Firms charm customers with crisis marketing strategies

Newsroom 04/05/2009 | 16:12

During times of financial restrain, customers go for lower priced products, downsize budgets and like to pick cheap offers. This mind shift was already felt on the Romanian market, where retail sales have dropped since the beginning of the year, with value per shopping spree having reduced by around 20 percent for fashion retail, for example.
In top of the products the Romanians buy and/or consume less are the products of furniture and interior decorations, electronic products, as well as clothing and footwear that nearly 40 percent of Romanians say they will buy less, according to a recent Synovate study.
To keep customers coming to their stores and encourage spending, retailers have to bring in their marketing tools, and special offers are one way of achieving this. It doesn't cover only fashion retail. Romanian customers nowadays get special offers for car purchases, holiday packages, IT&C products, spa packages, books, banking products and even stock exchange trading services.
For sellers, the profit margins shrink, but promotions ensure a flow of sales meant at least to help them survive during the downturn.

Fashion tries on its marketing schemes
Both good and bad news are coming from consumers. On one hand, one in three Romanians says they have reduced their fashion purchase budgets, and 30 percent of them intend to do the same in the future, reveals a study by Synovate carried on in February this year. But on the other hand, food sales could be less affected, as only half of the respondents said they were thinking about reducing their budgets for food.
Again on the bright side, there are still 3 Romanians out of 10 who don't intend to decrease their budgets to offer gifts, and only 9 percent have given up on buying branded products.
Romanians' perception follows the reality – they think the car industry, construction and agriculture are the worst hit by the financial crisis.
In fashion retail, special offers either target a short term increase in traffic in the stores and consequently higher sales or an increase in the customer loyalty to the brand. “Case by case, such promotional activities can generate an increase in traffic by 10 to 20 percent. But we also organize promotions which aim at increasing the customer loyalty,” Alexandra Dumitrescu, marketing manager with Rafar tells Business Review. The company, which runs fashion stores under different brands in Romania has been running promotions in its stores since the beginning of the year, with discounts up to 30 percent on certain products. “Promotions are something constant in our marketing activity and we organize them based on plans agreed with each brand before the beginning of each season,” says Alexandra Dumitrescu.
In Debenhams stores, one of the brands in Rafar's portfolio, the average value per purchase has dropped by 10 percent in Bucharest, and by 15 percent for its stores in the rest of country.
The retailer used promotional offers similarly to last years, but came up with new ones too, and says such promotions have led to an increase in sales compared to the period before the special offer period. In Rafar's case, these offers vary from price reductions to cross promotions with other brands on the market to offer complementary products.

Forex and stock trading do for special offers too
Stock exchange trading is by far not as a common activity in Romania as shopping for clothes, and 2008 was not a particularly good year for stock market investors, with stocks falling to historic lows. Deltastock, an online broker of shares and Forex has decided to run a promotional offer to increase its number of clients and raise awareness.
Each customer who opens a trading account with Deltastock in April in May will get double the first sum they deposit in their trading account for sums lower than EUR 1,000. This anniversary offer's target is a 50 percent increase in the number of the firm's customers, Cristian Enache, broker with Deltastock tells Business Review.
“This offer aims to help those who start trading on external markets and implicitly increase the number of those who use the Delta Trading platform,” says Enache. The firm targets local traders who want to expand their portfolios, with above average financial power who make investments decisions using trading software for external markets.
“In the first month, we have easily reached pour target and the interest we have seen makes us believe we will exceed our initial target,” says Cristian Enache. Moreover, this pilot project could be extended to other markets where Deltastock is active.
Most of the trading through Deltastock's platform goes on the Forex market, but the firm has seen an increase in interest for for stocks and exchange traded funds (ETFs) since the beginning of the year too.
Last year, for example, the volume of deposits in trading accounts with Deltastock grew five-fold compared to 2007, while eight times more demo trading accounts were opened.

Travel offers go the extra mile
Travelling expenses are the first to fall when budgets shrink, but if they are given the right offers, Romanians wouldn't say no to cheap holidays.
Romanians who plan to travel this year go for advance, discounted bookings, promotions and special offers, found travel agency Eximtur after conducting a study in several Romanian cities.
“We realized that in a year of crisis, in order to come up with a realistic holiday budget, the Romanian holiday market needs to be analyzed in a professional way. We didn't do it before because of the clear increase pattern of this market in the past, but now it is necessary,” says Lucia Morariu, general manager of Eximtur.
The firm now runs an offer which allows customers pay for their travel packages in ten installments with no interest.
The budget for trips and holidays suffered a significant decrease due to the financial crisis. Almost 4 out of 10 respondents claim they lowered the budget for trips and holidays as compared to 3 months ago, according to the Synovate study run in January this year. Those aged 30- 34 years lower their budget significantly more than the average, according to the study.
Low cost airlines seem to be favoured by the downsize in travel budget, as opposed to other carriers on the market, although they have felt the shrinking too. Local airline Tarom has recently taken a shift in its marketing policy and introduced low cost tickets for several destinations, competing with low cost companies.
The company offers EUR 50 tickets for certain foreign destinations and EUR 24 tickets for local flights during the entire 2009, with these low prices available only with a 30-day advance booking.

By Corina Saceanu

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