Marketing In A Recession

I am not a classically trained marketing person so my comments are not based on professional or academic expertise but I know enough to make a comment on this subject and invite views. I am specifically talking about two campaigns and a product launch which have caught my eye.

In a recession, one of the first budget lines to get slashed is marketing - there is a logic that says that if people aren't buying so much there's no point in communicating with them, plus it is usually a budget line that has not been all spent so there can be some actual savings made. Training is another budget line that gets hammered early for the same reason on savings although the logic is different.

So here are two campaigns which are very high profile in the UK right now and I thought it apt to highlight them. Remember, this isn't just a recession, but we are in the grips of a financial meltdown with the stock market going like a roller coaster and pensions getting walloped because of it and Quantitative Easing.

1) Aviva/Norwich Union

For many in the know, Norwich Union, a bastion of the British insurance and pension market, got taken over by insurance giant Aviva a while back. Until recently, Norwich Union had remained under its own brand as it had such good position in the market. So in the teeth of a recession and credit crunch, Aviva has taken the opportunity to change the name of its UK dominant brand from Norwich Union to Aviva.

And not just with the odd brochure - this is as subtle as a housebrick through the window.

The first wave of adverts used the likes Ringo Starr, Elle McPherson, Alice Cooper and Bruce Willis to demonstrate how stupid the public are in that we would not have taken these people seriously if they had not changed their given names to their stage names. Some may be pedantic and say changed from their 'real' names. It is pretty much in your face stuff as the names are so iconic and the stars so recognisable, and subtly international - perhaps. It certainly got my attention.

The point being that these people had to make the name change to get where they are or simply get on in life. The interesting risk to the point of the adverts is that the vast majority of the world's population, and many famous people to boot, have not changed their name and still thrived. I would argue that it is not mandatory to change your name to become successful, but in those specific cases highlighted in the advert, it has worked for them. I suppose that in each case, they feel that we, the public, are so fine tuned in our tolerance range of names that if Alice Cooper had not been called Alice then we would not have heard of him or rated him. I would suggest that he became prominent for biting the heads off live chickens during his gigs which did that - but what do I know. I honestly don't think that it makes a jot of difference to Elle McPherson that she changed her name - she would still have been one of the most attractive people on earth. Ringo Starr, though, may have a point.

Famously, when asked if Ringo Starr was the best drummer in the world, John Lennon replied that he wasn't even the best drummer in the band.

A subsequent advert goes on to give us the real message. Norwich Union clearly felt that people were just numbers and did not cater for the individual - Aviva in contrast does and this name change proves it. We get the same icons in Starr, McPherson and Willis telling us how they want to be treated in a series of role plays and then we get the rather forlorn figure of McCauley Culkin who moans that he 'Just wants to be known'. The sulky looking McCulkin's career seemed to have peaked too early after the immensely enjoyable 'Home Alone' franchise and he has certainly struggled to gain our attention since. Aviva has sorted that out.

Clearly the advert was not made in the UK and it seems awkwardly American in its slant and I may be wrong in guessing that this advert was made originally for the US market. It makes it all the more risky from that viewpoint as we Brits are stuffy sorts when not having adverts tailored to our way of life.

Let's take a look at the second before my comments.

2) Nat West Bank

The new Nat West adverts courted early controversy, I am told by an industry insider. Apparently the originals featured wording either in the advert body or the small print that no one reads on the screen, that Nat West would be giving impartial advice. This clearly was never going to be true so a complaint was made and upheld and the word impartial was changed to helpful - allegedly.

We see a string of scenes where bank advisers have been mobilised and are visiting people in their homes to sit them down and give them advice on their future plans involving savings etc. All very nice and friendly.

It does not escape the cynical amongst us that Nat West is owned by Royal Bank of Scotland who are at the centre of a storm on one person's investment advice, namely their former CEO Sir Fred Goodwin, who left with his formidable pension after clocking up a UK record for corporate losses. Of course, had RBS itself led with this advertising then we would have all fallen off our chairs, mouths frothing and spitting vilely at the TV at the audacity to show such hypocrisy as it is very unlikely that anyone watching the adverts would ever be treated so generously by the Bank.

Such is the genius of marketing people, that RBS had a brand that was still functioning well and had not been caught up the controversies surrounding its Board, although I dare say it contributed some of the losses to the group. It has been handy, in this instance, that the Nat West brand has not been assimilated and turned into RBS, as ABN AMRO has.

Bold Moves or Good Money After Bad?

