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That’s (Not) Entertainment
Playboy and other entertainment companies make cuts—but hope to keep the brand alive.
For the rest of the February 2009 issue of CRM magazine please click here
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You know times are tough when Playboy cuts its entertainment and travel budget. The mid-October announcement of budget restructuring involved other penny-pinching measures, including spinning down its porn-to-DVD business branch.

As recently as August, people were claiming the entertainment industry might be recession-proof, or at least resistant to the economic downturn. Television sales were still high, box-office numbers were still soaring, and publications had yet to experience the lay-off massacres now gracing headlines.

Recent months, however, have shown that no industry is immune to a downturn—even the companies with high levels of customer recognition and strong branding are affected. But how does a corporation restructure and essentially cut down on what it's known for? For a corporation such as Playboy, parties, appearances, and entertainment are its branding (in addition to the ever-robed Hugh Hefner and his entourage of scantily clad "bunnies.") Does cutting expenditures in those areas chip away at the Playboy brand itself?

In an October memorandum to Playboy employees, Christie Hefner, the chairman and chief executive officer, wrote, "Some of these cost savings will come from changing how we do business. This includes capitalizing on technology in ways that include doing our own magazine pre-production work and building a more robust digital asset management system." Hefner continues, "We will also respond to changes in how consumers access content and advertisers use media. Thus, we will continue to deliver more of our content digitally, using our assets across multiple distribution platforms and adding more a la carte offerings." Interestingly enough, Hefner announced her resignation from her 20-year post as CEO on December 8. The company is refocusing its goals—and hoping that customers still continue to follow.

"It's interesting that Playboy chose [to cut] what they chose," notes Richard Owen, CEO of customer experience management provider Satmetrix. "The parties are aspirational branding.... In a period of austerity, you see people almost turn against that kind of thing, what originally was seen like an aspiration [these people having amazing parties]...suddenly turns to, ‘Look at all these fat cats enjoying something on the back of my hard-earned dollar.'"

Owen points out that there's a noticeable shift in public mentality and consumer behavior right now. As Americans feel the strain of the recession, they realign priorities. "Lifestyles of the rich and the famous was sort of a great story even two years ago, and today it's perceived as very negative," Owen says. "Waste is bad, traveling first class is negative, corporate jets are no longer an aspirational object but a sign of wastefulness—and that's directly related to how people feel about their lives and the sacrifices they're having to make."

Research indicates that consumers respond differently to marketing in a recession. What was once seen as lavish and cool can suddenly seem frivolous or tacky. Advertising becomes more cost-focused. And choices of models, clothing, and even Playboy centerfolds are reconsidered.

In fact, according to an Environmental Security Hypothesis, when social and economic conditions are difficult, Playboy's Playmates of the Year tended to be older, heavier, and taller. These results suggest that environmental security may influence perceptions and preferences for women with certain body and facial features. All of this inherently affects Playboy's branding and the way consumers respond. Perhaps cutbacks at Playboy reflect the path dictated by the state of the country at large.

"Playboy is being quite wise in toning down, even if it's not for cost savings," Owen says. At the very least, he adds, one message consumers don't want to hear from a company right now is, ‘We're all having a really good time over here, pity you can't make it.'"

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.

Here's a quick link to more of this month's special coverage — The Recession Issue.

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To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
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