The Meltdown: A time for ‘guerrilla ideas’

The economic slowdown has seen the industry go on the backfoot and optimism is not really on the top of anyone’s minds. However, amid the meltdown, more and more marketing and media agencies have started to view the opportunities in challenging times, conceptualising a great idea that can compensate for falling spends. exchange4media talks to some industry people who feel this is more of a time to out-think and out-do.

A time for brave ideas, a time to be seen more

According to Varghese Chandy, Senior General Manager, Marketing Operations, Malayala Manorama, “The meltdown has a lot to do with panic reaction, which leads to negative sentiments. It is, in fact, a time for the brave ones to come out with the best.”

Striking a similar positive note, Senthil Kumar, Executive Creative Director, JWT India, said, “If something is melting, then it’s time for a cool idea from our melting pots. If some things are going down, that’s only because it is time for other things to climb up. If the budgets are low, then it’s time for the quality of your guerrilla ideas and low budget executions to reach for the sky.”

K Satyanarayana, VP/Communication Partner, Media Direction, said, “Agencies would certainly work harder to offer effective, efficient and innovative options to their clients. The opportunity for visibility will certainly improve when the relative clutter level is low.”

While commenting on the increased opportunity of visibility during the recession time, Senthil Kumar said, “The ad spends have definitely gone down, but this is the time to go beyond the brief and encourage the creative teams to explore beyond mainstream media. The teams are already dealing pretty well with the current situation and taking every day and every constraint head on, just like how true guerrillas would function in the event of rationing of supplies and restricted movements in a very unfriendly jungle.”

Troubleshooting

Ramesh Viswanathan, Executive Director, Cavinkare, while explaining in detail the effects of a meltdown on the FMCG sector and the possible damage control measures, said, “The FMCG space, for the moment is less affected than some other sectors (like auto, aviation, real estate, etc.), and category growths are continuing in line with previous years. That is not to say that it will continue to remain like that, as if the recession/ lower economic growths continue it will catch up with this sector as well.”

The real concern for FMCG companies is the cost inflation that has happened over the last year, wherein prices of raw and packing materials shot up and did not come down despite some correction in global factors like crude prices or local factors like inflation. The rising dollar is one strong reason for costs continuing to be high, since some of the material in the product is imported.

Given the rising costs, FMCG companies have two options – increase prices or reduce costs. Increasing prices is not an easy option, since there is a fear that demand will fall in such a scenario. So, how do companies reduce costs?

1. Through cost re-engineering of products. Using alternate material for formulations or packaging such that performance continues to be as good if not better, but costs come down. This is not as Utopian as it sounds, since only in case of pressure do managers go out looking for alternatives and only when they do that do they find multiple options, some of them meeting their objectives, some surpassing them.

2. Manage overheads. Difficult times are again the only time when companies actually relook at each and every element of their overheads and see how much fat they have put on. Travel, communication, electricity, even the cups of coffee get reviewed only in these times. And when companies take corrective measures, it is towards long term benefit because the fiscal prudence developed stays even when the difficult times are over.

3. Review heavy expenditure items like advertising. Advertising forms the largest head of expense for an FMCG business. Any irrational cut of the same can lead to drop in demand, but companies can look at their advertising basket and decide what can be held back and what definitely must be invested into. Once again, the fat can be trimmed, but companies need to ensure that they don’t cut the muscle in the process, which would continue to add strength to the brands. Companies should also look at renegotiating costs with advertising suppliers – there might be opportunities if the overall sentiment is down and there is space going unutilised.

There is a vicious cycle in such times that should be avoided, such as increasing prices, which would lead to a drop in demand, and to compensate that there could be a cut in advertising spend, which would lead to further drop in demand or worse, in people, on whom a significant investment has been made. All these would have a detrimental long-term effect.

Citing the example of the Grand Kerala Shopping Festival, Chandy said, “It is the time when media needs to take the initiative to advise the advertisers on how to convert the present situation into opportunities. There is scope for the consumers’ money to be channelised in a productive way. Cost cuts should not be forced upon one, rather it is something that should happen when the business demands and not necessarily during a meltdown.”

Senthil Kumar further said, “The way I see it, there’s never been a better time than now for small and medium businesses to go out there and shout from the mountain top. Even for big MNCs who have been hit financially, being seen as a visible brand in the midst of a meltdown can only mean positive things for all their stakeholders. A big splash could even revive their fortunes in the share market to some extent.”

Thus, despite sounding a bit too revolutionary, the meltdown can be viewed as a time when some of the best ideas are born, when some of the best business options are tried, when some of the best lessons are learnt, and which continue to be a repository of case studies when the bad times are gone.

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