When markets are sliding and sales volumes do not meet targets, everyone tries to cut the advertising budget to save costs. Investing on brands is the last thing most organizations and leaders believe in.
However, the fact remains that when times are tight, the bottom line is dictated by the value consumers place on your brand, or more precisely, how much they are willing to pay for that value.
The value perceived by consumers and actual shareholder value are strongly influenced by brand. Brand can drive growth in an up-market or protect the company’s value in a down- market.
One of the most important, but often overlooked aspects of a tight economy is the insecurity consumers experience. During a bull economy, consumers have more disposable income, spend more freely and take bigger risks.
However, a bear economy forces people to evaluate their purchasing decisions with a critical eye towards value. Consumers’ spending habits change dramatically — they take inventory of their costs and its related benefits. If the value is not readily apparent, they could move on to a ‘safer’ option.
Demand curve
During bad times, as consumers feel the pinch, they begin to search for change. Companies need to focus on action that takes advantage of the opportunities that change brings about.
Branding in a tight economic environment is all about investing in consumer retention and attraction. 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 the company and its brands in the long run. Not everyone automatically loses out in an adverse economy.
In a poor economic climate, companies must recognize 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 consumers as an appreciating asset, may soon find their brands and business devalued or defunct.
Brands are valuable in good times and in bad. During tough times, your brand may be considered by consumers who would otherwise not take notice or see relevance.
As consumers begin evaluating their purchases on a different set of priorities, heritage brands can use the emotional connections that exist, to regain past consumers who have moved on to ‘higher end’ brands.
Most valuable asset
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. 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 await things out. Ironically, those companies end up damaging their most valuable assets — their brands. 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.
Historically, companies which invested in their brands during hard economic times retained their core audience, attracted new consumers and emerged stronger in the end.
Branding cannot be reserved as an exercise in times of growth. To be effective it requires constant maintenance, perhaps even more so in times of crisis. Take care of your brand and your brand will take care of you. Neglect it and you will immediately feel the ill-effects.