving themfrom the pain will help our brand, aconnectivity which will last much longerperhaps for good.

Organizations need to begin withmindset, from which flows an action list.This needs large scale correction to facethe ongoing new challenges andespecially in difficult times to cover thefollowing:

Determination to win

Mindset to take crisis as anopportunity

Replace negativity with positivity(creativity)

No charisma, courage to takebalanced and bold decisions

2 – Check the way you segment yourcustomers to find new opportunity toboost your sales and profitability:Lot of new market opportunities lie inthe way companies segment theirmarkets/customer/consumer. It drivesyour product, service and valueinnovation. In our ten years ofresearching the marketing practices ofmultinational and local companies inPakistan, we found that oursegmentation is largely based onconventional methods and is not much

productive to discover opportunitiesaround emerging consumer needs,latent or known. For instance, it is notuncommon in our cellular phoneindustry to segment customers asprepaid and post paid. In milk it is loosemilk user, packaged milk users andpowder milk. This approach, however,risks alienating customers in two ways:customers who happen to be in morethan one segment get bombarded withmultiple uncoordinated offers. And bigspenders in one product category whostart buying in a second category arejustifiably miffed when they are treatedas strangers.

Consumers are also studied based ondemographics such as income, gender,rural/urban, age group etc., but itsgenerally not useful unless customersneeds happen to align neatly withdemographic characteristics. Lego, thebrick toy manufacturers whilesegmenting based on age also considerswhat users do with their bricks. In schoolkids who focus on building when theyplay will likely want plain bricks, butthose who focus on role playing usuallygravitate toward themed sets. In hisarticle “New Criteria for Segmentation”Daniel Yankelovich argues based onresearch for various consumer andindustrial products that demographicscannot lead to right customer insightsand suggests that seven non-demographic segmentations arepossible:

1. How buyers define value

2. How susceptible they are tochanging their minds

3. How they define product’s purpose

4. What kind of product styling theyprefer

5. How they change view andtechnological progress

6. What individualized needs theywant to fulfill and

7. How confident they are in theirability to choose among differentofferings.

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RBC Royal bank of Canada dividesindividual clients into five strategic lifestage segments:

1. Youth (younger than 18,)

2. Getting started (between 18-35going through first experiences:graduation, first credit card, firstcar, first loan, marriage, first child)

3. Builders: (between 35 to 50 in theirpeak earning years, borrow morethan they invest as they buildfamilies and careers)

4. Accumulators (between 50 and 60,worried about saving for retirementand investing wisely)

5. Preservers (older than 60, trying tomaximize retirement income andmaintain multiple income sources).

Based on these classifications ofcustomer, they targeted to devise newproducts for youth (medical and dentalcollege students) and preservers (whowould move from Canada to US to avoidthe harsh Canadian winter. RBC hadbranches in the US, hence they wereable to quickly came out with“Snowbirds package” that includedtravel health insurance, easy access toCanadian funds, online consolidatedaccount review, real time transfers,ability to leverage a Canadian credithistory to secure mortgages in US. RBCtranslated a 250 percent increase innet income per client.

3 – Improve price/performance ratio(affordability) for increasing the marketor size of the cake:Expanding the market is another areawhich helps significantly to hold yourposition or at least stay near it. But it isimportant that the company takes alead and match well with the purchasingpower of consumer. When consumersare hard pressed for money, productsmight not only compete with similarproducts but they also will compete withthe priority list of consumers matchingthe purchasing power.

It will be high time to look across yourvalue chain and do the neededstructural improvements to address

consumer’s affordability which will bringconsumption jumps making it feasibleto masses. Expansion of demand inmotor cycle through structural costimprovement in Pakistan is a goodexample. CEO of Coca Cola targetedcoke to be sold in China at the price oftea. Super market chain Imtiazmaintains its ‘low cost strategy’ andnever faces ‘sales’ issue.

4 – Re- visit your channel strategy:Penetration, moving from bigger tosmaller ( national distributor togeographical distributor) or providingsupport to national distributor toincrease channel effectiveness and suchother channel related measures willalso help in increasing sales. Bridgingthe coverage gaps in the ultimate‘connection: retail with consumer’ canbring in lot of improvement in sales. Attimes there are clashes betweendistributors and manufacturers’objectives in terms of market para-meters and customer convenience.Especially large distributors use brandsfor additional sales to cover theirexpenses and do not go for optimization

from the point of view of brandpositioning in retail. Sales suffer. Salesteam must take charge of channelcoverage proactively in their own handsnot leaving any gaps in the market. Theymust also be freed from otheradministrative tasks and spend moretime with customers.

Brand managers should provide ‘in field’support rather ‘head quarters drivenguidelines’ to collaboratively ensurecustomers convenience delight. Onepharmaceutical company’s CEO (basedin Karachi) experiencing a dip in thetargeted sales, followed the ‘in field’support philosophy of product/brandmanagement and grew his salestremendously. All headquarters basedsenior and middle managementincluding director sales/marketing,product/brand managers were in thebattle field 80% of their time.

