Managing the Marketing Mix in a Recession Trujillo.pdf · 2015-07-17 · Contrary to what many...

Sam TrujilloSam TrujilloDirector, Consumer MarketingDirector, Consumer Marketing

Women's Healthcare Business UnitWomen's Healthcare Business Unit

Managing the Marketing Managing the Marketing Mix in a RecessionMix in a Recession

EducationEducation

Career OverviewCareer Overview

Contrary to what many marketers believe, in times o f recession some of the biggest opportunities arise f or

brand, media and marketing innovations

Practical, immediately applicable tools you can use to bring your brand through the tough economic times

unscathed

Traditional Consumer Traditional Consumer Marketing MixMarketing Mix

Core Marketing ActivitiesCore Marketing Activities

Digital/SearchDigital/Search

MagazineMagazine

TelevisionTelevision

Consumer Marketing MixMarketing Pyramid

Information Seeking

Communication

Entertainment

Work Product

Consumer Marketing MixDigital Media MediaDigital Media Media

Source: Marketing Evolution, Magazine Publishers Association Comparing Media Contribution Throughout the Purchase Funnel

Consumer Marketing MixPrintPrint

•• Print Print is the most consistent performer throughout the purchase funnel

• Print is the largest driver of brand familiarity(degree to which advertising increases the percentage of consumers who say they know the brand)

Target

Direct TV

National CableNetwork

NBC

ReachReach

Target Target EffectivenessEffectiveness

Consumer Marketing Mix TelevisionTelevision

TargetTarget

Consumer Marketing Mix Recency/FrequencyRecency/Frequency

Usage Decay

Ad memory decay

Recency Period

Saleslevel

Advertising Time

Effective Frequency Build

1+?

or 6+?

Long TermConversion

Responding to TelevisionResponding to Television

Consumer Marketing MixResponse to Healthcare AdsResponse to Healthcare Ads

Source: Magazine Publishers of America, 2007/08 Handbook (MARS)

Consumer Marketing MixMarketing FunnelMarketing Funnel

Source: Forrester Research, Inc.

Awareness Awareness Awareness Awareness ---- Consideration Consideration Consideration Consideration ---- Preference Preference Preference Preference ---- Purchase Purchase Purchase Purchase ---- LoyaltyLoyaltyLoyaltyLoyalty

Consumer Marketing MixBasic Marketing Principals (4 Ps)Basic Marketing Principals (4 Ps)

4 Ps4 Ps

•• Product Product

•• PlacePlace

•• PricePrice

•• PromotionPromotion

6 Ps6 Ps

•• PoliticsPolitics

•• PerceptionPerception

This is a Paradigm ShiftThis is a Paradigm Shift

Marketing in a RecessionParadigm ShiftParadigm Shift

Mar

ket S

tabi

lity

Mar

ket S

tabi

lity

Corporate S

tabilityC

orporate Stability

Profitability/FlexibilityProfitability/Flexibility

Marketing LimitationsMarketing Limitations

Budget ConstraintsBudget Constraints

Recession Recession

Marketing in a RecessionNew Business EnvironmentNew Business Environment

US sees 20 bank failures

US sees 20 bank failures

in less than three months

in less than three months

Mortgage Crisis

Mortgage Crisis

AIG AIG -- Bear Stearns

Bear StearnsU.S. National Debt: 10.9

U.S. National Debt: 10.9

Trillion & Clicking

Trillion & Clicking

Global Stocks Plunge as Traders

Global Stocks Plunge as Traders

Fear Worldwide Recession ...

Fear Worldwide Recession ...

Unemployment 8.5%

Unemployment 8.5%

Marketing in a RecessionMacro EnvironmentMacro Environment

Economy Is Terribly Weak at Present Time• GDP: Weakest In Decades

• Consumer Confidence Completely Shaken

- Consumer Confidence Index fell in February for the third month in a row to its lowest level in history

- Personal consumption expenditures –the single most-important indicator of advertising spend –also fell markedly in the most recent period, down by 3.5% sequentially and 1.3% year over year

• Financial Institution Durability in Question

- Concerns about weakness in the banking sector cast a shadow in financial markets

• Housing Market in Crisis

- Case-Shiller Home Price Index fell for the fourth straight month in December, reflecting the decline in home values.

