During this time of great uncertainty, we really need leaders who can change our past business practices – and those leaders need development

Michael Pearce is professor in marketing at the Richard Ivey School of Business, and he gives advice on guiding marketing/advertising campaigns during a recession.

Are there any specific brands that tend to get hit harder than most during economic downturns or will recession hit all brands equally?

During recessions, price and timing become more important as potential buyers ask themselves, "do I really need this now?" Accordingly, we see discretionary purchases, such as celebrity clothing brands, suffering declines in sales while purchases of basics, such as food, seem relatively unaffected.

Anyone offering a branded product or service that is not already well established is at a great disadvantage because, today, brands matter more than ever. Brands, especially those that put a human face on a company, help customers make choices, to feel good about those choices.

The hallmarks of great brands are long-term authenticity and sensitivity to current context, such as the hard times being experienced by customers. Any brand that does not have a reservoir of well-earned trust going into this recession will be in trouble.

Many firms are drastically cutting their advertising budgets due to the recession. What actions can these companies take to limit the effects of recession on brand strategies and advertising campaigns?

There are three courses of action available in these circumstances.

First, make sure that what money is left in the budget is spent as effectively as possible. Lots of money is wasted in marketing communications. More than ever, there must be serious efforts to gather market facts and intelligence in order to design compelling campaigns, and then serious efforts to measure whether and how those campaigns actually worked.

Second, focus intently on existing customers. While customer centricity is not a new idea, the difference these days is the sophistication of the techniques used to execute against this concept. The techniques of direct marketing have long focused on loyalty, recency, frequency, amount and so on, but these are now mainstream marketing ideas aided by databases, scanning technology, loyalty programmes to track customers and customer relationship management systems to put the information together and make it accessible across an organisation. Lifetime customer value calculations are now more common, segmentation by value typical and, of course, the whole field of retention marketing has moved out of customer service to the entire marketing function. Customer centricity then becomes a powerful and pervasive rallying point for an organisation: it doesn't mean be marketing-driven, but rather market-driven - to make decisions based on market insights and to assess performance against market opportunity.

Third, experiment with Marketing 2.0 techniques. This is all about tapping into the remarkable growth in social networking through blogs, MySpace, Twitter, podcasts and video-casting. Marketing 2.0 is in some ways a paradigm shift for marketers. Marketing 1.0 has been characterised as "top-down, interruption marketing", meaning that sellers controlled what was said about their products and services, who got to hear their messages and when they heard them. Marketing 2.0 shifts much greater control of information flow to the potential customer. In this view, the customer chooses what information to examine, when to access it and, importantly, has the opportunity to add to the information flow that other potential customers may see.

How important do you feel it is for marketing executives to embark on MBA programmes such as yours? Do you feel that the recent credit crisis has highlighted a growing need for such courses? Why?

I believe that leaders are both born and made - and they are made mostly on the job. A formal education programme, be it a degree programme such as an MBA or a short non-credit course, can inform participants of new events, can offer new techniques, can motivate participants to apply new approaches to old problems and can broaden perspectives.

But, most importantly, an education programme for experienced practitioners can help make sense of their past work experience. Time and again over my 40-year career, I have heard executives say during a programme that, "I never really thought about it quite like that before - that changes what I'm going to do".

I believe an MBA programme serves its participants best by preparing them to lead in all circumstances and contexts. During this time of great uncertainty and anxiety, we really need leaders who can change our past business practices - and those leaders need continuous development of their leadership, at school and on the job.

SCMP
15th April, 2009

Read about the other series