There has been much talk about whether Asia will be impacted by an economic downturn in the United States.
Despite this being an Olympics year and that some economists are still propounding the“decoupling” theory, the answer is obvious: of course Asia will be affected.
The real question, however, is in what way and how businesses in this region should best buffer themselves against the inevitable requests to reduce their marketing budgets by bosses in Europe and the States.
The first point to remember is that businesses here may not yet be feeling the impact directly of an economic downturn; in fact, they may still be turning in record performances. However, this does not mean they will be immune to cautious decision-making that arises when overall global confidence levels are reduced.
If there are not across-the-board budget cuts, there will be hiring freezes and a more critical review of the return-on-investment of every expense, including marketing.
Hong Kong, being a finance and property capital, has traditionally been a city of high highs and low lows so is particularly vulnerable to cautious decision-making.
Here are some tips for marketers and their agencies to consider as they develop plans to ride out the volatility.
As Arvind Rangaswamy, professor of marketing at Penn State’s Smeal College of Business observed: the best athletes know they can make the greatest gains during the hardest part of the race, when their opponents are weakest. In a similar way, strong brands who continue to engage with consumers during a downturn often outperform their weaker counterparts.
For many global companies, Asia will continue to be one of their fastest-growing markets. As a marketer, you need to understand where the growth opportunities are in your business and develop a good case now for continued investment, outlining how each element in your plan will generate a superior return on investment, and what you are doing proactively to adjust your strategy to suit the times.
Tap into the mood of consumers. In less prosperous times, they are likely to want reassurance and comfort. There will be a stronger emphasis on family values, the value of hard work and resourcefulness (also in keeping with Year of the Rat), and less overt displays of ostentation. Make sure these qualities are reflected in your campaigns.
Stress superior price performance and value. If you sell luxury goods, it is a great time to use below-the-line marketing, including third-party endorsements and media relations, to reinforce the timeless qualities and rich heritage of your brands.
If you use celebrities as an integral component of your campaign, review them to ensure they are still appropriate for the message you want to send.
Consumers feeling the pinch themselves are going to be less forgiving of celebrities who take advantage of their status or who project a less than wholesome image. Make sure your celebrity is truly aligned with the values of your brand or product, and if they aren’t, don’t use them.
Focus on your existing customers and show them your appreciation. Look at your loyalty programs and make sure they are really delivering benefits to your most valuable customers.
Don’t cut your investment in Corporate Social Responsibility initiatives as there is nothing worse than businesses with a fair-weather social conscience.
But if you do need to reduce your monetary contribution, look at other ways you can continue your support through in-kind contributions and employee volunteerism.
Increase the dialogue with your customers. Find out what they think, and what their hopes, fears and aspirations are and then adjust your marketing to reflect their reality. The online world is a good starting place for this dialogue, so look to reallocate some of your budget to social media initiatives.
From an agency perspective, don’t wait. Be proactive and have the conversation with your clients now about what their situation is and how you can work together to make sure their budgets are being used as effectively as possible. It’s an opportunity to review strategies and suggest new ones that could show an even greater return on investment.
Plus you’ll gain a lot of kudos in your clients’ eyes for taking the first step.
Finally, if your budget, or that of your client, has been cut, don’t talk yourself into a funk. Keep the ideas coming and look at new ways of doing things.
Focus on what makes the most difference. You’ll be surprised at what you can achieve.
Rachel Catanach is senior vice president & general manager Fleishman-Hillard Hong Kong.