The statistics are in. The National Retail Federation (NRF) estimated that U.S. consumers spent $372.57 on average, an increase from 7.2% from a year ago. Which at first glance seems positive, however, come Saturday most retailers were reporting a significant drop in traffic. People pursued gate crasher specials, bargains, expansive sales and then stayed home. This fits with DDB’s view of the economic crisis – consumers are changing their definition of value on an almost daily basis as they react to economic news and the state of their own wallets and purses. Going forward, the NRF is predicting a 2.2% increase in holiday shopping sales this year, the smallest increase since 2002. Companies that know their consumers and prospective consumers can still do better in their category than their competitors if they chart the consumer price/value equation outlined in DDB's paper, Capturing Opportunities in Challenging Times. Two for one sweaters, heavily discounted flat screens, 50% off sales cannot sustain a company or brand for a prolonged period of time. The motivation to reduce inventory, generate flat or some sales growth while reacting to consumer confidence cannot be ignored but neither can the long-term impact on the health of the brand.


Jeff Swystun, Chief Communications Officer, DDB Worldwide

Posted on December 1, 2008 9:51 PM | Permalink | Comments (3)

On June 9th of this year, I posted a note to this blog on being a Marketing Contrarian. This was in response to economic signs and how historically marketers have reacted to downturns. I must admit that when the global economy really got hit this autumn, I had not been so clairvoyant to see the extent, depth and pace of the impact. It did prompt us at DDB to write a paper called Capturing Opportunities in Challenging Times covering in detail marketing and advertising in a recession (available for download from this site). The response to the paper has been overwhelming. Readers have enjoyed the papers four main sections: cut versus invest, brands as long-term assets, consumer price/value equation, and steps to take when managing brands in a downturn. One comment among many received was from a Vice-President of Marketing at a consumer products company, who shared, "This is my second recession and the primary lesson I have from the first one is to think of my business as a hot dog stand – view it as a much simpler business. Do I react by selling lower quality hot dogs, cut back on condiments, stop smiling and chatting with customers, raise or lower prices willy nilly, take away napkins? No I do not. I leverage equities I have built up over time, be prudent in my own purchasing and other processes, and offer value, value, value."


Jeff Swystun, Chief Communications Officer, DDB Worldwide

Posted on December 1, 2008 9:51 PM | Permalink | Comments (11)

One management lever brand owners have in tough economic times is to look at brand portfolio rationalization. Of course, that is already on the table for the US auto industry. Between them, General Motors, Ford Motor and Chrysler sell 112 different car and truck models through 15 brands in the United States. While the top three Japanese automakers — Toyota, Honda and Nissan — offer 58 models combined sold through seven brands. Brand rationalization will be a key part of any auto bailout plan - up there with executive compensation and union concessions. Retail brand formats, consumer product extensions will be examined, the latter because of production, packaging, and shipping costs. Value will trump variety in the majority of categories and that will mean making smart decisions in the portfolio not only short-term but for when the economic cycle reverses itself.


Jeff Swystun, Chief Communications Officer, DDB Worldwide

Posted on December 8, 2008 9:00 AM | Permalink | Comments (5)