This subsequently became part of the‘company’s culture’ and ‘brand/sales’are now jointly responsible for realizationof targets reducing blame gamebetween the two departments. Marketorientation of strategy makers andsupport staff with the sales team andchannel staff is a must and pays gooddividend.

Many lapses in sales and coverage arealso witnessed if you work throughnational distributors. One Pharmacompany in Karachi supported itsnational distributor by appointing andmonitoring sub-distributors all overPakistan and achieved much betterresults.

Alternate channels can also be lookedinto together with the conventional andhistorical ones to improve business. InBrazil for instance majority of cosmeticsas well as other consumer productsincluding garments are typically soldthrough direct sales force of hundredsof thousands of working women whopitch products to their fellow workersand in the neighborhood where theylive. Examples also exist in Pakistan butof very small scale. A system drivenapproach can do a lot and can alsoserve dual purpose of enhancing ‘social

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value’ by increasing income of membersinvolved in such alternate channel aswell sales increase of the companies.

Alternate channel also helps generatemore demand being always therewherever and whenever consumerswant it, else there is an opportunity forsubstitutes. When Coca-Cola installedits first vending machines in Japan,retailers objected. But later they realizedthat the alternate channel helpedexpanding the demand of Coke andretailers also benefitted together withthe company.

5 – Don’t withdraw but balance yourinvestment in brand and focus onimproving ‘value proposition’:Advertising and communicationexpenses particularly related to mediado suffer in bad times. A rationalizationwith a good analysis like which productscontribute the best of our sales andwhich customer category will be pro-viding us a continued business canbecome the basis of advertisingexpenses rationalization rather thanrandom cut across the board.

The share of voice that is built with‘branding’ does help in reinforcing thecustomers’ quality/price perception.Balancing the budget with a change inpromotional mix (like in store promotion,direct marketing, town storming inregional markets, internet advertising,and social media marketing) can getbetter direct results of money spent.But together with this, media advertisingfocusing on customer/product categoryshould strategically continue.It’s however, critical to get an insight of

consumer preferences and prioritiescovering brand switching, shift to nonbranded and cheaper alternatives andredefining its buying patterns to investin the brand to get optimal results. Theresearch and the adjustments as aresult thereof have got to be donefrequently matching the fast changingconsumer buying behavior/ trends indownturn.

Holding and improving the brandpromise is also a challenging task inthese days and must have a severeconnect with the customers ‘emotional’needs. Take the example of BarbequeTonight, sales here does not get hurt atany point in time rather has showntremendous jump year after year. Theyincreased the price, but instead of salesgoing down it jumped up by another 10-15%. Perhaps the results of ‘brand’sconsistent delivery of promise and valueproposition’, creating and increasingthe number of delighted customer.

6 – Take downturn as an opportunityto re-organize and cut cost byimproving operational efficiency:A blind reduction in expenses will beharmful but as we have explained, thedownturn should be taken as anopportunity to improve organizationalefficiency by re organizing. Followingsteps may be considered:

Remove extra layers (Jack Welch atthe initial GE days as CEO removedall ‘Questioners’—managers whowere just asking questions anddecided to have only those positionswho added definite value)

Merge positions to makeorganization leaner and faster

Innovate around processes toreduce costs (multiple operationhandling by skill development inworkers in apparel manufacturingfor example, replacing manualhandling with simple mechanicaldevices reducing labor and qualitycosts etc.)

Reduce waste and ask 5 questions(Japanese way of working) to get to

the root cause and reinforceprocesses around thesedeficiencies to reduce cost anddamages.

Conclusion:Marketing leadership will have to playa bigger role with the increasing stressto the humanity, global issues expandingin multiple dimensions. Consumer andsociety driven approach to business,nevertheless, will have to be takenkeeping the ‘economic engine’ in goodshape or moving faster. ‘Cash efficiency’,as Ram Charan (bestselling coauthorof Execution) tags it, must not be lost.It will be deadly to abandon strategicinitiatives but there should be asimultaneous pursuit of balancing withcash flows, price consistency, brandpositioning and avoidingdisproportionate amounts of inventory,extended duration of credit in themarket. Keeping things right in astrategic way is desirable but making itsimple with profitable bottom line is amust.

About the author

M. Ekhlaque Ahmed isAssistant Professor atInstitute of BusinessManagement (IoBM). Heis an IBA Graduate andteaches Strategy andMarketing. He worked on senior marketingand management positions in local andmultinational companies like Philips, Osram,Rajby Industries and has over 30 years ofcorporate experience. He is also a corporatetrainer/consultant and has coauthored a book:Marketing Management Case Studies ofPakistani Companies. He is researching on‘Social Value’ creation and has also writtenan article: Society and Business - An integrationcreating New Opportunities which waspublished by an international magazine.

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