Recession-Proofing Your Brand
Historically, most companies do one of two things during a recession: cut spending and do only the bare minimum until the economy bounces back, or move full steam ahead with their marketing plans, taking advantage of the ability to build or strengthen their brands while the competition is weak. Unfortunately, for those of us in the marketing business, too many companies go with option No. 1 and dramatically cut spending. But the irony in this approach is that it can end up damaging a company's most valuable asset: the brand.
When you choose to cut marketing, you put your brand at risk, increasing the likelihood that your brand will lose relevance to your target audience and your retail partners. During a recession, consumers have to make the hard decision of determining whether their preferred brand is worth paying more for. If the brand is truly perceived as a better or even a safer choice, then consumers remain loyal.
But if the brand loses relevance, then there is the risk that consumers will leave the brand for lower-priced competitors. Retailers also make hard choices about the brands they continue to promote with their limited funds. The brands that get the greater share of co-op dollars are the ones that either have the power to drive consumers into the store or warrant a price premium.
The key to making your brand survive--and dare I say even thrive--during a recession is to outthink your competition. Following are three strategies to recession-proof your brand.
First, redefine what value means. Value is not just about having the lowest price. There are many attributes of a brand that can be used to measure its value to a consumer. Mission Foods makes tortillas, wraps, taco shells and chips. But it has recognized that it's not in the food business; rather, it is in the meal solutions business. It delivers value to hungry families, not by just being priced right but by giving families the tools they need to save time in the kitchen. By providing recipes, cooking tips, and shortcuts, Mission Foods delivers value by saving families time, which is often a more scarce resource than money.
Value can also mean better performance. Consider Craftsman tools and its lifetime replacement guarantee. When a consumer buys a Craftsman product, the company justifies that the product is worth paying more for because of the guarantee it comes with, thereby giving it a higher perceived value. Performance also comes into play in categories that represent a much smaller investment, such as toilet paper. Even in a recession, many consumers may be pinching pennies, but they aren't willing to sacrifice the softness offered by Charmin.
Number two is being unique. Despite cutting back in areas considered luxuries (like their daily caramel macchiato), consumers are scrimping so that they can splurge on unique experiences and products. Consider summer movie revenues, which are down less than 0.5% from last year. The most successful movies were either part of a larger experience, had special effects that couldn't be replicated at home, or had huge talk value. There were no runaway hits from the independent film category, because consumers were spending only on movies they thought were the sure "winners."
"Sex and the City" earned $57 million in its first weekend and was the best box office debut of a film with a female main character. The film inspired an experience that extended beyond the theater, with 80% of moviegoers indicating they planned to attend a "Sex and the City" get-together before or after the movie, 68% planning to drink cosmopolitans and 51% planning to dress up for the event. The movie inspired a multi-layered experience that benefited everyone from Cointreau (an essential ingredient for the perfect cosmopolitan) to Manolo Blahnik.
The Apple iPhone is another unique, "I have to have it" product that did well this summer. On July 14, Apple announced that it sold its one millionth iPhone 3G, just three days after its launch. By comparison, it took 74 days to sell one million iPhones following the initial launch of the product in 2007 and almost two years to achieve this milestone with iPod. Why the urgency? Simple ... the iPhone is cool, there is no substitute, and tech junkies were cutting spending in a multitude of other places to make sure they could splurge on the device.
A third strategy: Reframe your competitive set. During a recession, understanding your consumers becomes even more critical. If you think the research you have from two years ago on how they are making choices in your category is relevant, forget it! Go back to the grocery store and watch the trade-offs that cash-strapped consumers are making. One critical thing you may notice is that your competitive set is larger than you think.
Consider the Kool-Aid brand. Many marketers, when evaluating the Kool-Aid competitive set, would include Crystal Light, Tang, generic brands, and juice brands. How many would include soda? To a consumer, they are all options that quench thirst, and if you examine how much the price of a case of soda has shot up in the past two months, you might notice an opportunity. The wise people at Kraft did just that. They are reframing the competitive set for Kool-Aid and repositioning the brand by focusing on its low price: one-third that of soda.
A final word of advice. Whatever you do, don't give up on marketing. When you cut marketing during a recession, you stop the conversation with your consumer. You are out of sight and ultimately out of mind, putting your brand at risk. The key is to rethink your strategy. Understand your current target mindset to make sure your message is relevant. Reallocate dollars to more effective mediums. Whatever it takes. Use this opportunity to build or strengthen your brand. A recession can be a great opportunity to gain market share and position your brand for the future. So don't just weather a recession--seize the opportunity to thrive.