• Stimulus Package Not Impactful Until Next Year

Source: MAGNA and Bureau of Economic Analysis

Marketing in a RecessionMacro EnvironmentMacro Environment

Unemployment Rates Skyrocket

8.5%

• Up 67% from 5.1 to 8.5 vs. March 2008

Source: Bureau of Labor Statistics

Marketing in a RecessionMacro EnvironmentMacro Environment

Marketing in a RecessionMacro EnvironmentMacro Environment

Retail Sales vs. Personal Savings Rate

• Retail sales are “falling off a cliff,” while personal savings are rising

Source: Bureau of Economic Analysis

Marketing in a RecessionMacro EnvironmentMacro Environment

Automotive Insights

Source: Citi Capital Markets

Marketing in a RecessionMacro EnvironmentMacro Environment

Category Analysis: Pharmaceutical

• Pronounced Focus on Cost/Productivity

- Few high-margin blockbuster drugs in the pipeline

- Relatively inefficient manufacturing processes

- Companies will carefully assess costs and operating structures, which can have trickling-down effects on marketing and media

- More sector consolidation could increase focus on costs overall

• Limited Near-Term Impact from Blockbusters Going Of f-Patent

- Patent “cliff” not a major factor until 2011/2012, where a third of today’s branded prescriptions will go off-patent

• Universal coverage could present some benefits in f orm of more prescriptions

Source: MAGNA and Citi Capital Markets

Marketing in a RecessionMacro EnvironmentMacro Environment

Category Analysis: Pharmaceutical

Source: Citi Capital Markets

Marketing in a RecessionMacro EnvironmentMacro Environment

•• Impact on cooperate performance Impact on cooperate performance

•• Layoffs & site closures Layoffs & site closures

•• Disruption businessDisruption business

•• Product acquisition and sellProduct acquisition and sell --off off

•• Changing competitive landscape Changing competitive landscape

•• Changing category focus Changing category focus

•• Change in product focus Change in product focus

•• Changing marketing mixChanging marketing mix

Marketing in a RecessionPharmaceutical Corporate MergersPharmaceutical Corporate Mergers

Marketing in a RecessionDTC Spending ImpactDTC Spending Impact

The Nielsen Company:The Nielsen Company:

•• DTC Ads decline 18.4% full year 2008:DTC Ads decline 18.4% full year 2008:

• $4,344 Billion 2008 – vs. - $5,325 2007

• Q4 2008 $800 Million less than Q4 2007

•• Overall Ad Spending 2.6% full year 2008:Overall Ad Spending 2.6% full year 2008:

• Boosted by Presidential election & Olympics

• Procter & Gamble reduced ad spending by 19%

• Johnson & Johnson reduced ad spending by 5.4%

• Overall TV spending (Upfront + Scatter) has dropped following the last two recessionary periods

Source: MAGNA

A TV Spending Slowdown is Likely

Indicates recession period

Marketing in a RecessionMacro EnvironmentMacro Environment

Reg

ulat

ory

Gui

delin

esR

egul

ator

y G

uide

lines

New

& E

volving Rules

New

& E

volving Rules

New AdministrationNew Administration

OIG OIG -- FTCFTC

New FDA New FDA –– New DDMACNew DDMAC

Public Opinion Public Opinion

Marketing in a RecessionNew Regulatory EnvironmentNew Regulatory Environment

DTC Advertising in 2009

• Political environment *: President Obama (and Democratic control of both houses) could tighten restrictions on DTC advertising; while he has not specifically proposed regulating direct-to-consumer advertising, future outcomes could include

- restrictions on advertising for certain drugs

- moratoriums on advertising new drugs

- stringent FDA review process

- limiting claims

• FDA: modified submissions process

- Eighteen new reviewers that check each line of copy; approval process is slowed down considerably

- Tighter control from FDA regarding PI info may require ad copy to be too lengthy for TV( ie: more than :60s)

*Source: MediaPost, Nov 5 2008

Marketing in a RecessionMacro EnvironmentMacro Environment

Waxman Targets DTC

Waxman Targets DTCRoche exec DTC ads

Roche exec DTC ads

hurt big pharma

hurt big pharma

Colorado Study Says DTC

Colorado Study Says DTC

Not Impactful

Not Impactful

Is DTC Doomed

Is DTC Doomed

The DTC Myth?

The DTC Myth?

GlaxoSmithKline to Cut

GlaxoSmithKline to Cut

Back Advertising on TV

Back Advertising on TV

Marketing in a RecessionFocus on DTCFocus on DTC

Managing the Marketing Mix in a Recession

Marketing in a RecessionWhat are our DTC Options?What are our DTC Options?

Marketing in a RecessionMarketing Funnel Now More Complex

Source: Forrester Research, Inc.

RecessionRecession 6 Ps6 Ps•• PoliticsPolitics

•• PerceptionPerception

Marketing in a Recession Paradigm ShiftParadigm Shift

It is not the Strongest of the species that survive…

Nor the most Intelligent........

But the one Most Receptive to Change.

Charles DarwinCharles DarwinCharles DarwinCharles Darwin

Rap

idly

Adj

ust

Rap

idly

Adj

ust

to N

ew R

ules

to N

ew R

ules

Patient B

enefit /Safety

Move Slowly and DeliberatelyMove Slowly and Deliberately

Corporate GovernancesCorporate Governances

Regulatory ComplianceRegulatory Compliance

Remain Focused Remain Focused

Marketing in a RecessionNavigating the New Regulatory EnvironmentNavigating the New Regulatory Environment

Media Channel:• TV• Radio• Print• Search• Display ads

Uniqueness

Variety

Comfort

Connection

Shift Budgets To Media That Drive Purchase and Loya lty

Loyalty drives success and growth during this reces sion

Source: Forrester Research, Inc.

