Recently I was asked to provide my philosophy on marketing in a down economy by a marketing publication In response to that request, I penned three marketing planning principles for dealing with a bad economy. These are just my thoughts and I would be interested in your feedback to my thoughts as well as any different POVs.
Principle 1: Seek out pockets of demand, and invest
Take a closer look at the marketplace for areas where consumer demand remains relatively strong or where demand is emerging as a result of the weakening economy:
First, identify and focus investment on your highest-value customers. These customers are your most identifiable and reliable source of revenue and profit across your business; and because they are enthusiasts for your products or services, they will be most likely to continue spending in your categories during a down economy. At Best Buy, we can identify them through our database and loyalty programs, so we can target offers, communication, and investment directly to them.
Second, target product segments based on “need” where your value propositions are strong enough to drive revenue growth and share gain. For example, in our industry, some products have become consumer necessities (e.g., cell phones, PCs) and therefore may be more resilient during times when consumers pull back their spending on more discretionary items. Direct efforts to drive greater share in these segments while cutting back in areas where demand has declined.
Third, identify and invest in consumer segments or geographic regions that are likely to grow during a declining economy. For example, unemployed workers tend to startup small businesses during a recession and create demand for small business IT products and support. We can direct our efforts and our value propositions toward these segments or regions in order to capture that demand.
Principle 2: “Sweat” your marketing assets
Take a new look at existing marketing programs to find new ways to create leverage and customer preference.
This effort includes maximizing advertising ROI by intensively focusing on how each program effectively targets demand. It includes trimming programs that no longer make sense in an environment where advertising ROI is at a premium, cutting programs that target segments where demand has disappeared, increasing investment in areas where demand is relatively strong, or squeezing more out of fixed asset programs that have the capacity to work harder.
Principle 3: Invest in the brand experience and the brand story
Find ways to improve the brand experience and tell the story of how the brand is differentiated during a time when price becomes more important to many customers.
For Best Buy, marketing investments in the brand experience have included initiatives like improvements to our Web site to support a better customer experience at the first touchpoint of the brand. We have also demonstrated our support of customers who have been disappointed by technology by offering $50 gift cards to all our customers who bought obsolete HD-DVDs.
We are also continuing to refine our messaging (internal and external) to support our brand story so that we have a clear point of view on how Best Buy is a relevant and better choice for our customers.
Hi Barry,
Another idea would be to allow your customers to customize their own Best Buy newsletters. I love getting newsletters from Best Buy but most of the promotions aren’t relevant to me. For example, I’m not in the market for a laptop so I don’t want to see deals about laptops. I’m not in the market for a new plasma TV either, but on that type of product I DO want see promotions because at the right price I might find myself upgrading to a bigger screen. I could also check off to see more deals for films, XBOX games, etc.
In other words, it’s a step deeper than simply being segmented as a consumer and targeted based on what you think I’m interested in. I know what I’m interested in better.
I like your points quite a bit. There’s also something to be said for re-focusing on interpersonal value propositions as the things that have built trust and the loyalty in the first place. The “marketing in the moment” that comes from an employee who goes the extra mile for a customer… and fostering a culture of doing that for every customer, everyday. A back to basics approach.
That and embracing the principles around scarcity and innovation. Necessity being the mother of invention and all… so in addition to sweating the assets, creating new (lean) ones.
Pretty much agree with all you’re saying. Now is definitely not the time to pull back, but to get even smarter with the marketing, and ensuring that the ROI of every marketing dollar/program is tracked, with the non-performing programs cut. Find the customers that your competitors are leaving behind, offer them more than they expect, become their trusted partner.
I also think that it’s interesting that you mention that unemployed workers tend to startup small businesses, and are going to be focusing on this segment. It’s interesting considering that CNBC just put The Big Idea with Donny Deutsch, which is specifically targeted at this segment, on ‘indefinite hold.’ I believe they should be promoting it and turning it into a much larger presence/de facto resource for this (unfortunately?) growing segment.
Barry,
Good insights all, but I particularly like the third part of your first principle pertaining to investing in consumer segments or regions that are likely to grow in a tough economy. It’s easy for some to take a blanket view of all consumers and forget that some audiences do respond differently than others in good times and in bad. Good reminder of the opportunities that are still there if we look hard enough and do our proper research.
