Duncan McCall A Marketing Communications Firm
Even in these hard times, we still avoid giving up simple luxuries like chocolate. Instead, we buy Hershey's rather than premium brands. Hershey's fourth-quarter net income was up 51%, topping analyst expectations, thanks to price increases and consumers trading down from premium chocolate. Another critical factor was increased advertising. The company spent 26% more on marketing for last year and is projecting another 20% to 25% marketing increase in 2009.
Hershey is benefiting from consumers trading down from premium-priced chocolates to Hershey's and Reese's, and even to it's new Bliss brand aimed at female consumers.
Any economic downturn favors a value brand, and Hershey's increase in marketing focusing on its core value brands is just smart business. This is a unique opportunity to expand their market share. And while they are having more trouble with its more costly Starbucks chocolates, they will be working hard to transition the new customers to their more premium brands as soon as the economy turns the corner.
Wal-mart, the king of value brands, understands the current opportunity. The huge retailer spent as much as $300 million more on marketing in 2008 while much of its competition pulled back. In fact, Wal-mart will go from having the ninth largest ad budget in the category to having the second, just behind Macy's. It seems clear that Wal-mart smells blood in the water and is moving in to take market share.
If your product or service can be positioned as a value relative to the competition, this is a golden opportunity. Increasing your marketing now, while consumers are looking for values and the competition is likely cutting ad spending, is a tried and true way to expand your market share.
Posted on Monday, Feb 9, 2009 by Bryan McCall
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