CALAMITY

presented at the 7th Americas Marketing Forum

The Economist and Young & Rubicam Brands
17-18 March 2009
St Regis Hotel, San Francisco, California

please use with permission only, just ask,

we’re happy to grant

John Gerzema
 CALAMITY:
MARKETING YOUR WAY
OUT OF THIS RECESSION

SOURCE: CONDE NASTE PORTFOLIO, JANUARY 2009

Copyright John Gerzema/Young & Rubicam
RESULTS 1–10 OF ABOUT
22,200,000 FOR RECESSION
AND MARKETING

2 Copyright John Gerzema/Young & Rubicam

FUNDAMENTAL SOCIETAL
SHIFT
FROM A CREDIT TO A CONFIDENCE CRISIS

SEA CHANGES IN CONSUMER BEHAVIORS

COMPANIES MUST CHANGE
HOW THEY CONNECT WITH CONSUMER

Copyright John Gerzema/Young & Rubicam

MANAGING FOR AN UPTURN

SUPERIOR CASH FLOW AND

SUSTAINABLE GROWTH
ALIGN BRAND AND BUSINESS
STRATEGY
ACQUIRE TALENT AND QUALITY
DO MORE WITH LESS
SHARPEN MESSAGING AND ROI
RETURN TO YOUR CORE
FACE YOUR CUSTOMER

3 Source: Y&R Strategy, HBR: Anthony T Jan, John Quelch Copyright John Gerzema/Young & Rubicam
HALF OF ALL GLOBAL WEALTH
HAS EVAPORATED

$36 TRILLION DOLLAR LOSS

WORLDWIDE
S&P 500 DECLINED 64.4% FROM 2000
45% OF AMERICAN WEALTH FROM LOSS
OF EQUITY AND HOUSING VALUES
AVERAGE RECESSION IS 6-12 MONTHS.
THIS IS A MARATHON
5 Source: Bloomberg, Iconoculture March 2009 Copyright John Gerzema/Young & Rubicam
THE NEW FEAR ECONOMY

UNEMPLOYMENT NATIONAL DEBT

HOUSING VALUES DETROIT

EQUITY MARKETS CURRENCY VALUATION ?

INTEREST RATES ? PROTECTIONISM ?

COMMODITY PRICES BANK LENDING

IN(STAG)FLATION ? FACTORY & HOUSING STARTS

BAILOUT ? CREDIT CARD EXPOSURE

}
CONSUMER CONFIDENCE

6 Copyright John Gerzema/Young & Rubicam

THE LARGEST U.S. BUDGET
DEFICIT POST WWII

8 Source: Board of Governors of the Federal Reserve System Copyright John Gerzema/Young & Rubicam
VISUALIZING THE BAILOUT

9 Source: The Atlantic Copyright John Gerzema/Young & Rubicam

HOUSING VALUES CONTINUE TO
DECLINE ACROSS THE U.S.

10 Source: “Irrational Exuberance”, 2nd edition, 2006, by Robert J. Schiller Copyright John Gerzema/Young & Rubicam
A GROWING REALITY:
A MORTGAGE IS FOREVER

11
19 Source: Copyright John Gerzema/Young & Rubicam
AMERICAN’S HOMES NO LONGER
PERSONAL LINES OF CREDIT

11 Source:Us Department of Housing and Labor, 2009 Copyright John Gerzema/Young & Rubicam
WHILE THE CREDIT CRISIS HAS
HALTED HOUSING STARTS

12 Source: www.calculatedriskblog.com Copyright John Gerzema/Young & Rubicam

INTO THE GREAT WIDE OPEN

UNEMPLOYMENT 8.1%; HIGHEST

IN TWENTY-FIVE YEARS
THIRD STRAIGHT MONTH OF
600,000 JOBS LOST

4 Copyright John Gerzema/Young & Rubicam

THIS PERIOD MARKED BY MOST JOB
LOSSES, WEAKEST RECOVERY

13
Source: Change in Nonfarm Pay rolls, Reported Monthly, Bureau of Labor Statistics, U.S Dept of Labor Copyright John Gerzema/Young & Rubicam
 AN EQUAL OPPORTUNITY
RECESSION

MILLIONAIRES HAVE LOST ONE-

THIRD OF THEIR NET WORTH.

