By Dr Grace Kite

Covid 19 and the economy podcast part 2

This is the 2nd part of Grace’s contribution to marketing week’s podcast on 15th April.

The first part explains what economists are saying about how the virus will affect the economy. You can read it here.

What do marketers need to know? How should they react?

Look there are no short cuts, unfortunately, in terms of how this crisis should affect marketing plans.

The impact is going to be different for different sectors depending on a number of things:

The first of these  – how badly the supply chain is affected – is a deal-breaker for marketing in some sectors.

There’s a table in yesterday’s OBR report where they estimate output losses in Q2 this year from the supply-side shock of the virus.

That is, they take into account % key workers, % that can work from home, likely absences from illness and to undertake childcare

Construction, restaurants, and education, are all predicted to be down more than 70%. While financial and insurance services for example are only forecast to be down 5%. That’s a huge difference.

And so, the role for marketing has to be different in these different sectors because fundamentally, advertising a product that can’t be delivered can cause long term damage to a brand.

In these cases its best – as Cheryl Calverley said in her recent piece in marketing week – for marketers to bow down to the COO, who might well say that the company’s financial resources are better deployed in just getting products to market.

So, if your supply chain is OK, then the second point to consider is – how consumers in your market are experiencing the crisis – it’s said quite a lot, but marketers need to get out of their own bubble to get this right.

We in marketing are generally fairly well paid and able to work from home. We need to keep in mind that the people we market to may well be having a very different crisis to ours.

Some recent research coming out of Oxford University shows that the people who are worst affected in terms of job losses and loss of income are: young – less than 25 years old, and, sadly, those that were earning less money to start with.

What’s particularly heart-breaking is that these are exactly the groups who don’t have significant savings to see them through the difficult times.

If this is your target market, bearing in mind that they may well be struggling to find money for food, it’s important to be aware that any message with even a subtext of “buy this” will at best come off tone deaf, and at worst damage brand equity.

Equally, anyone that is marketing to c.30% of UK consumers who are aged 55+ should think carefully before delivering communications.

Many in this demographic are understandably just scared at the moment, and their movements are even more curtailed than most. Even when lockdowns are lifted, this group will need very sensitive product offers and very carefully written copy.

Then there is the third possibility, that your target market is relatively unaffected, and your supply chain is relatively unaffected. In this case you could well be in a very good position to make the most of the bounce-back we were talking about earlier, and it absolutely makes sense for you to be visible.

This is particularly true if you are able to sell your product online, because while people are stuck at home there’s a really good window for people to try online shopping. The recovery will likely see a big opportunity for online retailers and service providers to gain a share of a bigger pie.

And you know, I agree with Mark Ritson, that a lot of things in marketing will go back to how they were, but I think the exception to that rule is this thing about online shopping.

And the reason I think that is because historically there is a very clear pattern in the % of purchases that take place online vs in the real world.

At Christmas, when the shops are full, people who don’t usually shop online try it. Then, in the subsequent year, many don’t go back, but instead continue to shop online, so that the % settles at a higher level.

In other words, the process of change towards online is triggered each year by an event that prompts trial of online shopping.

Lockdowns are exactly such an event on a massive scale. People will try doing things online and some will never go back. And, its anecdotal evidence, but our local Hermes delivery guy – key worker – says that he’s busier than he is at Christmas right now.

This points to a huge opportunity both during and after covid for online retailers and service providers. It’s absolutely the right time for them to be on air, talking about how their technologies make life easier, even in a crisis.

For bricks and mortar retailers, restauranteurs, cinemas, and other in-person businesses, there is a defensive role for communications. It will be important to remind consumers who’ve been stuck indoors that there is more to it than functional benefits that can be purchased online.

Bricks and mortar retailers that offer a social experience – a café, a library, a clothes advice service – were weathering the online revolution most successfully before covid, and these initiatives will be even more important afterwards.

So I’ve given you a bit of a flavour here of what our research on how different sectors will fare shows. And really, our business is all about the economics of marketing, we embed this stuff into all our econometric, market mix models, so we’ve gone through it in a lot of detail. And the truth is, genuinely, the answer is different for different brands.

For marketers in many sectors, discretion is the better part of valour, and lockdowns may not be the best time to be advertising. On the other hand, if and when the predicted bounce back arrives, it is a golden opportunity for a wide range of brands.

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