When times are tough

Faced with market jitters, brands often err on the conservative side

TURBULENCE. It’s a word that’s on everyone’s lips at the moment – from the highest-rated economists, to businesses of all sizes, to the proverbial man on the street.

As South Africa teeters on the brink of recession, with threats of downgrades to “junk status”, slow economic growth, a fluctuating currency, high unemployment rates and the effects of irregular weather conditions taking its toll, marketers are faced with challenging decisions and trade-offs to make in building and sustaining their brands.

Although we faced similar instability in 2008 and 2009 as a result of the global financial crisis, the challenge for marketers today remains overwhelming.

They may have a plethora of brand manuals to guide marketing communication and activations but, last time I checked, there’s no toolkit in the manual for navigating recessionary times.

Seven years back, a number of companies employed a host of marketing strategies to get their brands through the economic turbulence.

To remain on course, some brands opted to continue with business as usual, much to their detriment. Others chose to take a risk and go big with heavy brand-building activities, and some brands cherry-picked and used a few brand-building opportunities to build relevance and resonance.

Which of these strategies is best? The simple answer is that there is no simple answer.

But brands can learn a lot from the brand-building and maintenance activities that took place during the previous slowdown.

Here are the principles I believe brands should be employing in these difficult, recessionary times:

Value provision shouldn’t come at the expense of your brand.

When times are tough and shortterm sales are taking a knock, marketers are often tempted to run sales promotions and offer enticing discounts to cashstrapped consumers.

This tactic may work to build shortterm sales spikes and beat out the competition temporarily, but it also leads to tricky price wars and an erosion of brand equity over the long ter m, especially for leading and premium brands.

Understand that, although you may be offering relief to consumers in the short term, you need to put the long-term equity of your brand first.

A brand that did this well during the previous slowdown was Woolworths with its Essentials range.

Instead of relying on discounting and sales promotions, Woolworths developed a “no-frills” value range of household products – with basic packaging and an assurance of everyday value and quality.

In doing this, they were able to retain the consumers who were feeling the pinch, instead of eroding the equity of their premium brand.

Difficult times call for out-of-thebox thinking.

It may sound obvious, but when the status quo is challenged, you need to challenge your own status quo.

In turbulent times, risk-averse marketers are often inclined to stick with their “bread-and-butter” methods: tried and tested marketing tactics that draw in their familiar customer base. The challenge is when your usual customer base doesn’t necessarily behave “nor mally” – this strategy could render itself null and void.

Marketers need to understand that, in recessionary times, there is no “normal”. Clever marketers should question and challenge the relevance of every piece of marketing and communications. Think to yourself – is this relevant in a tighter, more depressed economy?

A brand that challenged the status quo and thought out of the box during the last slowdown was Hyundai.

They understood that people were under considerable pressure with potential retrenchments and cutbacks, so they devised an assurance programme that allowed customers to return their car in the event of job loss or retrenchment.

It proved a highly effective campaign and brand-building initiative, with competing automotive brands soon following suit with similar promises.

Sometimes it’s worth looking on the bright side in gloomy times – this could be a time to invest in your brand.

Tough economic times are exceptionally difficult, with many tradeoffs, and marketers not wanting to take risks or to be seen as being reckless with their budgets.

However, abandoning your brand during such times can be damaging, as consumers often seek brand reassurance when the going gets tough.

According to a number of studies, brands that retract their spending in tighter economic conditions often lose market share once the economy bounces back, as they have lost awareness and their relevance has diminished.

Standard Bank opted to invest in its brand during the slowdown in 2009 and relaunched with a new identity and positioning.

Although, this might have been perceived as a gutsy move – especially for a financial services provider – it capitalised on good rates for media space and a lack of marketing clutter.

With so many other brands “opting out” during this time, the impact of the brand was so much greater.

Marketers of today have a lot to contend with: more demanding consumers, fragmented media and retail channels, and large amounts of clutter to break through.

A fragile marketplace adds even more complexity into the mix.

Essentially, to ensure a brand can weather the storm, marketers need to put the long-term needs of their brand at the forefront of every decision.

Doing this not only enables smarter marketing decisions, but sustainably builds brands that can stand the test of time.

Shapiro is brand associate director at Added Value.

Abandoning your brand in such times can be damaging