Economic Down-turns Need Not be Brand Down-times
The same can be said for – and said by – outgoing coaches in closing press statements, presidents in State of the Nation addresses, all summed up with that singularly expressive South African word I’ve recently acquired, Eish. Indeed, it has been a difficult and undoubtedly challenging year to date. And it’s not over yet.
With the falling rand, soaring inflation, declining investor confidence, rising fuel fees, crumbling house prices and the power crisis, it’s undoubtedly a tough time for brands in South Africa. Not to mention Brand SA. Having done business within these borders for years, I note a discernable air of trepidation from stakeholders – and I use that term to refer to everyone invested in the local market – everywhere.
However, taking a macro view as CEO for a global branding agency, what I see is not unique to South Africa. No country or brand is immune from what is looking to be a global economic affliction right now, as consumers are forced to pinch their pennies, count their krone, their reubels, their rands, and brace themselves for what is a tough ride ahead.
Risking charges of nascence and a stiff British upper lip, I believe it need not be all doom and gloom. While economic recessions are inevitable, brand recession need not be. How so, when a credit crunch sees consumers everywhere cutting back on discretionary spend, packing padkos instead of stopping at Wimpy, and questioning brand value more than ever before? Famously recessionproof, not everyone has the luxury of being a luxury brand, though the winds of change have been blowing through the streets of Sandton too these days. There’s no single remedy and we don’t propose to have the answers.
I too am party to the same data and media reports as you and can’t profess to be an expert on macroeconomics nor soothsaying, both of which can be as reliable as the BBC’s weather reports. In this climate of uncertainty, a considered and well-thought through, well-founded approach to building brand equity is the best antidote to the affliction of consumer cut-backs. A recession – the ultimate ‘physical’ To begin, brands need to diagnose the condition of their immunity – their capacity to withstand a battering – before considering which survival strategy to adopt. Indeed, like a game of survival of the fittest, through (naturally thrifty) selection, cashstrapped consumers are more inclined to weed out weaker brands. So, how do you check your brand’s vitals?
While Brand Valuation models can offer useful health checks for a brand, despite offering second, even third opinions according to whose diagnostic tool you prefer, a brand’s true success really resides in the minds of its customers. A brand is only valuable if it can translate consumer sentiment into shareholder value. Never before have quality standards and added-value been more important to consumers. And, commensurate with this, never before has customer loyalty been so important to you.
With a careful and holistic prognosis, like the Growth, Direction and Protection (GDP™) brand filter, in this time of dis-ease brands must adopt the appropriate strategy to survive, drawing on existing loyalty and building equity.
Invest to Protect
Frequently the first to be trimmed, resisting the urge to slash the marketing budget is vital to your strategy. While your biggest opponent will be your financial director whose mandate is to shore up the bottom line for the next ailing annual report, research shows that brands with the foresight to invest more – at best, the same – in marketing and ad spend in a climate of competitor cut-backs, stand to gain the most in the long term.
Market research spend is vital; you need to know more than ever how consumers are redefining value and responding to the recession. Need not, want not; Know what your customers need, not what they want. In times of economic downturn, it pays to concentrate on your current customers and avoid the five-fold cost of acquiring new ones. Now is the time to expand your brand loyalty, not so much in terms of expanding portion of the purse, but retaining it in the face of lower-priced value alternatives.
Keep your existing customers close with, in this instance of the GDP model, a Protection strategy. In the likelihood of consumers doing a little more shopping around than usual, brand messages need to refocus on quality and value. Take advantage of a louder voice on a quieter stage as competitors pull back on their marketing and advertising spend. Try cranking yours up a decibel or two, but craft your brand messaging accordingly. Importantly, this can’t be a case of a superficial gloss-over; you need to be able to deliver on your claims of quality and value. Look at the existing capabilities of your brand and look for opportunities of alignment with the new needs of your audience.
Arguably, in no other category is this more important than in Financial Services, which account for more than a quarter of Millward Brown’s Optimor Top 100 brand heavyweights. Having worked with the likes of HSBC, Bank of America and American Express over the years, we see that these formidable financial brands are pulling strongly on long-term provenance whilst wisely revising their marketing plans, advancing transparency, communication and empathy to key stakeholder groups.
This holds true for the major players here; Old Mutual, Standard Bank and FNB, among others, with refocused and relevant communication, offers and strategies, while staying true to their positioning. Likewise, be prepared to readdress your marketing plan if necessary, asking key questions on how each item of your action plan supports or drives up loyalty and ultimately equity. If you cut back now, be prepared to have to overcompensate – and over-spend – at a later stage to recover. Brands that continue to build their equity during slump time will be streaks ahead in the long run when the economy inevitably turns a corner, setting you up for your Growth strategy.