Media Channel:Media Channel:• CRM• Brand sites• On-line • Word of mouth• Persistency Programs

Awareness - Consideration - Preference - Purchase - Loyalty

Marketing in a Recession Marketing FunnelMarketing Funnel

• Invest in market research and consumer insights to understand the changing consumer behaviors and react accordingly

• Consumers are looking for savings when they can find them, so promotions with immediate returns seem to be enticing, but price promotion alone won’t cut it anymore

• Pay attention, navigate, and course correct

• Contrary to what many brands believe, in times of recession some of the biggest opportunities arise for brand, media and marketing innovations

2001- 42 days after September 11 th,

Apple unveiled the first iPod

1933 - Years into the Great Depression P&G didn’t lay of

anyone and charged ahead with

innovation and launched the first radio soap opera

Painted DreamsPainted Dreams

1981- Reeling from a recession fueled

downturn, airlines developed currency-miles- based loyalty

programs

Marketing in a RecessionLook for the OpportunityLook for the Opportunity

• Stay positive during the recession - don’t immediate ly cut back or change what is working so well

- Continue to test, learn, and optimize media plans

- Stronger more established brands have the most to gain by maintaining and/or increasing marketing efforts in a recession

• Take advantage of competitors pulling back and maintain or grow leadership SOV

- The cost of recovering share of voice post-recession will likely be considerably more expensive than simply staying the course

• Stay true to your history and long relationship wit h consumers and continue to engage them on an emotional level

Marketing in a RecessionOutlook

Marketing in a RecessionFocus•• Focus on Core Business Focus on Core Business -- Increase investments in retentionIncrease investments in retention

• Consumers that trust a brand will be more inclined to buy familiar products again, rather than find a new product

•• Evaluate Core Strategy Evaluate Core Strategy –– Look at your optionsLook at your options• National vs. targeting• Mass reach vs. segment

•• Evaluate UpEvaluate Up --front buy vs. Scatter front buy vs. Scatter –– Look at your optionsLook at your options•• Value, commitment, cost, flexibility

•• Spend Wisely Spend Wisely -- Shift media budgets to the end of the funnel Shift media budgets to the end of the funnel • Do more with less – focus on “need to haves” vs. “nice haves”• Digital, Print, non-DTC may increase effectiveness during the recession

•• Focus on Tangible Returns Focus on Tangible Returns -- Measure what matters: Measure what matters: • Unaided brand awareness dos not direct return revenue• The real revenue returns are seen in prescriptions, units, new customers, etc.

•• ROI ROI -- Measure the results:Measure the results:• To avoid another budget cut in 2010• Show results from intelligent channel choices in 2009

5 Don5 Don ’’ tsts

1. Don’t reduce your investment behind core brands.

2. Don’t be afraid to invest in proven business drivers

3. Don’t make media investment choices in the absence of hard facts

4. Don’t be afraid to shift media opportunities - now is the time to grow revenue, maximize effectiveness and corporate stability

5. Don’t make major strategic decisions with implications beyond 12 months

Marketing in a RecessionFive Five DonDon ’’ tsts in a Recessionin a Recession

5 Do5 Do’’ss1. Do prioritize investment behind core brands in every market

a) Evaluateb) Focus on business driversc) Support corporate stability and flexibilityd) Demonstrate DTC Return (ROI)e) Exploit opportunities

2. Do consider alternative media options to broadcast and actively look to increase investment in digital, print and non-DTC

3. Do invest in comprehensive and immediate consumer research to understand how your customers are re-evaluating their brand choices

4. Do demonstrate confidence and support for chosen marketing mix from a leadership and key stakeholder perspective. For overall corporate marketing mix and especially for appropriate DTC, (as DTC can be a “big ticket” item).

5. Do hold a DTC WAR CHEST to fund near term/high value DTC opportunities

Marketing in a RecessionFive Five DoDo’’ss in a Recessionin a Recession

Marketing in a RecessionDTCDTC

Magazines continue to engageThese are difficult times and These are difficult times and The rules have changedThe rules have changed

We need to demonstrate that We need to demonstrate that DTC is part of the solutionDTC is part of the solution

This is still the age of the Informed This is still the age of the Informed Consumer and DTC is a Proven Source of Consumer and DTC is a Proven Source of

Consumer InformationConsumer Information

Thank YouThank YouThank YouThank YouThank YouThank YouThank YouThank YouManaging the Marketing Managing the Marketing

Mix in a RecessionMix in a Recession

Sam TrujilloSam TrujilloDirector, Consumer MarketingDirector, Consumer Marketing

Women's Healthcare Business UnitWomen's Healthcare Business Unitsamuel.trujillo@bayer.com

Bayer HealthCare Pharmaceuticals6 West Belt

Wayne, NJ 07470