One slight addition I’d like to make to your third principle if you don’t mind is that when you make an investment in your brand experience in times like these, beyond building upon the brand story and consumer goodwill, it can also be an excellent opportunity to position yourself against a competitor that is likely pulling back on their spending — and thus extending yourself to new customers. Because if everyone else is pulling back on investing in their brand in a downward economy, the companies that put themselves out there in the marketplace stand to seize upon a potentially extraordinary moment for growth.
Barry – these are helpful insights as many marketers at companies big and small are trying to figure out the best way to “get smarter” during our current economic downturn. During my nine years as a marketer at Fidelity Investments, we went through a couple of recessions (the worst being post 9/11) and one of the philosophies we found helpful was getting really focused on customer retention. One of the reasons this approach became so attractive was because it is a lot cheaper to keep existing customers than spending to bring in new ones. Existing customers also tend to be profitable already vs. needing to wait 1-2 years for them to become profitable.
As direct marketing and advertising budgets continue to shrink during the current economic crisis, focusing on retaining customers through deeper brand engagement and loyalty programs should be top of mind for every marketer out there. To that end, it’s exciting to watch Best Buy engage in this practice through innovative ways like your blog, your Twitter presence and your http://askablueshirt.net/ sites.
As a fellow marketer, I look forward to hearing more!
Aaron | @astrout
Barry, I’m surprised that you didn’t mention anything about managing the effeciency of your media buying.
All your points are valid (esp. the point and comment above about leveraging customer preference), but at some point, you are going to have to get more out of your media dollars to get through this. In my opinion, media is the biggest stick that any big brand has, and getting your media mix & rates right is the #1 priority for any ad manager.
I’m sure that your pushing your Agencies hard to negotiate down the cost of media, remove performance risk, get more value adds and better utilize coop dollars, but I think that with a budget like Best Buy, you have to be super aggressive.
I have an interesting recent example of BestBuy failing to do that, but I don’t want to leave it here. The email for the comment works.
One principle that I’d add is that you should re-examine existing assumptions about how things work because recessions alter the balance of power in very interesting ways.
For example, as a retailer (and one of the only surviving CE retailers, Best Buy now has much more leverage with manufacturers than it might have when the economy was better. This creates a fertile environment to take a different look at how coop or MDF are deployed and it may be possible to find better, more effective ways to deploy those resources for both partners.
I think the #1 most important thing is demand generation. At this point you can apply many of the excellent ideas expressed above. I think Robert is right on with personalization and the profiling of customers and Adam talks about 1 to 1 mktg. The question of how to find these pockets of “consumer segments” such as startups? The best opportunity of course is from the people populating your website. A system beyond chat would helpful to communicate with these consumers on personal basis while empowering them to populate with other users to shop at your site. I think we will see some pretty clever applications released in the next couple of years that will help push the ecommerce needle a bit further to support the growth of new marketplaces and workforce.
Some things I saw/read this week suggest it’s also important to manage shifting perceptions of products/categories in a down economy. In many ways consumers are looking for new signals of what is okay and what is irresponsible. People of means may postpone purchases to avoid looking insensitive in tough times (car with a bow on it). People of lesser means may cut larger purchases (e.g. family vacation) while rationalizing smaller (e.g. home entertainment). Aligning with the emerging values/solutions for tough times helps consumers see it’s still okay to buy. In many ways, tough economic times shift cultural priorities – having a relevant POV keeps you in the consider(able) set.
Barry: focusing on your “high value” customers is important, but you should also be thoughtful in how you define this category. In a widely reported HBR article, a study of “customer referral value” showed that customers in the mid-tier of lifetime value actually generate significantly more referral value than those at the high end. And the total value to you if those referrals far exceeds lifetime value.
Barry, great post! This is a tight, crisp recipe for making the most in these tough times. I also found Adam’s comment compelling – making interactions as personal and meaningful as possible. In theory, tighter focus + lower traffic = higher capacity for front-line employees to really tend to the relationship with the customer. Which means, in a tough economy, it’s also critical to focus on those employees who are dealing directly with the customer, making sure they are positive, focused, and aligned with the marketing strategy.
I believe focusing on high-value customers is the right approach as long as the opportunity is sized appropriately to ensure that you can maintain a level of scale to remain competitive. That may mean extending the definition of “high value” to those who are on the fringes or to those you believe you can move to high value because they are within reach or have similar attributes to other customers who became high-value.
