The end of the beginning
Jan Gooding evaluates the impact the Covid-19 pandemic has had on marketing - assessing what we've learned, and what should happen next
We all appreciate the power of storytelling. The compelling story that is worth remembering and repeating and that can create or destroy reputations. We are in a massive one now. And the story of how we each behave and lead our companies and brands will certainly be told afterwards.
Generally, the middle of any story is the hardest part to navigate. The plot gets complex. The significance of certain decisions lacks the perspective and understanding that comes with consequences. Without reaching a conclusion it is hard to track back and make sense of the pathway of steps that led you there.
It is time to look ahead
That is where we are right now in the era of coronavirus. The story is underway. Companies, brands and the media have adapted fast to limit the damage and protect their assets in readiness for the beginning of the end.
It is natural now to look ahead and to start to prepare for the unlocking of movement and the economy. Decisions need to be made in spite of imperfect information.
It is not acceptable to drift, there is too much at stake. Leaders will be keen to shape reality and seek out opportunities as they emerge.
People have been compelled to save
What is challenging about our current national lockdown, is that we are not just restricted in movement, we are restricted in what we can spend our money on. Not only are shops and restaurants shut, but we find ourselves unable to book and plan holidays, anticipate sporting fixtures or any form of live entertainment. Parents don’t even know when their children will return to school. Our futures are on hold.
A key idea in Keynes's General Theory (1936) was that faced with an uncertain future it was ‘expectations’ that most affected aggregate demand decisions. It has been accepted ever since that it is our view of the future, not the past, that drives how we spend or save our money.
Only arguably that is not true of today. It is our present reality, not our expectations, that is inhibiting both demand and supply. Even those of us fortunate enough to still be employed and drawing an income are being forced to defer consumption and save.
The problem is an inability to supply
We find that even activities that could have been conducted at home are constrained. DIY and gardening are classic occupations for people stuck at home. And yet warehouses and garden centres remain closed, unable to capitalise on the lucky bounce of an unprecedented surge in home improvement ambitions. Instead plants will be destroyed, paint and wallpaper will remain on the shelves unused, and the moment will have passed.
We all need a haircut. I learnt to my cost the limits of cutting my own fringe and enduring the laughter of my friends and family when they next saw me on Zoom.
However, hairdressers may not survive to take advantage of the surge in bookings when we finally emerge blinking from our homes. Anyone with a seasonal business, from nail bars to music festivals cannot get this time back. The demand is there, but it’s been impossible to supply.
Does the behaviour of the boss impact the brand?
An argument has been made about bosses who will ‘pay the price’ for their actions and experience a slump in the sales of their brands. There have undoubtedly been some business leaders who made some brutal calls in relation to their staff as this story began.
For example, Virgin Atlantic asking staff to take eight weeks unpaid leave. Wetherspoon’s boss Tim Martin initially saying staff should go and get a job at Tesco while the pub chain was shut, rather than taking advantage of the government job retention scheme. Sports Direct keeping its stores open on the basis that sports equipment was ‘an essential service’. Leading to angry calls for these brands to be boycotted in future.
The ‘backlash’ myth
The problem with this argument is that it is the staff, not their owners, who will be most punished if these brands lose customers. A slump in sales will result in fewer jobs and even worse pay prospects. I also wonder if people have so much choice over the brands they use when money is tight? If a pint in your local Wetherspoons remains the cheapest it stands to reason that is where you will go to buy one.
The truth is that the impact of treating staff badly is unlikely to have very severe consequences on these particular service providers who were compelled to mothball their operations. I am sceptical as to whether these brands will be at the top of a ‘brand blacklist’.
The people who wish it to be so are often not their customers. And as we saw when attempts were made to boycott Starbucks for making such a low contribution in tax, it just didn’t gain traction with the people who find it convenient to go there.
Some sectors are already winners
The brands who are growing fast have already been identified. Those fortunate enough to have the right proposition and the ability to quickly harvest demand. Sectors like gaming, video conferencing, media, video streaming, supermarkets, online retailers, and health providers. They are sitting on the services for which there is unprecedented demand which even they cannot completely fulfil.
There is unprecedented value to be had for those brands with the confidence to keep communicating with their customers"
New possibilities have opened up which other sectors must surely now leverage? Such as the shift in our relationship with the office and how they may be set up in future, so we make the best use of them. Work travel, whether commuting to work or visiting colleagues and customers will be rethought so it is even more efficient.
There will have been weaknesses made evident with the equipment we need to do our jobs from the point of view of security and connectivity. The limits of home-working have been laid bare as it becomes obvious that many people simply don’t have the luxury of a comfortable space and environment in which to work. New needs and new frustrations are there to be responded to.
Production innovation has been marked
We watched as 3D printing came into its own and led to the emergence of the cottage industry production of protective masks and other vital supplies. A beer brand made anti-bacterial gel and a Formula One team produced ventilator equipment. Our imaginations as to what brands have the ability and credibility to produce has been stretched, and there is opportunity in that too.
People are reappraising the wisdom of sourcing quite so much internationally. Particularly from China. Concerns about carbon consumption was already causing many to question our supply chains. The reality of restricted borders and regulation for years to come, until this particular pandemic has been quelled, will cause many to relook at more local production and sourcing. The price people are willing to pay for continuity of supply has surely shifted upwards.
Attentive audiences in traditional channels are on the increase
Advertising has been vital in explaining how brands have adapted to the new environment to share supply amongst customers and keep everyone safe. It must be completely maddening for media brands to be delivering unprecedented audiences at the very time that so many advertisers have postponed their campaigns.
New habits are being formed in media consumption and home entertainment which those brands will have to work hard to maintain when wider choice once again re-emerges. There is unprecedented value to be had for those brands with the confidence to keep communicating with their customers.
Brands who keep communicating should do well
Mark Ritson has written eloquently about the argument for brand owners increasing rather than cutting their advertising spend as we enter the recovery phase. The argument is underpinned by the compelling notion that share increased in a declining market can be harvested in the upturn.
There is undoubtedly an opportunity as we endure the muddle of the middle phase, to re-evaluate the whole marketing mix"
It is also entirely logical that brands have to keep on investing to fight for their share of spend during a recession. However, even Mark must admit that demand creation is usually accompanied by the ability to satisfy it with supply. Something extraordinarily constrained at present.
Distribution channels are being disrupted
We have all seen the pace of innovation that has been taking place in distribution. Wholesalers unable to supply pubs and restaurants finding ways to establish home delivery services. Farms and nurseries offering access to their products at a local level. Training and events organisations converting their programmes into digital formats. Distributors recruiting thousands of new staff to increase capacity. Perhaps some of these new routes to new markets will be retained afterwards?
The whole marketing mix is ripe for review
There is undoubtedly an opportunity as we endure the muddle of the middle phase, to re-evaluate the whole marketing mix. If we are to keep advertising our brands, taking advantage of unprecedented media value and levels of attention, we must also address supply.
The marketers who win in the end will have innovatively cracked all four P’s of the marketing mix - Price, Product, Promotion, and Place and re-written the story of their brands.
Jan Gooding is one of the UK's best-known brand marketers, having worked with the likes of BT, British Gas, Diageo, Unilever and Aviva. She is also the chair of PAMCo, Given (London), LGBT equality charity Stonewall, and the president of the Market Research Society. She writes for Mediatel News each month.