15 Source: Copyright John Gerzema/Young & Rubicam

AFFLUENT MORTGAGE
RATE DEFAULTS

16 Source: LPS Applied Analytics Copyright John Gerzema/Young & Rubicam

THE ONLY CERTAINTY IS
UNCERTAINTY

22 Source: Copyright John Gerzema/Young & Rubicam

ONE STORY IN
THE AMERICAN NIGHTMARE

18 Source:New York Times Copyright John Gerzema/Young & Rubicam

MASLOW UPENDED:
MARKETING MUST MOVE FROM PASSION TO COMPASSION

20
07

20
09
17 Source: American Progress.org February 2009 Copyright John Gerzema/Young & Rubicam
TECTONIC SHIFTS IN
CONSUMERISM FROM THE
CULTURAL LOSS OF TRUST

21
23 Copyright John Gerzema/Young & Rubicam
 SELFISHNESS AND
COLLUSION

24 Copyright John Gerzema/Young & Rubicam

EGREGIOUS AND CRIMINAL
BEHAVIOR

25 Copyright John Gerzema/Young & Rubicam

FAILURE OF REGULATORS

24
33 Copyright John Gerzema/Young & Rubicam
TAXPAYERS ARE NOW
SHAREHOLDERS

30
25
Copyright John Gerzema/Young & Rubicam
DECAYING INFRASTRUCTURE

26 Copyright John Gerzema/Young & Rubicam

 LACK OF PERMANENCE

27
28 Copyright John Gerzema/Young & Rubicam
28
Copyright John Gerzema/Young & Rubicam
29
Copyright John Gerzema/Young & Rubicam
 Source: Millward Brown Optimor 2007

30
Copyright John Gerzema/Young & Rubicam
THE 250 MOST VALUABLE
GLOBAL BRANDS ARE
$2.197 TRILLION DOLLARS
WHICH EXCEEDS THE GDP
OF FRANCE

31
Copyright John Gerzema/Young & Rubicam
BRAND ESTEEM AND
REGARD IS DOWN 12%

BRAND AWARENESS HAS

DECLINED BY 20%

PERCEPTIONS OF BRAND
QUALITY HAS ERODED 24%

TRUST IN BRANDS HAS

DECLINED BY 50%

32
Copyright John Gerzema/Young & Rubicam
TRUST IS DESIRABLE, BUT IT HASN’T
DIFFERENTIATED

35 Source:BrandAsset Valuator 1993-2007 Copyright John Gerzema/Young & Rubicam

 IN THE PAST QUARTER, A ‘TRUST VIRUS’
INFECTED MANY CATEGORIES

36 Base: BAV USA Q4 2007, Q4 2008; All Adults

Copyright John Gerzema/Young & Rubicam
37
“I SCREWED UP”
Source: Barack Obama Press Conference, February 2009 Copyright John Gerzema/Young & Rubicam
CONSUMERS ARE BEGINNING
TO OWN THEIR PROBLEMS

38 Source: Time Magazine Copyright John Gerzema/Young & Rubicam

SAVINGS RATE HAS RISEN IN PAST FIVE
CONSECUTIVE MONTHS

40 Source: U.S. Department of Commerce: Bureau of Economic Analysis Copyright John Gerzema/Young & Rubicam
 Q4 SPENDING FELL 3.7% FROM Q3 -
STEEPEST DECLINE IN 62 YEARS.
$3 TRILLION IN SPENDING STOPPED IN Q4, WAS SUSTAINING US GDP

41 Source: www.calculatedriskblog.com Copyright John Gerzema/Young & Rubicam

CREATE COMPETITIVE
ADVANTAGE NOW

EVERY RECESSION ENDS...EVENTUALLY

CONSUMERS MOVING FROM ANXIETY TO ACTION
HOW YOU ACT NOW WILL SHAPE YOUR FUTURE
PERFORMANCE
39
Copyright John Gerzema/Young & Rubicam
THE NEW RULES OF
‘POST-CRISIS CONSUMERISM’

NEW
CULTURAL VALUES

NEW
CONSUMER BEHAVIORS

NEW
MANAGEMENT PRINCIPLES

44 Copyright John Gerzema/Young & Rubicam

 POST-CRISIS CONSUMERISM
RULE #1

CULTURAL VALUE = INDESTRUCTIBLE

SPIRIT

CONSUMER STRATEGY = DURABLE LIVING

MANAGEMENT = BRAND THAT

PRINCIPLE LASTS

41 Copyright John Gerzema/Young & Rubicam

 CULTURAL VALUE = INDESTRUCTIBLE SPIRIT
CONSUMER BEHAVIOR = DURABLE LIVING
MANAGEMENT PRINCIPLE = BRAND THAT LASTS

DURABLE LIVING

•CONSUMERS ARE DRIVING AND DINING OUT LESS

•USE OF COUPONS IS UP 300%
•PRIVATE LABEL UP 12%
•“SWISHING” PARTIES TO EXCHANGE CLOTHING
•REPAIR FOR SHOES, CLOTHES AND CARS IS UP 22%
•AMERICANS SPENDING IN ‘RETURN TO HOME’
•68% OF AMERICANS NOW CARRY A LIBRARY CARD
•SPICES BEING USED IN LIEU OF EXPENSIVE FOODS
•VALUE RECIPES GROWING MORE POPULAR
•CRAIGSLIST POSTING 100% INCREASE IN TRAFFIC