It is an interesting argument on marketing spend in a recession.

Clearly, it is not wise to stop spending money on brand, image and general communication to the outside world in a recession - that only damages the company in the long term. Most would advocate being wiser on marketing and use different, perhaps lower cost methods to keep the momentum going and certainly not spending any more than necessary. So in Aviva's case, this is a huge gamble. There is a lot of cynicism out in the market particularly about the largess of banks and institutions generally. The insurance market has weathered the storm well as long as you discount one of the biggest of that fraternity, AIG. But there has been a belief by a number of economists that insurance stands at a precipice and that should there be many more body blows to the financial industry then insurance could become part of an inevitable domino effect.

Aviva not only flies in the face of this but they have actually done what could be described as, in the vernacular, corporate self-gratification. That a company should think so much of itself that by changing its name we will believe it is good is just bloated self-confidence, it could be argued. Certainly, to do it in such a gaudy way with household names of high standing telling us how good it is to change your name, we get to know that they have spent a fortune on this one thing.

Here's the rub - by using household names to tell us, they have missed the obvious point that the Aviva brand is virtually unknown outside of the insurance inner world and it is not a household brand name in the UK the way that Norwich Union was.

So the question must be asked of the Board - was this the right time to blow such a vast amount of money just to announce a name change? There wasn't even a single comment on there to tell us what to buy - it was all about self flagellation and it seems so inappropriate.

Or is it?

The risk for NatWest is unquestionably whether the public are clever enough to make the connection between Nat West and its troubled, disgraced parent, RBS. I did and I shouted out loud frightening the dogs and stormed around the room in a lather. It did not help that just over 3 years ago I changed all my bank accounts, personal and business, from Nat West after a series of appalling calamities, lack of service and the fact that they certainly did not value my custom. There were plenty interested in calling me to sell things, though.

I think this, again, is a gamble by Nat West. they have been clever enough to keep the brand alive despite being part of RBS and keep its own strand of image, very different from the more corporate looking parent, although I dare say there are many customers in Scotland that have banked with RBS for many years who have difficulty recognising the new RBS.

I suspect that Nat West have weighed all this up and concluded it's worth it. However, talking of savings in the current climate is actually a bit dodgy given the dreadful run on the stock market and low interest rates and given my own IFA (and I stress the I is for Independent) advised to liquidate some of my ISA assets prior to the crashes. Interestingly, the advice is to buy ISAs now in readiness for the inevitable upturn, not cash ISAs though as the returns look pitiful.

It will be interesting to see how the two companies do as a result. One thing is for sure, in the glossy world of marketing, measuring the return on corporate image campaigns on TV is notoriously difficult and full of flannel - worse still in the midst of a recession. It could be a bold move or a very silly one by each company.

And Finally - Ta Ta for Tata?

It's launch time for the world's cheapest car, the Indian Company Tata Motors built Nano. It measures 3 metres, has no radio, air conditioning, air bags, or power steering but it does come with 5 seats, 4 doors, a massive 33bhp, a 624cc lion of an engine at the rear and a wheel rather than satellite navigation for guidance.

All for the paltry sum of 100,000 rupees or to you, guv, £1,366.

You may think this is a stroke of genius by its makers in the heart of a recession, particularly when one of the associated stories tells us that a chauffeur who has driven many a swish vehicle for his employers, has in fact never been able to buy a car for himself. However, Tata is also taking a horrendous gamble.

The firm is struggling heavily under a mountain of debt and falling sales and made a loss of 2.6bn rupees for the quarter October to December. It is also having a problem getting a further $2bn of loans on top of the $1bn it borrowed to buy the Jaguar and Land Rover brands from Ford Motors as late as last June - they could not have made a more worse mistake in terms of timing. Worse still, the Nano is 6 months late and there has been associated problems with production after Tata got into a spat over the site of its proposed factory in West Bengal and switched to the site to a new one in Gujurat. That new factory will not be available to produce that car for another year and so production is at a reduced level than anticipated from its other factories.

The real problem is that the numbers simply don't add up. Even if it were to sell 250,000 cars this year, it will only add around 3% to the company's revenues. Further, at the bottom line, it is likely to take 5 to 6 years to break even on the product.

As they say, there is such a thing as bad business and revenue is vanity, profit sanity. While the car may well revolutionise the lives of a lot of Indian people who have never afforded transport in the way we take for granted in the further developed world, it is perhaps another ill-timed strategic move for a firm already in the grips of financial hardship.

It really could be a gamble that ruins the company.