Unilever Ghana Chief Executive Officer, Mr. Charles Cofie has cautioned that the last thing for businesses to do in the face of declining sales, is to take the problem out on consumers and reduce product quality while raising prices.

He said companies would rather be wise in committing a substantial portion of their marketing budgets to reinforce the core brand proposition of their main brands, since empirical evidence from the 2001 to 2002 recession shows that consumer goods categories that were able to increase market shares by actually capturing market shares of weaker rivals, did so by maintaining or increasing their spending during the turbulent time, and were able to do so more cost effectively than even during the good times.

Mr. Cofie said as a result of what he termed ‘recession psychology’, consumers have adjusted their behavior in fundamentally different ways, and while some may continue to live for today and therefore be unconcerned about saving money for heady days in the future, others who may feel extremely vulnerable and hard hit, will just slam the door hard on consumption patterns so to eliminate, postpone or decrease all types of spending.

“Consequently, we should not expect consumers to respond in characteristic manner to our marketing programmes and activities they have come to know over the years.”

Mr. Cofie was speaking at the maiden Graphic Business Roundtable Forum on the theme: Turn Around Strategies During Global Recession held at the Alisa Hotel in Accra. He was addressing the issue of Tools to overcome Global Recession.

The Unilever boss said as companies begin to feel the pinch of the recession, “the temptation rises to look for all possible means to save money” and one of the first casualties turn to be advertising and promotion budgets.

He advised however, that it is imperative for businesses not to become complacent but they should push at maintaining and even growing market shares for the simple reason that shoppers of branded goods will not give up on product quality and they will continue to search out trusted brands at the point of purchase, arguing that it is not true shoppers always go after the cheapest alternative.

“They balance perceived price against quality and affinity of the brand and so for marketing practitioners, this is actually the challenge for us to strengthen brand equity.”

Describing the current downturn as one that “appears to be a perfect storm,” he said it is “set with the entire spectrum of all the factors that impact negatively on consumer demand as well as the operating margins of enterprises. "Specifically, we have a decreasing consumer confidence, decreasing consumption, rising consumer prices, under inflation, disposable incomes being squeezed, defaults of mortgages and consumer credits, increasing power of retailers and rising input cost,” unlike the recessions of the ‘70s, ‘90-‘91, or even the 2001-2002.

Market Trends

According to Mr. Cofie, in Ghana the recession is further compounded by a cedi that has depreciated substantially over the last couple of months, and it is the greatest concern of local chief executives.

He said in times of economic uncertainties, it is the low income consumer who is affected the most, and available data show down-trimming, downsizing and channel switching is underway globally and also right here with us as Ghanaian consumers rely more on staples and basic goods.

“People are switching from saving time to saving money, households are taking fewer shopping trips and average basket sizes are becoming smaller.”

Mr. Cofie said in the developing world, the marketing task faced by marketers even in good times, was designed to change consumer behavior and to bring new users into their category and also to create the habit of regular use through group education, product demonstrations and sampling, among others.

But the current global recession has considerably changed the scope and content of the marketing job, he said, “and since the current recession has been unusually severe, consumer confidence and trust in businesses are at exceptionally low levels.”

He said market uptake depends largely on consumers having disposable incomes, feeling confident about their future, trusting in government, business and the economy and embracing lifestyles that encourage consumption.

Mr. Cofie therefore asked marketers to plan differently; they should pay attention to preparation; focus communication on reassuring consumers that the same old brands deliver the trusted quality they are associated with; reduce spending on promotion in favour of building brand equity; manage price to maintain price relativity and pay attention to packaging, among several other suggestions.


Story by Isaac Yeboah/Myjoyonline.com/Ghana