Fearless marketing forecast for 2009

Asia may become a top destination for global brands

Published January 9, 2009, Philippine Daily Inquirer

So far, the Philippine economy has remained relatively resilient in 2008 from the massive, rapidly descending free-fall of the global economy. GDP growth is estimated to have slowed down to 4.4% in 2008 versus a robust performance of 7.2% in 2007. Despite this and pocket behaviors of a slowing economy i.e. returning OFWs from affected advanced economy countries; dips in the automaker, manufacturing and export sectors, etc., there is more than enough bright news sustaining the performance of certain industries, companies and brands in 2008.

The International Monetary Fund (IMF) projects a 3.0 world GDP growth in its ‘World Economic Outlook October 2008 Financial Stress, Dowturns and Recoveries’ report. Much of the positive contribution will come from Asia with newly industrialized Asian countries contributing 3.2% and 7.7% for Developing Asia where the Asean 5 including the Philippines, China and India belong.

In 2009, more bailout packages will shore up advanced economies. While still presently inadequate, these economies are being infused with running amounts at $3.35 trillion by the United States and $3.36 trillion from the nine leading European countries.

All these indications point to the fact that no one advanced economy to the best of its capability will lend itself to a downhill battle which is welcome global news. So is this same attitude and mindset prevailing in the minds of local businesses and entrepreneurs? Not likely. Locally, most businesses are followers, over-calculated in their ways, highly risk-averse and less-opportunity seekers.

What’s in store for 2009

A new year marks new hope. Filipino consumer confidence and optimism is generally high when it comes to welcoming a new year. Not so for local businessmen anxiously expecting the falling of the axe in 2009.

Most ask, which industries and categories are likely to meet growth in 2009? Here are the lucky nine sectors likely to be resilient.

1. Brands in various categories, who are presently, top one or two in their markets and enjoying high awareness levels with no indications of slowing down in 2009. Recessions come and go, in various generations and times. It is how one responds to the economic crisis that makes one successful.

Marketing cases document how a number of brands have profited during recession. Philip Morris gained market share during the 1970s downturn by maintaining advertising and marketing spend while its competitors watched and waited. Nike in the 1990s tripled its marketing spend resulting in profits nine times higher during recession.

2. Local companies and brands in various categories with a differentiating, relevant brand story to tell and guts to overcome fear of investing in a forecasted doomsday economic scenario.

Regional and global brands are likely to prioritize their present strong markets over new, developing markets. This presents an opportunity for a challenger or follower brand in a market dominated by a global brand.

Then again, Asia might just become the favorite destination for global brands having a better economic forecast than elsewhere in the world. Still, local brands with fervor and passion must work to maintain, if not grow what they do have.

3. Brands with an economic story so long as they are told in a relevant way and with an adequate share of voice to reach potential target markets. Do it yourself (DIY) retail shops and economic substitutes in categories like food and beverage, healthcare, retail fashion, etc. are likely to be resilient.

4. Home entertainment versus out of home. Even in times of crisis, people have a natural tendency to want to feel good and indulge oneself once in a while. Modeling and duplicating fun experiences in-home, once enjoyed out of home in prosperous times, isn’t all too bad particularly when one is able to control and restrict expenses more effectively. Likely to benefit are convenience, instant meals; food deliveries; home entertainment and gaming; home furnishings, house wares and repairs, etc.

5. Personal care, toiletries and beauty products and services including spa, skin, body and hair care, etc. Filipinos, in good and bad times, are keen about their physical appearance. This must be because, Filipinos are generally proud. Despite economic adversity and skipped meals, if it can be helped one is not about to drastically reduce consumption in this area.

6. Health is wealth as most people know and have experienced. Even in economic adversity, if it can be managed, consumers will continue to support healthcare brands that they trust. Particularly in economic crisis, people value their health as this guarantees them sustained livelihood. Despite possible dips, the healthcare category particularly those that have built their brand’s image, in various categories that include preventive and therapeutic healthcare, nutraceutical and medical services shall remain relatively resilient.

7. Education is the source of sustainable development and for many centuries has been proven to help many individuals and nations rise out of poverty. Demand for education services will continue to rise as many seek to improve their skill. This windfall is likely to be enjoyed largely by educational institutions and experts who have become trusted brands.

8. Travel, lodging and travel-related services will remain heads above water. While business travel will be restricted substantially, with businesses opting to maximize communication technology and shift downward to economy travel, lodging and services; the demand for leisure remains, provided it is sustained with far more creativity e.g. new and exciting closer to home foreign and local destinations; shift from high-margin to low-margin but high value business strategy for travel agencies for both local and overseas leisure travel, etc.

9. Indulgent and luxury brands with authentic, socially responsible causes. Even the wealthy have become suddenly conscious about inconspicuous spending as much of the world is expected to go into recession. Nonetheless, pleasurable shopping is given a new twist by helping sustain authentic causes with every purchase e.g. saving the environment, alleviating poverty, providing sustainable livelihood, etc.

Contraction expected in downtimes

It is expected that a global recession the size of the 1930s depression will spare no one nation. In a recession this size, markets are expected to contract and the period of downturn will not be short. There will be winners and losers. But triumph will come to those who work hard to sustain demand in efficient ways during trying times; while loss and failure is but expected to come to the weak at heart, slackers and laggards who awaits the time when the economy will once again experience robust health and they can enjoy the crumbs falling from the table. Hopefully, this group prays that economic recovery comes quick before the ills of waiting eats up what little they have toiled and earned during robust times.