The other reason high-value customers seem attractive is they are probably the most willing to follow the brand as you look at extending into products that may be on the edge of what customers think Best Buy represents. If they are really engaged in the brand, they are probably more willing to accept new solutions from Best Buy and may even welcome them.
The other focus could be on the experiences of these high-value customers. In my neighborhood, one cul-de-sac gets together every Sunday to watch football and have a bonfire out in the street. They somehow manage to drag a TV out into the road and power it up with a 50-foot extension cord! I also know a couple who went to Mexico and stayed at a really nice resort. One night, the hotel staff put a TV out on the beach for them and they watched a movie under the stars next to the ocean. Not your typical family/media room experience! Anyway, if you focus on the experience customers are trying to create, you could land on what seems like an out-of-the-box experience, which may already be happening anyway.
Everybody agrees that focusing on the high-value customer is the right approach. The real question is how do we effectively do that with limited marketing/adv dollars?
The answer is to leverage analytics in the marketing communication channels we have with the high-value customers. Some of those customers are responsive to those Value Propositions, some aren’t. Determining who is and who isn’t responsive can be achieved thru understanding the data, capitalizing on the information and optimizing the Adv dollars spent.
Right on. Agree completely with the recurring theme throughout your post: FOCUS. One thing to keep in mind is that the principles we use today to weather this storm should carry forward and frame our strategies when the economy rebounds. Businesses tend to lose focus in good times.
I posted a similar POV today: http://wikibranding.blogspot.com/2008/12/battling-recession-message-from-front.html
Beyond the behavioral data, advertising measurement data, etc. that can be collected, reviewed and analyzed, there is also the human element to any recession marketing which cannot be ignored and may be one of the most important aspects in getting ahead. How are consumers feeling? What are they saying? Are you listening and adjusting not only your message but also the places in which you advertise because of it? Are you empathetic to their situation? The voice of the customer becomes even more important during downturns and listening to them is a key to success.
For Best Buy, might this mean an increased focus on services like Geek Squad as well as accessories that go into enhancing an experience? As customers slow down on replacing technology, they may be looking to extract more out of the experiences they currently have. Instead of upgrading a computer they may consider adding memory, adding an external hard drive or tuning it up. Instead of expanding their HD experience into multiple rooms in their home, they may be looking at enhancing the experience in a single room with HDMI cables, a Blu-ray player, iPod dock or speakers. Enhancing an experience may cut away some of the “guilty” feelings of being frivolous with their money in tough times. Also, customers will need help navigating how to get the most out of what they have, which fits well with Best Buy’s positioning.
Interesting Barry. I work for a large cable company’s advertising dept. and meet with clents who are facing everyone’s nightmare..a community filled with potential customers who are nervous about spending their hard earned money on products or services they COULD live without. I like the idea of focusing on core services (what brought you to the dance to begin with.) For example, a medical facility whose core business is spider vein removal, but want to reach the patient who needs laser. We are doing a series of three :30 spots for them and I found your holiday commercial very helpful. Oh, and I’m on your website ’cause my 11 year old just decided she wants a wii fit. Got any inside info????? Thanks for the blog
Spot on blueprint for marketing in a down economy, but there are nuances to each of the points you make that will make or break companies as we head into a lengthy recession. The key to all marketing in this environment is about providing utility to your customers (and prospects) inside and out of the store.
Your current high value customers aren’t going anywhere, but now is the time to make sure they understand you value them. I’d focus on the ‘most-growables”at this point, as there is a good chance that they aren’t loyalists yet becuase BB hasn’t provided that utility to them. It might be good deals or fantastic service in-store or showing them product they might actually be in the market for right now and so on.
Especially in the online environment there is an opportunity for all of us to look at how we’re speaking with our customers, listen to what they’re saying and give them the tools they want/need to talk back wither with their voices or their cash.
Topical thread going here. Thanks for continuing to put it out there when you would not have to. You’re getting a lot of great feedback. When I read the request for ‘philosophy’, I took it to a different place than marketing principles, per se.
The 3 Principles feel similar to strategies for an o.k. or robust economy. It’s not clear to me whether you think there’s a big difference. Is there a dial for the economy where you crank it up to 11 when business gets tougher? Rebalance your high/low risk strategies? Seems like you’re saying that core marketing philosophy doesn’t change too much. Is that right?
