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Strategic
Brand Management
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Ad
budget cuts during recession
Implications For Brand Leaders
Kaushik
Roy
Executive
Director, Mudra Communication
Many
of the things that Akai did happen to be the general prescription
to fight a sluggish market condition:
1. Create demand through advertising
One the most unconventional things that Akai did was to
take out advertisements announcing attractive schemes even
before the distribution was complete. This led to a rush
at retail outlets, some of which were not even appointed
dealers. These dealers took orders from customers and paid
the company in advance to ensure that they got a slice of
the business.
2. Lower costs
This type of advertising helped Akai achieve an automatic
distribution penetration while lowering the initial working
capital requirements. The demand also helped lower the cost
of the inventory because they were bought at volume discounts
from the importer. For paying in advance, the dealers were
rewarded with hefty cash discounts. This led to a win-win
situation for the brand, the trade and the consumer.
3. Buy media cheap
During an economic down-turn, advertising-to-sales ratio
and other such theories are not important because there
isn’t too much media noise. So when Akai built its brand
with big monies, they seemed bigger. Indeed, the advertising
always had a big feel; arguably, they started the trend
of full-page newspaper advertisements. Using outdoor innovatively
was another new trend started by Akai. Due to the slump
in advertising, hoardings were going empty. Akai worked
out a deal of paying a low token fee to cover the painting
costs and got the Akai brand name splashed across town.
4. Make your advertising direct, distinctive and fun
It was not just money power; the first leg of the Akai campaign
was a clever attempt to make the brand respectable by establishing
its Japanese heritage. The treatment was humorous and entertaining;
another requirement during days of gloom. The scheme print
ads from Akai were clear and to the point. They were the
first to introduce the comparison tables to make the brand
value come across loudly to the consumer. Everything was
believable and there was no fantasy!
5. Build trust, be a friend
Akai was attacked by competition for doing business unfairly
and unethically to keep the prices down. Consumers were
not bothered as long as they saw the value for money. However,
Akai used the opportunity to prove that other brands were
cheating consumers because of their high costs. To instill
further confidence, Akai advertised their mobile after-sale
service that reassured consumers about the value that they
were getting at the right price, not cheap price.
Recession is a time when we need the brave because the future
favours the brave. In the words of Philip Kotler: ‘The first
thing I would do in a crisis period is to appoint a cost
reduction task force, to develop a recession business plan.
Please don’t let it be only in the hands of the finance
department. They will cut everything that counts—and tell
you to stop marketing, when marketing is the only prop that
you can turn to, to sustain demand.’
One must remember that, in this day and age of technological
parity, the one thing that makes the brand stand apart is
marketing communication and creativity. Very often, it is
the advertising that becomes the differentiator. So should
one put less of the most critical ingredient in the product
formula during a period of recession?
India for far too long has been in the hands of cautious
bean-counters. By and large, developing countries spend
anywhere between four to five per cent of the GDP on advertising,
whereas India has hovered around three per cent. A country
like India needs advertising to create demand, change attitudes
and fight the negative sentiments that rule the country.
But can we expect much where the Finance Ministry further
discourages advertisers by levying taxes on advertising?
The recent five per cent tax on broadcast media advertising
is perhaps the worst thing that one could do in this period
of negativism. Recession is the time when you squeeze more
bang out of the buck rather than pay additional taxes! Truly
speaking, my analogy of the airplane in a storm does not
work for India. As for us, we have been grounded even before
we could clear the runway!
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