In 2015, the Malaysian economy entered a challenging phase. The global fall in oil prices puts economies like Malaysia in a difficult position due to their significant reliance on natural resources. A predicted slowdown of economic growth from 5 per cent last year to 4 per cent in 2016 will affect big business first, but the next dominoes to quiver are SMEs which are not as resilient to market dynamics. The question now is how to thrive in an economy where many will struggle to survive?
SMEs based in Malaysia are now at a crossroad as to how to weather the current financial storm. One time honoured strategy is to cut costs, batten down the hatches, and try to ride it out. But SMEs do not necessarily have the same labour (they’re lean) and operational efficacy (they’re efficient) cost-cutting opportunities as their MNC counterparts.
It seems inevitable then that for SMEs, ‘cost-centres’ such as marketing are first on the chopping block. You can understand why. It’s hard to easily attribute specific revenues to more intangible assets such as brand. But when MNCs are continuing to spend, albeit slightly less, SMEs who do make marketing cuts risk losing share of voice and market.
Don’t stop believing.
Landor’s analysis (see chart below) indicates that reducing marketing investment and trying to trade through tough times might not bode so well for brands in the longer term. The research actually highlights that it could be pertinent to continue (or maybe even increase) investment.
By continuing to spend in agile ways, it is possible for small businesses to steal share of market from those who do make cuts by creating greater differentiation and relevance, and also to create new markets by embracing innovation as an investment.
Learning from recession busters
Create greater relevance.
P&G realised during the great depression in the thirties that people were staying at home rather than going out for entertainment. In reaction to this, they re-allocated their marketing budget away from traditional TV and print advertising to the sponsorship of television and radio drama (eventually deemed soap operas thanks to the nature of product sponsorship). The result of this agile move was greater relevance with consumers and a market leadership position as a bonus.
Snuggle up to your consumer.
In 2009 the Snuggie was snapped up by almost 20 million people globally. The ‘robe you put on backwards’ was a triumph of timing and actively watching consumer behaviours. When times are tight, people save money by curling up on the sofa and watching movies, Snuggie enriched the experience.
Inspire people and involve people.
During the Global Financial Crisis (GFC), Boston Beer’s Samuel Adams brand instigated the LongShot contest for the best homebrew recipes among customers and employees. Winners were mass-produced and sold in a mixed six-pack the following year. The initiative provides ongoing inspiration to foster new and interesting elements of home brewing into everything Samuel Adams does.
These businesses all have a common attribute. An agile mindset and a willingness to rapidly change strategies in response to market conditions and consumer needs. So how can Malaysian SMEs adopt it? In a recent study conducted by Landor, we identified six traits commonly held by agile brands. These were ‘principled’, ‘adaptive’, ‘responsible’, ‘multichannel’, ‘global’, and ‘open’.
Applying agile thinking in an SME context
As Malaysia’s businesses begin to cut marketing spend, tough times could mean golden opportunity for the country’s SMEs to adopt an agile mindset and start to steal share of mind and market from business big and small.
Embrace innovation – actively listen.
Understand consumer and customer needs to find new ways to adapt to the current context. It doesn’t necessarily have to be breakthrough innovation, it could be a smaller format version of an exiting product, or a new closing mechanism that allows consumers to store your product for longer. The point is to actively listen and create accordingly.
Address portfolio strategy– maximize your coverage.
If people are down trading from your core proposition, re-address your portfolio to catch them. If they are down trading to your core proposition, then spend marketing dollars to create stand-out from the crowd.
Be an expert – own what you do.
Shift some of your marketing dollars to initiatives that reinforce your leadership perception, such as branded content. Even if you’re not a market leader you can still be the preeminent expert in what you do. So launch a platform that allows you to talk expertly about your area and begin to build a community that sees you as the go-to.
Invest in good – be responsible.
In difficult times, consumers react well to businesses who visibly try to improve business practices. Contribute to your local community, embrace your Malaysianness and show you feel a sense of responsibility to improving local lives.
Involve people – make them feel part of you.
Ask consumers to help you create a new product, flavour or service. Social media is a tool perfectly designed to create this kind of connection, and audiences appreciate being involved in the journey.
It is easy for Malaysia’s businesses to follow their global counterparts and cut marketing spending when times are tough. However, this difficult climate provides ample opportunity for Malaysian SMEs if they apply agile thinking.
Charlie Cookson is the Senior strategist of Landor Singapore