All over the world during an economic crisis, most companies cut back in every area of the business and start slashing prices to accommodate the shifting demand curve. While this may help in the short-term, this strategy can actually damage both the company and its brands.
Analysts believe that there are tremendous lessons to be learned from previous recessions. For them, not everyone automatically loses out during an economic slowdown or recession. It is also important to note that historically, companies who invested in their brands during hard economic times retained their core audience, attracted new consumers and emerged stronger in the end.
While a recession may feel like the worst time to be a marketer, it may be the best time to build brands. The companies who maintain a strategic perspective and invest in their brands will rebound from a recession stronger from the experience. Weaker brands may not exist by the time the economy re-surges.
Checks by a publication shows that abandoning or neglecting your brand as markets tighten, only makes matters worse. Historically, companies which properly support their brands with cost-effective measures can retain and even gain share in the face of lower-priced alternatives. These same companies will be best positioned to enjoy the fruits of their labour when the economy inevitably returns to growth.
For example, following the U.S. Stock Market crash of 1987, Nike, one of the world’s leading brands tripled its marketing spend and emerged from the recession with profits nine times higher than going in. Taco Bell and Pizza Hut also took advantage of this recession, promoting themselves heavily, while the market leader McDonald’s cut back. This investment paid off by significantly narrowing McDonald’s category lead.
Speaking on this issue, a brand and marketing analyst, Wale Okoya said, “During economic recession, brands must recognise that consumer retention and attraction is the name of the game. You must invest in brand-building to win market share, not just mindshare or margin. Those who fail to see their consumers as an appreciating asset may soon find their brands and business devalued or defunct.”
According to him, “Recessions are tough on brands and consumers alike as both face the pressures of restricted cash flows and receding bottom lines. The bonds that brands build with consumers at such times are powerful. A recession must be viewed as an opportunity to reassess and strengthen the brand to drive the most value—spend smarter not harder.”
He also disclosed that, “consumers are forming opinions about your brand whether you’re proactively managing the experience or not. So, to be successful, be as optimistic as you can. Your brand and business are in a position either to contribute to the fear or help diffuse it. The connections made during these times of crisis are often stronger than those made in times of prosperity. Look for opportunities where others see hopelessness to find the low hanging fruit your brand needs to thrive. Equity is only built through the consistent delivery of your brand promise over time. The reward is improved customer loyalty.
“Cement a value-based position with consumers, not a position of low price. If you can find a way to reduce costs–while maintaining quality–and you can permanently pass that price reduction on to the consumer, your brand equity will grow now and after the economy eventually rights itself. Whether in good times or bad, if you can provide enhanced value to consumers, you’re doing the right thing.”
Further, he posited that decisions should be focused on spending wisely, but too often companies do nothing at all. A company’s typical reaction to a slowing economy is to cut back and wait things out. Ironically, those companies end up damaging their most valuable assets—their brands. Conventional wisdom suggests that in times of recession it is better to tighten the belt and cut marketing and branding expenditures. However, when companies cut their outreach, they also begin to cut the ties that bind consumers to those brands. For smart companies, opportunity beckons.
He pointed out that “A downturn represents less money in consumers’ pockets and more careful consumption habits. A slimmer budget means companies must be more effective with their branding efforts. Determine what is excess or even damaging to your brand and shed it. Use your focus and resources to strengthen your position in the market and in consumers’ eyes.”
Also speaking on the issue, a brand management consultant, Gbenga Alomoja said, “While difficult economic conditions may be trying, it is important to stress that investing and spending are not one in the same. A company can make a significant investment with minimal spend. There are many ways to achieve great impact with minimal or even reduced costs.
“In a recession, more effective employees can make the difference between success and failure. Implementing an internal program that encourages employees to “live the brand” brings a company together by providing clarity. This simple effort can boost employee morale and ensure that their efforts stay focused and on-brand.”
He stated that; “instead of spending on typical sales promotion, spend on engagement. Exploring and exploiting different sensory inputs can lead to innovative brand signals that are less costly to implement than traditional advertising. Look for the low hanging fruit. Ask the question: “Where and how can the brand effectively get the message out?” Bang for the buck is everything. Outsource branding, “insource” execution. The cost of execution eclipses the cost of creativity.
A tight budget can choke branding and marketing efforts. In a recession, the costs of branding can seem high,however, by bringing high-cost items like execution in-house, companies can better leverage their
He pointed out that “A downturn represents less money in consumers’ pockets and more careful consumption habits. A slimmer budget means companies must be more effective with their branding efforts. Determine what is excess or even damaging to your brand and shed it. Use your focus and resources to strengthen your position in the market and in consumers’ eyes.”
Also speaking on the issue, a brand management consultant, Gbenga Alomoja said; “while difficult economic conditions may be trying, it is important to stress that investing and spending are not one in the same. A company can make a significant investment with minimal spend. There are many ways to achieve great impact with minimal or even reduced costs”.
According to him, “in a recession, more effective employees can make the difference between success and failure. Implementing an internal program that encourages employees to “live the brand” brings a company together by providing clarity. This simple effort can boost employee morale and ensure that their efforts stay focused and on-brand.”
He stated that; “instead of spending on typical sales promotion, spend on engagement. Exploring and exploiting different sensory inputs can lead to innovative brand signals that are less costly to implement than traditional advertising. Look for the low hanging fruit. Ask the question: “Where and how can the brand effectively get the message out?” Bang for the buck is everything. Outsource branding, “insource” execution. The cost of execution eclipses the cost of creativity.
A tight budget can choke branding and marketing efforts. In a recession, the costs of branding can seem high.
However, by bringing high-cost items like execution in-house, companies can better leverage their
