Perhaps companies in the plastics industry—including processors, mold manufacturers, and suppliers of all types—could take a lesson from consumer products giant Unilever. In its Q2 and half-year financial results, it was interesting to note that in Q2 the company actually increased its advertising and promotions (A&P) spending by 50 basis points “as we stepped up support behind innovation and market development initiatives,” said Paul Polman, Unilever’s new CEO. “Both A&P were significantly higher despite lower media costs, strengthening our relative position.”
It’s not been an easy year for consumer products makers, but rather than pulling its head into its shell and trying to wait out the storm, not spending money on advertising and promotions, Unilever increased its spending on these items. It wants consumers of its products to know that it continues to innovate, coming out with both new and improved products to provide a reason for people to buy in spite of the fact that “consumer confidence remains low,” as Polman noted in comments to shareholders and the media.
When I hear people say they aren’t going to invest in new equipment or new technology, or that they are going to lay off their salespeople or cut back on marketing, advertising, and promotions, I cannot help but believe that this is rather short-sighted. At some point, things will come back because everything—yes, EVERYTHING—is cyclical. And when it comes back, companies will have to be ready to meet what is sure to be pent-up demand for products and services.
Many large OEMs are already concerned about the financial strength of suppliers in the plastics industry, including processors and mold manufacturers, and the ability of these suppliers to be ready to meet increased demand when it comes, as it surely will when the recession begins easing. Being a turtle isn’t beneficial, even in tough economic times.
Remember, when the going gets tough, the tough start marketing! —Clare Goldsberry