Integrity, the platform for Growth
That’s not to say only category leaders pursuing a Protection strategy stand to gain during the hard times at the expense of challenger brands. There is no single apply all antidote and brands can take a number of different routes to get a much needed shot in the arm. While brands on the lower end of the quality spectrum will suffer to the benefit of category leaders, value-based brands are also well positioned to increase their brand strength because they offer a more cash-cautious consumer a familiar name at a reasonable price.
In today’s climate of uncertainty, never has brand integrity been more important. ‘Buy once, buy well’; consumers can’t afford mistakes and will remain loyal to the brand that has consistently delivered on their needs. Google, for example, is one brand that has set itself up on a growth trajectory and stands to reap the benefits of the good times through the trust it has established with its loyal fan base.
There is no room for mistakes in your marketing plan; look for opportunities to buy more trust from your buyers by truly doing what you say and looking for opportunities to exceed your customers’ expectations through adding value. Special offers and sampling, for example, are more gratefully received by consumers, so the areas for growth are quite feasible during the crunch period. Spot opportunities to add more value to your customers, rewarding them for their continued support and you will endear yourself to your buyer.
Focus and Direction
Critical to your future is for your brand to have a point of view. And to have a point of view is to have a Direction, the third core component of GDP. How is it that those brands with lucid points of view timelessly triumph over their non-descript, less distinctive peers? This is because in a market of increasing commoditisation where competing brands borrow from each other’s product benefits; it can be a key differentiator and your brand’s best ability to cut through the clutter.
A point of view resonates with your customer and doesn’t merely inform, but engages, provokes and inspires on an emotional level. It is an added ability to talk directly to your customer and further gain their loyalty. A point of view – that which tells your customer why it is different and how it adds value – is what will keep your brand honest in this climate of scepticism. It should be a long term view for growth, while protecting what you have. It needs to be relevant, coherent and powerfully marketed.
It also needs to be clear and steadfast. This foundation of certainty must be underpinned by a commitment to delivery that is relevant to your consumer. Take Tesco, the UK übersupermarket chain that Pick n Pay has modelled itself after in many aspects. I recall some years back, Tim Mason, then Marketing Directory, sharing with me that Tesco’s secret was undeniably – even surprisingly – simple. Rock solid, the determining force that propelled the business strategy is Tesco’s promise ‘Every Little Helps’. This mission statement underpins a point of view and core purpose; ‘To create value for customers to earn their lifetime loyalty’. It is a point of view that permeates every activity of business this major retailer competes for – from their consumer promise and customer value-add, to internal processes like food stuffs innovation pricing, stock management and the out-of-category sectors they have extended into – private medical insurance, personal finance and telecommunications.
That’s not to say that they are limited to a value strategy alone. Tesco’s ability to straddle the brand spectrum with its ‘multi-vitamin’ of multi-brands that cater to a number of tastes and pocket sizes is a healthy approach for the sector it is in. Through a tiered approach of own-label value brands, cheaper than big brand alternatives and a selection of premium-priced treats,Tesco maintains relevance with all its stakeholders and customer groups.
Its point of view pertains to both internal and external stakeholders; from employees, management and suppliers, all the way through to customers, shareholders an even the media. However, there is no apply all solution. Some brands have high growth opportunities and an appropriate growth strategy would help them fulfil this potential; others need direction; while those that have already ascertained a sense of wellbeing and are in good health need to pursue a strategy of protection. It all depends on your brand’s GDP.
It will be very interesting to fast forward to the 2009 edition of Brands & Branding, how the top brands fared, which ones heeded this advice or not? Which brands moved up or down Millward Brown’s Optimor brand list?
Recessions are never desirable, but they are inevitable. And the wheel will turn. Will your brand come out largely unscathed or, will it be – to use another of my favourite South African expressions – eina? To a large extent, the outcome rests with you.
Simon Bolton is worldwide CEO for The Brand Union, he oversees a network of 21 offices around the world. Having cut his teeth in the advertising world with Ogilvy & Mather, FCB Worldwide and ultimately JWT, as CEO for UK & Ireland, Bolton believes brand and design agencies will continue to usurp the traditional power advertising agencies have held to date. He lives in London but travels regularly to The Brand Union’s Johannesburg office, the agency’s African HQ. The Brand Union is a WPP company.