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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 [email protected]
Bayer HealthCare Pharmaceuticals6 West Belt
Wayne, NJ 07470