BTO: Building brand in a recession

Business Times - 21 Mar 2009

Building brand in a recession

During a downturn, when people think twice before spending, strength of the brand is critical. It's also a chance to reinforce the brand and build market share

By ALLEIN G MOORE

 

DID you prepare for the recession? I don't mean by unloading shares before the market took a nosedive or putting your apartment on the market before the prices slid down to the basement. But did you start building and reinforcing the most important asset - your company's brand - during those heady times?

 

Most marketing experts will tell you that it is the strong brands that best survive economic downturns. What will the recession mean to your company and its products? In some cases very little will change and in others there will be a dramatic effect on trading and soon on the bottom line. Basically the recession means that everyone is more cautious about spending money. The reasons range from the rich being more conservative about investments, to people in management and on the factory floor worried about losing their jobs or bonuses.

 

In general people think hard before spending. They reduce non-essentials like leisure trips and eating in fancy restaurants. Recent reports in Singapore newspapers showed that both the travel industry and the food and beverage sector were well aware of their vulnerability and offered instalment payments for holidays and reduced buffet pricing for time limited dining.

 

One should note two other recent news items. The newspapers reported a few weeks ago that Italian luxury car brand Ferrari has its order book full for 2009. More recently Kentucky Fried Chicken announced the fast food chain was opening hundreds of new outlets in economically hard-hit Britain.

 

The mega rich do not personally feel any recession even if their shares are down and will not change their lifestyle. The Ferrari badge on their car is a symbol and the price is part of the attraction. However, the ordinary guy in the street will now eat more inexpensive chicken meals to reduce his outlay on food. The important thing to remember is that consumers do still spend, and at this time the strength of a brand becomes more critical.

 

Within the essential purchases group like food and petrol, if you have built up loyalty to your brand, you probably have little to worry about. Sure, motorist may make fewer trips to reduce petrol consumption and Mum may spread the kaya more thinly on the bread but basically purchases will continue (although house brands were gaining strength even before the recession hit).

 

Consumer loyalty is a significant benefit from building a strong brand. It retains customers and immunises the product from the need for price reductions. What is important to all brands at this time is to reinforce the brand character and maintain the quality of product or service. This is not the time to make a mistake. It is, however, a time of opportunity.

 

Weaker brands may cut prices to hold onto to market share. Some marketing managers under pressure from the financial division may cut back on advertising expenditure, reducing exposure of the brand. Some of your competitors may even disappear during tough times. This change in the market place offers an opportunity for a good brand backed by impactful, focused advertising to steal market share. When the market recovers, the strong brand has a bigger slice of the pie.

 

Let's look more closely at advertising. While your business may not stand for any increase in advertising expenditure, you can do more with your budget in these tough times. Media owners will be willing to negotiate better deals as the number of advertisers drop. You should be able to buy more ads for your bucks especially if you can commit for the whole year. By advertising regularly, you maintain your brand.

 

Currently, online media is undervalued and underestimated by advertisers. Companies working on small budgets would do well to explore the 'new media' which is comparatively inexpensive. Reliable measurement data means errors in strategy are quickly revealed and equally quickly corrected. While I am a supporter of the online media, a word of caution. Many brands which have been successful with online activity have spent millions in past years building their brand in 'traditional' media like the press, magazines or television. It is that heritage of warm positive feelings towards the product or service that enables the online promotion to work. Don't ignore the value of the press or outdoor campaign.

 

It is human nature to cling together in the face of danger. In a tough economic climate, your budget can be stretched by marketing partnerships with related brands. Find a brand that has similar values and co-operate with the manufacturer or distributor to offer a value package to consumers. Your customers are all suffering to some extent in business and in family life. Now is the time to show them you are a caring company or brand. Reward loyal customers, support community efforts or produce helpful booklets. Do this in areas which mesh comfortably with your brand character, of course.

 

This brings me to the last point. Your brand only exists in a small corner of the brain of your customers and non-customers. This perception can have its roots in family history.

 

Your mother served Gardenia bread to you as a child and now it is associated with nourishment and nurturing. No other bread has such a strong emotional attachment for you. For another person it could be Sunshine loaves that link him or her to a pleasurable childhood.

 

While admittedly it is hard to change perceptions, retaining customers must remain a prime goal and accumulating new ones is vital. In tough times, it is important that every touch point (a place where the customer interacts with your brand) reinforces the brand positioning and image. This stretches from advertising to packaging, from customer service to in-store display. Everything you show or say must harmonise with the brand character.

 

You are already doing most things right or your brand wouldn't be here today. The recession is your opportunity to raise your game.