Recession Marketing

In the middle of last year, Engro Foods launched it’s low end “milk” brand by the name o f Dairy Omung. It confounded some people as to what was the need for a cheaper milk brand when they had Olpers as the market leader; would it not cannibalize Olpers?  The fact is that this has been yet another move by engro foods which which shows its superior marketing capabilities.

As AG Laffley, former CEO of P&G, used to see it: “We have a philosophy and a strategy. When times are tough, you build share.” In recessionary times, an organization has certain decisions to make:

-          Increase A&P

Since the PnL is under pressure during such times, firms tend to cut down on their marketing budget, as Olpers appears to be doing as they did not, for the first time, run any thematic during last Ramazans. Such a move which seems a necessity in the short term and does not really have any immediate future implications does carry long term implications. In times of recessions, there are some opportunities. As firms all around slash down their A&P budgets, it is time for your brand to gain market share by having dominant share of voice. Having cut down their Olpers budget for instance exposed them to this risk that a competitor brand may invest in their brand at this time giving Olpers a huge dent in the pnL & shares. But simultaneously they introduced Dairy Omung so that Engro’s overall value share is not lost to competition

-          Fighter Brand

While Unilever enjoys value leadership with Surf in the fabric care segment, it’s volumes were coming under pressure in the current inflationary environment. In order to safeguard its position, one option was to lower the price so that the share of Colgate-Palmolive detergent brands stop increasing. However, that would have impacted the brand image of Surf and no one wants to fiddle around with the image of the market leader. So, it introduced it’s fighter brand, Sunshine, to counter CP.

-          Lower price

Recessionary times are usually accompanied with inflation. As the consumers’ income levels stop increasing in the nominal sense, in real sense they start decreasing due to inflation. But its not just the consumer who is getting impacted by inflation. Organizations’ COGS also increase thereby putting pressure on them to take a price increase to sustain margins. This leaves organizations with the difficult decision to either risk a decline in volumes, since the consumers’ purchasing power is going down, or to risk a decline in total value as it may not necessarily be able to compensate for the decline in value with incremental volume. 

-          Continue as is & risk a competitor doing one of the above two and taking your share

Sometimes the smartest thing to do is to not do anything at all! However, sitting on your ass carries risks & only succeeds if the competitor is as lazy as you are.

-          Further enhance value

Augmenting the value proposition of your brand so that consumer continues to spend believes its worth it is known as the best way to beat recession. Innovation !