Financial Institutions’ Marketing Communication During Economic Downturn and Implications on the Corporate Image

The world economic crisis has necessitated finding ways for survival in the most pessimistic scenarios or just cutting costs in the best situations. US Banks suffered the most from the crisis. Banks in Macedonia are not feeling the same effects. The world financial crisis didn’t jeopardize the stability and liquidity of the Macedonian financial system because of the strong deposit base, banks’ low debt and the prudent regulatory system, which maintained a healthy banking portfolio. However, the Financial Institutions in Macedonia are already feeling the consequences of the global financial crisis. The Advertising sectors of the global financial institutions are showing lower marketing budgets, but importantly they have not been cut completely. Banks are working on increasing their deposits through their corporate image communications. This means that the financial institutions’ advertising should continue in order to keep and strengthen banks' corporate image and should stress the stability of the banks. This paper presents the advertising activity of the financial institutions during the current world economic crisis and the consequent marketing communication budget reallocation. The effects of the banks’ marketing communication during the crisis is shown with data on the banks’ customer and market share and on the banks' corporate image perception.


Introduction
We are witnessing the one of the largest, the strongest and the longest financial crisis in the World. It is nothing new how marketing communications has influenced in the previous crises, but current crisis has its own specifics, as also the marketing communication tactics has been developed and reach certain level of interest. From the third side, also the financial services have its own specifics, which influence on the marketing communication strategy development and implementation.
In this paper we research how the current crisis is influencing on the financial market development and sales in Macedonia and in the region. The most important question elaborated in this research, is how important is the marketing communication during an economic downturn and the influence on the further business growth.
The research is conducted through direct interviews with several financial institutions in Macedonia and in the region. All of them have developed unique and specific marketing communication strategy, in order to match their business goals and survive during the current crisis. Each strategy implementation is generating appropriate results and sales implications as a conclusion.

History of World crisis and advertising implications
According to the Wikipedia Dictionary (May, 2009)  Among the key lessons of previous major financial crises are (Schifferes, 2007): • Globalization has increased the frequency and spread of financial crises, but not necessarily their severity • Early intervention by central banks is more effective in limiting their spread than later moves • It is difficult to tell at the time whether a financial crisis will have broader economic consequences • Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.
Those who don't know history are doomed to repeat it. As DiMassimo has founded (2001) in an article written by E.B. Weiss in 1942, as if it could have been written today, Weiss offers the following thoughts on advertising in wartime: • The advertising must be distinctive, to be noticed at all.
• It must be timely. (The anxious are tuned to every scrap of news.) Financial Institutions' Marketing communications during economic downturn 6 • It must be brand-building. (Ignore what others may say about gaining readership by hiding your logo.) • It must create conversation, to amplify your small budget.
• It must stir emotion.
It should consider the "saving grace" of humor. (Because people crave relief from the grim tidings of the nightly newscast.) It must be believable. The trend toward branding. The trend toward targeting, measurement and data-keeping--the most important factors affecting marketing communications today.
According to Pacek & Thorniley (2004) some companies argue that crises turn out to be positive for their operations, making them lean and mean, and providing opportunity to get rid of average and bad performers.
So what to do in times of recession, when you need every penny to sustain earnings? Stop advertising? If you stop advertising a brand that is still in its introductory phase, you will probably kill it forever (Ogilvy, 1983 Studies of the last six recessions have demonstrated that companies that do not cut back their advertising budgets achieve greater increases in profit than companies that do cut back.

Implications of the World Crisis on the Macedonian market
The Evidently there is strong link among the crisis, financial product reallocation and advertising activities related. More precisely, the financial crisis evoked the following strategic changes in terms of marketing communications and product development: Picture 1: The link between the global crisis, company's business model and marketing communication strategy The global crisis as mentioned above, already caused significant long term implications on the real and financial segment. Hence, the companies are facing necessity of readjustments of the business models in accordance with the external changes due to the crisis. The financial institutions are bearing the most "heavy" burden, as perceived as carriers of the crisis, so that the image of stability and trust Financial Institutions' Marketing communications during economic downturn 12 is jeopardized. In order to struggle or even maintain the position on the market, they need to reallocate their products, to review brand architecture and adopt marketing budgets. These changes are the greatest challenge of the financial institutions during a financial downturn.

Macedonian market financial services diversification
The segmentation of the financial market in terms of financial products is applicable for the Macedonian market and the regional countries. The chart shows the most frequently used financial services for banking and leasing customers from: The chart shows the perceptiveness of Macedonian and regional financial service customers for getting information about specific financial service. Clearly, the banks staff and word of mouth plays a great role for Macedonian customers. At these directions, the trainings and staff attitude, particularly the front desk employees should be recognized as an important component of the promotional activities of the banking or leasing institutions.

Analyses of the current financial institutions' Advertising
News about the credit crisis just seems to go from bad to worse, with no end in sight.
Indeed, the past months have felt like financial Armageddon. So how should these institutions be communicating? What should they be saying to their customers?
What messages are resonating with people and what ones are not? Though many of our nation's banks are doing just fine, it is hardly business as usual for them in terms of communications.
History tells us that, absent communication, rumor, speculation, and innuendo rush in to fill the void, leaving in their wake mounting fear and anxiety among company stakeholders and the public at large.
Last June a Gallup Poll showed that consumer confidence in banking had fallen near its lowest level -32% -since the firm began asking this question in 1979. This month another Gallup Poll found that among affluent Americans -those with $100,000 or more of investable assets -confidence in banks had fallen below 25%.
So what would be "all or nothing" communication approach versus a "communicating through good times and bad" approach that has been the foundation of public relations best practices since the days of Teddy Roosevelt.
As public relations professional Iverson (2008)  Silence is a powerful and destructive form of communication. So say something, do something. And in due time, the public will reward you for your good corporate citizenship, and for your courage to lead.
Public Relation (PR) is another part of the marketing mix, which is very useful in times of crises. For example (Janine Gordon): • Think PR when times are bad or in the face of crisis. In the aftermath of 9/11, Bankrate.com, the leading aggregator of personal finance information on the Web, wanted to reassure advertisers that its reach and effectiveness were unaffected by the attacks. The Internet site quickly mounted a full-bore effort, including one-on-one outreach to each Bankrate.com advertiser. The result: not one cancelled scheduled advertising.
• When marketing dollars are limited, PR delivers more bang for the buck. A strong PR campaign generally costs a fraction of what a high-impact advertising effort would require. Consequently, when the marketing budget is tight, PR is the more productive use of funds.
• Nothing enhances a damaged reputation like credible PR. To improve a tarnished image, a company must first fix the problem. But once wrongs have been righted, nothing enhances a damaged reputation like a credible PR campaign.