For me, someone who is also fortunate to be able to hear you talk about some of this stuff in person on occasion, I notice a passion gap between your marketing philosophies in person and on blog. Does that ring true for you? Maybe that’s intentional because of this forum? Maybe it’s me, in that that the written academic lessons just don’t resonate with me as powerfully as when we try to apply it in real time. (Touchie-feelie person here.)
I have come to believe, when I hear you talk, that heart of your philosophy does live in Principle 3. 1 & 2 seem to fall out of 3. It’s around that clearer point of view and differentiating that core value to the customer. Vision, bravery, thirst for (faster, deeper) learning about customers, taking strategic risks that align with core brand promises. From my vantage point, that’s where the $50 HD DVD experience and other acts like it come from.
Again, thanks for sharing how you think and inviting us to do the same.
Since Best Buy is THE most popular electronics store in the country, maybe they would not feel a pinch at all in this tough economy if they were not such bah-humbug Scrooges! In Las Vegas and California , they refuse to acknowledge the holidays by even displaying the most meager of holiday decorations. Employees are not encouraged to help shoppers to remember the season (which historically makes people spend more.)
On this website, I see all kinds of happy holiday blogs and things. What is happening in the stores? Is this bad apple “district” thing?
This wonderful “volunteer” severance package being offered to high level executives is tainted by the fact that they are forcing salaried employees to work 6 day/12 hours shifts with no overtime pay, and cutting hourly labor to the point of no work at all, which is tantamount to layoffs w/options. Not much of a labor force around to help customers who actually want to purchase something and the ones who are there are having their holiday tainted. No time left for holiday family get togethers. How very sad.
So, they are, in essence taking Christmas away from customers AND employees. Stressed out Best Buy employees can definitely relate to Bob Cratchet this holiday season, and so can the rest of us.
The best strategy would be to make it fun to shop there. Best Buy use to be this way. It used to be fun to shop at this store and hear the employees rave about how marvelous it was to work for them.
In a down economy, as referenced above by Aaron Strout, we need to do everything we can to retain existing customers. Chuck Densinger hit it on the head for me when he wrote
“Which means, in a tough economy, it’s also critical to focus on those employees who are dealing directly with the customer, making sure they are positive, focused, and aligned with the marketing strategy.”
I stopped shopping your stores in 2000 due to an experience I had with a manager during the holiday season. During the 8 years that have passed, like many folks, I have installed surround systems, purchased multiple computers, printers, TVs, DVDs, etc.,etc. Not one dollar was spent with Best Buy.
So while all of the discussion about ROI, under served markets, online brand experience is all important, I view it this way: as long as a brand chooses to have a brick and mortar presence they need to be damn sure the employees that represent that brand on a daily basis have the same client centric values that are espoused by the home office.
[...] the no-crap headline of the year: The economy sucks. That’s caused most brands to re-evaluate their marketing mix, re-allocate spending and re-prioritize initiatives. Sometimes the marketing strategy or tactic that makes you stand out, though, can be something [...]
Great post Barry. I think you’re right on all counts. Continuing the story behind Best Buy is key; also, transparency during this difficult time of budget cuts and layoffs will help your audiences remain on Best Buy’s side and see you as the “good guys” who are just trying to survive.
Also it is a matter of good business priciples and using the best resources when doing your marketing budgets. What media outlets are giving you the best value and ROI. What type of customer are supporting your Company during this hard times. How employees are doing their customer servive and working for the Company like they are part of the Company. The major principles, look for customer loyalty and Brand Promotion since when you promote your brand, you are making money for the Company. Never forget your Hispanic customer since they are the most loyal to any brand that has won their support.
[...] marketing gurus reading today, I came across an interesting post by Best Buy’s Barry Judge, Marketing In a Tough Economy: “Principle 3: Invest in the brand experience and the brand story “Find ways to improve [...]
dude – i’d focus on making sure that your stores are staffed efficiently. i think that would be a lot more helpful that all the marketing-speak.
i’ve had HORRIBLE experiences at your stores over the last year or so, and no level of marketing is going to change that perception.
only getting better personnel and computer systems is going to fix what i saw at best buy.
just figured you should know…
Never a better time for principle 1. With consumer demand shrinking leveraging your best targets and eliminating waste can drive significant market share gain. Also, there have never been better media segmentation capabilities. Data is the key. http://tvmissionary.typepad.com/tv_missionary/2009/02/segmentation-dmas-dont-matter-anymore.html
Barry
As you search for pockets of demand, consider the demographic of women. As you may know, women are most likely to start business.
