There are a wide range of theories regarding the best approach marketers should take in a recession, ranging from reining in all spend to conserve costs to expanding activity in a bid to capture the market; and everything in between. The reality is there is no ‘one-size-fits-all’ solution, and brands will have to make their own decision based on their own situation.
However, historical data shows there is one technique that regularly comes to the fore in times of economic crisis: that is, sales promotion or promotional marketing. According to the latest Bellweather Report (the IPA’s regular report on marketing trends) this downturn is no different to any other, and investment in sales promotion is already on the up. But are the likes of BOGOFs (buy-one, get-one-free) and prize draws the way out of recession for B2B brands, or are they only useful for driving attention of bored supermarket shoppers?
Impact on the bottom line
Perhaps unsurprisingly, the Institute of Sales Promotion (ISP) – the trade body that represents the promotional marketing industry – is adamant promotional techniques have a role and relevance far beyond FMCG; particularly in times of recession. “Sales promotion comes to the fore in a recession because it generates immediate results and impact on the bottom line,” says Martin Croft, the ISP’s communications manager.
The ISP’s definition of sales promotion extends to subtler forms of marketing, including charity promotions; free gifts (including white papers); loyalty programmes; and even corporate hospitality. So is sales promotion just about getting something for free? “We prefer to talk about ‘value added’,” says Croft.
“There’s no question promotional marketing becomes more attractive during a recession,” agrees John Stanton, chair of the Association of B2B Agencies (ABBA). “At our last meeting, agencies were saying they aim to be increasingly focused on activity that is response-focused in the coming months.”
Under normal circumstances, Stanton says B2B brands use sales promotion for two main reasons, firstly when they’re trying to gather leads; secondly when they’re seeking to differentiate a product or service in a commoditised market. However, he adds, when recession strikes, promotional techniques are desirable because they are excellent at driving sales. In other words, it’s a safe haven.
Brand danger
So is promotional marketing a knee-jerk, tactical approach to marketing? Not necessarily, says Stanton. “Sales promotion can be used to instigate a relationship that can be developed and exploited over a longer period,” he explains. But adds there are also dangers inherent in promotional marketing that means brands should not rely too heavily on it.
“There is a limit to how far you can go. If it’s overused, it can undermine your brand, particularly if you’re aiming for premium status. It’s important to look at the potential for brand damage.”
An additional danger inherent in sales promotion comes from the law – the legal requirements surrounding promotional marketing are complex, and brands transgressing these are subject to public naming and shaming by the ASA, whilst persistent offenders can be fined by the Office of Fair Trading. Sales promotion is covered by CAP; the British Code of Advertising, Sales Promotion & Direct Mail.
Trish Curtin, client services director at specialist sales promotion agency Platform, says she regularly sees brands break the law with promotional marketing campaigns without realising it. “Promotions are difficult to get right. Many campaigns developed by clients and agencies are actually illegal.”
Trade-off
Curtin highlights another advantage to promotional campaigns: speed to market. Using existing templates and incentives packages, they can be developed and brought to market quicker than other forms of marketing, which has additional advantages in a recession when brands demand results fast. But the danger of pre-packaged promotions is that – of all options open to marketers – they have the greatest potential for brand damage. Effective use of promotional techniques is therefore a trade-off between business expediency and long-term brand equity.
Given the worsening state of the economy, it’s certain we will see a greater use of promotional marketing techniques during the next 12 months. For some brands, their use will be a tactical response to a new marketing environment; for others it will be a case of desperate times calling for desperate measures.
