What companies do during the ‘Ghost Month’
For the Chinese, August is also known as the Ghost Month and the most dangerous time of the year.
In this seventh month in the Chinese calendar, the spirits of the dead are believed to be wandering the earth, so it is not considered a good time to sign contracts, enter into new business ventures or even get married.
While Filipino companies and entrepreneurs do not necessarily believe that hungry ghosts wander the earth in August and spread bad luck, a number of them do feel a slowdown in sales in the entire third quarter, not just during the Ghost Month.
Major factors cited as behind the seasonal decline in the third quarter include the rains that dampen consumer demand and also the weakening of purchasing power following big expenses the previous quarter for taxes and school opening.
According to Leo Riingen, one of the founding shareholders of Apple products retailer A Shop, the third quarter has always been the lowest quarter in terms of sales and he attributed the sluggishness in the third quarter to the cash outlays made in the second quarter for school opening, and also the rainy season that makes it inconvenient for customers to go shopping.
“It is the proverbial calm before the storm when sales peak toward the Christmas season. During the slow third quarter, we pump sales via marketing programs, push sales through demand generation activities and conduct lots of training to draw traffic to the store that can eventually convert to sales in the fourth quarter. It is also a good time to launch or relaunch products or versions to get some customer excitement up,” Riingen tells BusinessFriday.
Nikki Cauton, CEO of Amorita Resort in Bohol, also says that July, August and September are slower in terms of bookings compared to the peak summer months, also due to the rains.
“But even if it is raining in Manila, it is usually still hot and sunny although a bit windy in Bohol [during the third quarter]. We communicate that to our potential guests. We are also lucky that airlines often have promo fares for these months so that spurs local travel. We also take these slower months to take stock of where we are headed, to train our team and to refresh our rooms so that we’re ready for Christmas and the next summer months,” Cauton says.
A similar slowdown is felt by the Discovery hotel group, but Discovery Group Director of Marketing Services Gemma Batoon says the group compensates for the slight dip in the third quarter by aggressively going after groups, meetings and conventions mounted by the corporate sector.
The group, which has the Discovery Suites, Discovery Shores and Country Suites under its wing, also uses the time to prepare the properties for the flurry of bookings that usually come in the fourth quarter, especially in December.
For quick-service restaurant chain Binalot, the third is the second-weakest quarter after the first quarter, and it takes this time to sit down and think of ways to expand and get ready for the fourth quarter, when sales reach their peak.
“The fourth quarter is our strongest. What we do is join exhibits in these weak months to get more franchisees and expand more. We also produce promos which will warm us up and build momentum for the so-called ‘ber’ months,” says Binalot CEO Rommel Juan.
For his part, Francisco Magsaysay, president of Carmen’s Best Dairy Products, deemed it fit to work with a group buying site to offer the Carmen’s Best line of ice cream products to a totally different market and cope with the usual dip in sales in the third quarter.
The strategy worked, Magsaysay says, as the company was able to attract new customers through the group buying site. At the same time, the company has expanded its list of ice cream distributors to grow sales.
Food chain Max’s Restaurant, meanwhile, launches various promotions and marketing campaigns to continuously push sales in the third quarter, when most small- and medium-scale enterprises experience a decline in their business performance, according to Max’s Marketing Director Edgar Caper.
For this quarter, Max’s Restaurant launched its choose-your-own merienda campaign or Max’s Merienda Mixes for P99 each to encourage patrons to continue going into the restaurants and introduced new advertisements to raise awareness of its baked goodies.
Not all entrepreneurs, however, are concerned about a sales decline in the third quarter.
For the Generics Pharmacy, for example, the third quarter is even the strongest and also because it is the rainy season.
According to Generics Marketing Head Philip Tan, sales surge in the third quarter because a lot of Filipinos get sick at this time. And to further shore up sales, he says Generics Pharmacy tapped the services of Batangas Gov. Vilma Santos as an endorser. So far, the move has proven to be effective.
Islands Group chief executive Jay Aldeguer, meanwhile, says he is seeing a reversal in third quarter fortunes.
“For the longest time for many businesses, the third quarter of the year is slow. Lately, however, especially for us whose businesses are in tourism and travel, we have seen a ‘break’ in the pattern, mainly brought about by the attractive and low-priced promotions of airlines, particularly the low-cost carriers. The attractive fares stimulate a lot of travel both for leisure and business travelers. This has helped cushion the drop in sales during these months,” says Aldeguer, whose Islands Group includes Islands Souvenirs and Islands Hotels.
“But instead of just waiting for random ‘spikes’ in travel during the lean months, we normally prepare our operations by scaling back our overhead. We keep our expenses in check and become more vigilant with our budgets. This has allowed us to cope with slow months and prepare for busier seasons,” he adds.
“Overall, we at the Islands Group try to understand the cycles and peculiarities of our businesses and prepare accordingly,” Aldeguer says.
Andrej Wisniewski, vice president of The Raintree Group, which manages restaurants and hotels in the Philippines, likewise considers the third quarter a good quarter.
“For the restaurants and food courts, the third quarter is actually a good quarter, as far as I know. The rain affects certain restaurants but helps the food courts. And there are more events leading up to the end of the year. Overall it’s the second-best quarter. The best is the fourth quarter and the worst is the first quarter. For hotel and resorts it’s the worst quarter, of course, the rainy season being considered low or off peak season,” Wisniewski says.
Cebu-based businessman Manny Osmeña also has good things to say about the third quarter, saying that for the hospitality sector in Cebu, sales actually spike in the third quarter thanks to the deluge of visitors from Korea and Japan. Then for his line of Manny O wines, sales have also continued to grow quarter on quarter and year on year because of continuous brand building activities.
“There is still a lot of excitement over Manny O wines probably because it is still a new brand and so we experience gains every quarter compared to not just the prior quarter but also year on year,” says Osmeña, adding that the company continues to invest in marketing and distribution programs to make sure that the group does not stray from the growth path.
