June 9, 2009. CEIBS Lujiazui International Financial Research Center -- CEIBS featured two incoming senior professors for evening presentations on “Marketing in the Crisis” for the school’s Corporate Advisory Board tonight at the Liujiazui International Financial Research Center.

To begin the evening, CEIBS Dean and Vice President Rolf D. Cremer introduced professors John Quelch, La Caixa Visiting Professor of International Management at CEIBS, and Charles Waldman, incoming Professor of Marketing at CEIBS (beginning December 2009) and current Senior Affiliate Professor of Marketing at Insead.

Prof John Quelch, La Caixa Visiting Professor of International Management at CEIBS

Drawing from the article “How to Market in a Downturn,” recently published in the Harvard Business Review, Prof Quelch began his talk by commenting that in China, given the nation’s expected GDP growth-rate of 6% for 2009, discussions of the downturn are markedly less dire than elsewhere worldwide. He joked that in the United States, by contrast, 2008 was a good sales year for such items as home safes (for holding one’s gold ingots), for aspirin and antidepressants, and for repair of shoes and PCs.

Prof Quelch introduced four customer segments that have emerged during the downturn: “slam on the brakes,” “pained but patient,” “comfortably well off” (but laying low), and “live for today.” He then introduced four new categories for purchases: essentials, treats, postponables, expendables. Finally, he advised managers to graph the four emerging customer segments against the four emerging purchase categories to determine where your products and services fit into the new “downturn” matrix. This exercise can show what percentage of your sales volume falls into each quadrant. “This helps you see how the recession hits your business,” Prof Quelch explained, adding that once your weak points are clear, you can move strategically to secure sales by bolster marketing or strengthening customer services in a category of purchase and customer.

Prof Quelch also advised against making the three “worst mistakes” common in a downturn: cutting R&D, slashing marketing across the board, and canceling staff training and development. “Avoid overkill,” he said. “If there is a V-shaped recovery, you’ve lost your sales capacity when the recovery happens.”

Managers can use the recession as an opportunity to rethink your products and services, and to focus clearly on “solving customer problems,” he advised. Smart moves during tough times include continue to innovate, maintain quality, avoid price cuts, and “hold the customer’s hand.” One trend to note: use of ‘social networking’ internet sites, such as Facebook, are soaring in popularity as inexpensive channels for people to reach out to friends and family. Lastly, he pointed out that recessions can trigger creativity and innovation, pointing to companies that have launched now successful products during downturns including Charles Schwab, which launched discount brokerage commissions in 1974, and American Airlines, which debuted its frequent flyer program in order to retain customers, during the downturn of 1981.

Prof Charles Waldman, incoming Professor of Marketing at CEIBS

"Shoppers and Consumers Changing Behaviors in Gloomy Times," was the topic of the presentation by Prof Charles Waldman. During the downturn, he stressed, market research is essential because consumer thinking can change significantly. As a first example, he showed the results of a recent survey in which US consumers named their top three “untouchable” products (items they will not give up despite the downturn) as: cel phone, internet access and cable TV subscription -- an indication of the high priority that Americans now place on communication tools. “Know your customers,” said Waldman. “They differ from place to place.”

Another example of changing mindsets, Prof Waldman said, can be seen in emerging trends among Europeans in food consumption. While food consumption is traditionally the “least fragile” product during a downturn, in recent months, a trend has developed in Europe toward more home cooking and home entertaining. Sales are rising in upscale food products as more shoppers plan weekend dinner parties. Prof Waldman advised smart food retailers to employ in-store cooking consultants to answer consumer questions and promote sales of upscale groceries to the new population of at-home chefs.

Other emerging trends among crisis-hit European consumers, according to Prof Waldman, are: replace as needed, buying in smaller packages, comparison shopping, DIY, and moves to curb impulse shopping -- including not taking the children when shopping for groceries. Interestingly, he mentioned that less understood products such as organic foods and natural cosmetics have fallen sharply since the recession hit. Overall, he said consumers are moving “back to basics”.

In sum, he advised managers to focus on innovation and customer services, but tailored to the new frugality, and on maintaining emotional ties with buyers. This is a good time, he said, to pamper and empathize with consumers. As an example of a company cashing in on the downturn, he pointed to UK-based food retailer Tesco. In recent months, the company has seen sales rise not only in its Tesco Discounter brand (a direct response to demand for hard discounts) but also in its premium Tesco Finest line, which includes gourmet foods and catered meal delivery via Tesco.com

More than 25 members of the Corporate Advisory Board attended the meeting, engaging in a Q&A after the presentations and a networking dinner. CEIBS welcomed new corporate sponsors Randstad and Shangri-La among attendees.