I would suggest creating a experiencial buying environment in your stores that does not mimic men. Develop a line of products that respect and reflect the needs and interest of women with a finger in fashion and a head for business.
Your current stock of fashionable laptop bags appear as if they were selected as an after thought. Consider looking at a vendor that also has a following that can bring added value to the buying experience. I would like to talk to you about how e-GLAM can bring value to the buying process while building a loyal following through the generations.
Barry
As you search for markets, maybe you should consider the people that you have in executive positions. Recently, at the Morrow, Ga. store. I had the opportunity to meet Paula the district manager. Never have I been treated so badly or felt so embarrassed for the management team. I had, had a problem that was not solved at the store I made the purchase at and the store manager invited me in to see if he could help. He was very professional even when Paula interrupted and took over his conversation, she would not let me finish a sentence and when I ask her to please let me talk to the other gentleman: She ask me if I knew who she was. When I told her no, I didn’t nor did I care; I actually told her I would report her to her supervisor, she told me to go ahead. According to her-her job is very secure and apparently she can not be fired as she meets more than one minority, and yeah now I know which ones. Why she felt compelled to tell me this I am not sure. So I would say one way to get more customers is to rid your stores of uneducated bullies and tyrants. I love best buy and am one of the few adult female gamers I know, but clearly I do not want to shop somewhere that I feel bullied, ridiculed or talked down to. Think about it “you catch more flies with honey than vinegar”. by the way the store manager did walk me out and apologized for her behavior. However, I left there problem unsolved as she wouldn’t let the manager handle anything. Way to drive away sales in a down economy. Think about it customers do care how they are treated.
Like you, I’m a big fan of #3. It would be interesting to see how the purchase funnel changes in good vs. down markets, and how purchase (or loyalty) drivers shift. What is now driving purchase and loyalty when disposable income decreases (especially from a touchpoint perspective), and what are the implications for your customer experience?
Hello Mr. Judge,
I am breaking open a new program called “Wii Fit Together” or “Wii Fit Schools”.
The intention is to team with Best Buy to put a Wii Fit system in EVERY SCHOOL IN THE NATION, and I want to team with Best Buy to be the PRIME supplier of “Wii Fit for Schools Package” using my patent pending accessory for Wii Fitness, which allows WHOLE-CLASS participation in Wii Fit excercises utilizing one Wii and Wii Fit Balance Board and up to 30 of my creation, the “Active Practice BoardTM”.
The website page link included (VERY preliminary web page) shows my grandaughter using my creation. We are in 5th week developement at South Grandville Elementary School, where they are already using this package actively in formal Phys. Ed. classes for ALL 6 GRADE LEVELS!!! We will be going “public” with local newspaper and television media releases when we do promotional video taping within the next 4 weeks (before school ends). WE NEED BEST BUY TO TEAM WITH US !!! We do not intend to stock Wii consoles or Wii Fit balance boards – we want Best Buy to be “the Wii Fit School Program” location across America. NOTE – I am NOT wanting Best Buy to stock my Practice Board (that could be discussed in the future) – I want to see Best Buy offer a “slightly discounted” Wii Fit package – and WE (Active PLastics, Inc.) will deliver the Practice Boards direct to the schools who purchase “Wii Fit for Schools” package from Best Buy……..
Imagine Best Buy teaming with us to offer ANY SCHOOL IN THE NATION a complete, whole-class, structured fitness program for LESS THAT $950 PER SCHOOL! That includes COMPLETE system – 1 Wii console, 1 Wii Fit Balance Board, 30 “Active Practice BoardsTM” and COMPLETE PRGRAM GUIDELINES (developed by Mr. Tim Arends, PE Teacher of Grandville, MI South Elementary School).
As you may tell, I am not a “marketing professional”, but an earnest, hard working business entrepreneur, my company is a small family-owned and operated business – we just “look” big!!
I respectfully ask your help and assistance getting in touch with the proper divisional manager of Best Buy who will “get the program” started with me.
(Can you tell I’m excited???)
ANY assistance and direction you can offer is GREATLY appreciated!!!!
Sincerely,
Jeffrey M. Kusmierz
President
Active Plastics, Inc.
[...] Judge, CMO for Best Buy, also wrote a lengthy post about the current economic situation, but used the blog as a teaching platform to promote his philosophy and ideas about how to market [...]