Macedonian Banking market
As it is already mentioned, the World crisis influenced over the Macedonian economy and the Macedonian banking sector. After the first signs were noticed set of measures were undertaken by the Commercial Banks in Macedonia. The Financial Institutions' Marketing communications during economic downturn 16 measurements that were undertaken from the National Bank of Macedonia were increasing the interest rate of the treasury bills and introducing compulsory deposit.
The introduced compulsory deposit means that the bank shall be obliged to allocate a compulsory deposit if, at the end of the month, it registers growth in the household credits higher than the allowed growth rates compared to calculation base.
The changes that were done at the beginning were more focused on strengthening the credit criteria under which the loans were approved and also slight increase of the interest rates. For maintaining the proper liquidity, the banks started also with increasing of the deposits interest rates and offering new types of deposits sometimes with special offers for limited time period. It was noticed that the strengthening of the credit criteria was much stronger for the corporate loans compared to the retail loans. At the same time the customers' interest for corporate loans is not decreased compared with the previous period, and the customers' interest for retail loans is considerably decreased.
During the next months all the banks continued with strengthening the credit criteria and increasing the interest rates for lending products and at the same time increasing the interest rates for deposits. According to this chart and the results of the survey for the changes in the demand for corporate loans we can see that there is no considerable decrease in the demand and the main reason stated from the banks is the need for financing the companies.
Also it is noticed that the demand for short-term loans is not decreased and there is slightly higher decrease in the demand for long-term loans.  In the year 2009 we can see that 90% of the total spending is divided between two types of products -deposits 38% and credit cards 52%. But it is very important to highlight that the total spending for credit cards of 52% is done only by one bank - Almost no marketing activities were done by any leasing company on the market, which resulted into decreased trustworthy by the market and decreased sales.
Taking this into account and detecting that one of the most concerned segment is the export oriented companies and industrial production SME's, one of the most dominant leasing company on Macedonian market changed its product development plan by launching new product "Business leasing" targeting the SME's which have the most jeopardized liquidity.

Results from the marketing communications at financial institutions
During the current crisis the marketing communication is mostly realized through the Banks' Advertising. Only few banks are using sales promotions as wining games for credit cards. PR activities are also present by most of the financial institutions, influencing on the credibility and the corporate image perception, even though with small budgets but with very good effects. Direct marketing is rarely used, which is an issue because of old banks' databases and not using the unique opportunity. This should be changed in the near future, if the financial institutions wants better results.
Financial Institutions' Marketing communications during economic downturn 27 As we seen before, from the Advertising agency media analyses, some banks continued with the advertising during the last financial crises and some of them cut the advertising budget completely. There are different strategies regarding this question, especially according to the type of the product. However the research is showing different results for the banks using and not using advertising activities in this period.
According to the internal data and analysis of Stopanska banka AD -Skopje, that are provided with this research we can see that during the period of the crisis the advertising remains to be considered as very important in order to maintain the image of a safe bank with long tradition and with great knowledge and experience. Almost no marketing activities were done by any leasing company on the market, which resulted into decreased trustworthy by the market and decreased sales, as written in the previous part.
Financial Institutions' Marketing communications during economic downturn 30 We cannot assume what will happen after this crisis finish, but the previous advertising experience is showing better results for the Banks, which were active with marketing communication during the crisis period, with effects on strengthening Banks image and market positioning.

Conclusion
Taking into account the unique features of the current crisis and its implications on the marketing strategy and budgets, the obvious conclusion is that the marketing communication strategy should be centered on four major components: Promotion of new or modification of existing products in accordance with the external conditions and internal business strategy Deliberate and neat PR activities on continual basis: regular PR Interviews and media events should take place in order to inform the public about company's business and stability. PR activities are less expensive but much more powerful tool that should be wisely used during economic uncertainty. Being silent is also communication, but negative one.
Corporate and brand building advertising campaigns, with awareness and brand image maintain purpose.
Staff training and motivation, as they have largest impact on the customers' financial institution choice.
Out of this conclusion we can extract a short guidelines, which can serve as a lesson for future challenges: Select refining target audience Financial Institutions' Marketing communications during economic downturn 31 During economic downturn, when costs are "big issue" and marketing budgets are lowered, the advertising activities should be directed toward customers who will bring profits. Business objectives should remain ground basis for developing marketing strategies; Innovation is a key to success Implications for marketers: differentiate trough innovation with product or service that performs in faltering economy; invest in R&D now to ensure that your company is in a position to compete when the economy rebounds.

Continue researching
Implications for marketers: Conduct research to understand your competitor position and your target audience perception of the economic environment; hone and refine your messages; highlight the value of products and services, rather then slashing the price.

Sustain the brand
Corporate brand campaigns are needed in order to obtain the market position and the image of the company.
Financial Institutions' Marketing communications during economic downturn 32