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05.15.20

(Re)Open: Market Re-Entry Framework

by James Lanyon

On April 29, I held a webinar to help brand leaders develop a strategic framework to identify the first markets to bring back online, and more importantly why.

In two short weeks, we’ve seen the COVID-19 conversation start to shift as state and local governments start re-opening and businesses take their first steps to do the same in a way that balances business impact with responsibility for the health of employees and customers.

Our strategic framework is still valid because it establishes a set of rules for a situation that is both fluid and complex.

STATE OF REUNION?

T3 has offices in Texas and Georgia, so we have firsthand experience as consumers and marketers with two states who are being more assertive in reopening. In Texas, we are seeing 25% capacity limits in our restaurants, malls and other businesses. More types of stores can now provide curbside pickup. But this is all against a backdrop of rising case counts (a caution to go slow) and business and political pressure to open more business faster. Every state press conference seems to introduce a new set of scenarios to plan for.

This is the complexity of just one state. Now multiply it by 50 states, 210 DMAs, 314 cities and towns, 392 MSAs and 3,007 counties. The reopening calculus is mind-boggling and compounded by overlapping governmental authority between governors, mayors and county officials representing urban and rural populations.

NEW RULES TO MANAGE CHAOS

If your brand is operating in multiple markets, what’s required is a strategic framework to identify the first markets to re-open and why? This decision process requires a new set of data points and a framework for assessment to provide clues to replace previous business or market entry models that do not adequately inform.

This new approach to market re-entry starts with understanding the implications at multiple levels.

Operations: Do you have the personnel, logistics and resources in place to deliver at the level of quality and consistency expected?

Safety: Do you have the policies, procedures and materials needed to ensure a safe/secure environment?

Marketing: What budgets, resources, channels and content do you need to effectively compete and how does that impact forecasting/budgets?

Economic impact: If you do all this, what’s the expected economic benefit? Is there wisdom to prioritizing certain areas or markets over others? Can you safely and affordably operate at 25% or 50% capacity to start drawing customers back or is it better to stay closed and wait a few more weeks? What if weeks turn into months.

Brace your teams. Market reopening will be organically shaped and jagged, not uniform, analog, left-to-right or predictable. 

Our framework uses four factors to help structure the chaos, each with a key question to answer and a key finding to glean.

Before I go deeper into each factor, download our Framework PDF at the bottom of the page to score your market readiness.

1. Market Footprint: Out of all the markets you serve, which represent the greatest total gain in terms of number of locations active? 

  • Answers this question: “If a market comes back online, what impact does that make to the system?”
  • Requires your business aligns on the definition of a “market”: How to categorize a market (MSA, DMA, City, County, etc.). This is important for data gathering purposes. 
  • Requires itemization of number of locations per defined market put into a spreadsheet 
  • Allows for accurate tracking and data aggregation

2. Revenue Baseline: What was the revenue trend in a market before COVID-19?

  • Answers the question: “Can we envision a smaller market having a greater system impact? Can we create a tiered set of assumptions?”
  • Requires revenue by location 12 months prior to market shut down
  • Requires 12-month prior revenue per location crafted into a market-level average 
  • Allows for greater prioritization and more granular decision making

3. Consumer Sentiment: How eager are our customers to re-engage?

  • Recognizes that the urge to spend or “go back out” will vary from market to market 
  • Answers: “If we reopen, is there economic activity to take advantage of or compete for?”
  • Requires market-level tracker survey (does not have to be complex or rigorous)
  • Requires consensus on survey components at an executive or decision-maker level 
  • Allows for a business rule to influence harder market and revenue data

4. Market Permission: What’s the municipal policy and to what degree does it let us operate?

  • Recognizes that policies and “open market” designation can be informed at multiple levels
  • Further recognizes how open market designation has variations or versions 
  • Requires crafting a definition of “open for business” market  
  • Requires collecting and monitoring market-level policy updates 
  • Allows for a business rule creating a green light or “go, no-go” for your markets 

Assessment of each of these factors will enable you to create a Market Status ranking for each of your markets, giving you a green, yellow or red determinant of overall status and which factors are putting limitations on reopening.

Markets can be expressed in different forms and should be aligned to how the brand/business manages market-level decision making. DMA, MSA, city or county are most typical but data can be aligned to operational or business market designations (retail trade areas, etc.). It’s important to understand how markets and policy authorities overlap, so you can aggregate the correct information.

Footprint (percentage of system) and revenue (baseline average 12 mos prior to COVID) can be expressed relative to the system or regional average. 

Consumer sentiment is data you will need to create or obtain at a market, or at the very least, a regional level. It should be gauged as high, medium or low positivity levels. Tracking components should include: 

  • Overall desire to re-enter normal life
  • Fear of contracting disease
  • Eagerness to re-engage your category
  • Level of fear or concern around your category

Market permission is a factor you can develop for your company. An “open market” definition can have specific parameters or be crafted using municipal, regional government or CDC policies and guidelines. We recommended expressing them in three levels:

  • OPEN: Clear policy statement indicating commercial resumption.
  • PARTLY OPEN: Partial reopening or unclear guidance. 
  • CLOSED: Clear policy maintaining closure. 

Business rule: Red light for permission should automatically trigger a red light for market status. 

5. Status: Ultimately, market status is what you’re looking to get to—a consensus definition of how to think about moving funds, operations and logistics. In a formula:

Footprint + Revenue + Sentiment + Permission = GO

Footprint and revenue can help guide market or regional prioritization. Sentiment and permission act as gateways to authorize a market. Ideally, all markets would be ALL GREEN. In the real world, conditions will be mixed. Clarifying these four key variables will improve chances for success and confidence-building as brands begin to re-enter operations.

THE LONG AND JAGGED ROAD BACK

In speaking with our clients and in answering questions after the webinar, we hear similar levels of uncertainty and frustration over their lack of control. As we’ve watched companies respond to this crisis, those who feel more in control have been proactive and agile, adapting teams, operations, communications and budgets to respond and pivot. Our framework is cut from that approach to regain control by planning what comes next.

If I can answer specific questions or you want me to talk you through our framework in 30 minutes, let me know. james.lanyon@t-3.com

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James Lanyon

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