46 Copyright John Gerzema/Young & Rubicam

 CULTURAL VALUE = INDESTRUCTIBLE SPIRIT
CONSUMER BEHAVIOR = DURABLE LIVING
MANAGEMENT PRINCIPLE = BRAND THAT LASTS

BRAND THAT LASTS

43
Copyright John Gerzema/Young & Rubicam
 POST-CRISIS CONSUMERISM
RULE #2

CULTURAL VALUE = ETHICS AND

FAIR PLAY

CONSUMER STRATEGY = EMPATHY AND

RESPECT

MANAGEMENT = VALUE AND

PRINCIPLE VALUES

44 Copyright John Gerzema/Young & Rubicam

 CULTURAL VALUE = ETHICS AND FAIR PLAY

EMPATHY AND RESPECT

CONSUMER BEHAVIOR EMPATHY AND RESPECT
MANAGEMENT PRINCIPLE = VALUE AND VALUES

• SEEKING BRANDS THAT SUPPORT SIMILAR BELIEFS AND CAUSES

• BE TRANSPARENT (WHITEHOUSE.GOV)
• USER REVOLT AND RESPONSE (FACEBOOK)
• ENCOURAGE CONSUMER PROBLEM SOLVIN (LEGO)
• CONSUMERS EXPECT YOU TO Don’t stop believing
• GOING GRASS ROOTS AND GREEN (TRUE NORTH)
• CULTURAL SHIFT TOWARD SCORNING GREED
• CONSUMERS EXPECT TO BE REASSURED DURING A CRISIS
• ENRICH COMMUNITY TO CLOSE SALE

50 Copyright John Gerzema/Young & Rubicam

 CULTURAL VALUE = ETHICS AND FAIR PLAY
CONSUMER BEHAVIOR EMPATHY AND RESPECT

VALUE AND VALUES

MANAGEMENT PRINCIPLE = VALUE AND VALUES

46 Copyright John Gerzema/Young & Rubicam

 POST-CRISIS CONSUMERISM
RULE #3

CULTURAL VALUE = LIQUID LIFE

CONSUMER STRATEGY = DÉCLASSÉ

CONSUMPTION

MANAGEMENT = DOLLARS AND

PRINCIPLE SENSE

47 Copyright John Gerzema/Young & Rubicam

 CULTURAL VALUE=LIQUID LIFE
CONSUMER BEHAVIOR = DÉCLASSÉ CONSUMPTION
MANAGEMENT PRINCIPLE= DOLLARS AND SENSE

DÉCLASSÉ CONSUMPTION

48
Copyright John Gerzema/Young & Rubicam
 CULTURAL VALUE=LIQUID LIFE
CONSUMER BEHAVIOR = DÉCLASSÉ CONSUMPTION
MANAGEMENT PRINCIPLE= DOLLARS AND SENSE

DOLLARS AND SENSE

49
Copyright John Gerzema/Young & Rubicam
POST-CRISIS CONSUMERISM
RULE #4

CULTURAL VALUE = RETURN TO THE

FOLD

CONSUMER STRATEGY = COOPERATIVE

CONSUMERISM

MANAGEMENT = COMMUNITY
PRINCIPLE ORGANIZER

50 Copyright John Gerzema/Young & Rubicam

 CULTURAL VALUE = RETURN TO THE FOLD
CONSUMER BEHAVIOR = COOPERATIVE CONSUMERISM
MANAGEMENT PRINCIPLE= COMMUNITY ORGANIZER

COOPERATIVE
CONSUMERISM

51
Copyright John Gerzema/Young & Rubicam
 CULTURAL VALUE = RETURN TO THE FOLD
CONSUMER BEHAVIOR = COOPERATIVE CONSUMERISM
MANAGEMENT PRINCIPLE= COMMUNITY ORGANIZER

COMMUNITY ORGANIZER

52
THE OPPORTUNISTIC CEO:
BRAND MANAGER IN CHIEF

53
Copyright John Gerzema/Young & Rubicam
MARKETING IS NOT A COST, BUT
A FIDUCIARY RESPONSIBILITY
TO SHAREHOLDERS

54
Copyright John Gerzema/Young & Rubicam
THE CHINESE CHARACTER FOR
CRISIS ALSO MEANS OPPORTUNITY

BAD COMPANIES ARE DESTROYED

BY CRISIS. GOOD COMPANIES
SURVIVE THEM. GREAT COMPANIES
ARE IMPROVED BY THEM.”
—ANDY GROVE

65 Copyright John Gerzema/Young & Rubicam

 CONSUMERS REWARD
BRANDS WITH ENERGIZED
DIFFERENTIATION

Source: Gerzema, Jacobson, Lebar, Mizik, Stanford and Poor’s COMPUSTAT over 1988-2003, University of Chicago’s Center
for Research in Security Prices from 1993-2003. BAV 1993-2004
56
Copyright John Gerzema/Young & Rubicam
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Copyright John Gerzema/Young & Rubicam
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