Until mid-2000, everybody was a .300 hitter.
US corporate earnings grew at an annual rate exceeding
20%. Productivity was at twice the level of previous years.
Stock prices seemed to shatter the Law of Gravity as the
Dow and NASDAQ skyrocketed to over 11,000 and 5,000 points,
respectively. Then things began to unravel, and there’s
no need to chronicle again the declines that followed.
Let’s just say that the US economy has slipped into recession
20 times since 1900 and you may have an opportunity to
live through #21 very soon, the efforts of the Fed notwithstanding.
Consequently, now would be a great time to assess the
battle worthiness of your brand(s).
Toughening your Brand for Tough Times
By Lynn Upshaw
One topic that rises rapidly to the top during such an
assessment is the concept of value. In our last US recession
(July ’90 – March ’91), the term “value” was redefined
as something much more than a synonym for “cheap” as buyers
began to see value in higher-end, quality products and
services. Today, value can be found (at least in some
customers’ minds) in a $72,000 Lexus LS430 as easily as
in a Target storewide sale. In the tough times ahead,
the surviving brands will define value in perfect alignment
with what their most loyal customers believe is of most
value to them.
Genuine value requires genuine quality, and quality is
much more leverageable in the form of superiority. In
today’s economic environment, marketers who settle for
simple differentiation as an ultimate brand goal are creating
an opportunity for more aggressive competitors. In an
uncertain economy, some marketers believe that consumers
and B2B customers cannot afford to pay for a premium-priced
brand with a reputation for superiority. Just the opposite
is true. Buyers in such times often avoid wasting their
money on products or service solutions that may be “unique”
but fail to deliver superior performance. Genuine value
– the kind that buoys corporate vessels on rough seas
– calls for quality at a reasonable price, not lower pricing
for parity performance.
Another axiom that often gets mislaid in stormy weather
is the fact that virtually every purchase decision is
emotionally based in some way. That emotion can be channeled
into brand preference if prospects see the brand as a
trustmark they can count on when they are financially
challenged. Volkswagen bounced back from horrible sales
declines a few years ago by re-creating the kind of superior
brand persona that had made the brand a hit thirty years
earlier. Apple’s “Think Different” campaign was a persona-driven
customer retention invitation that laid the foundation
for a successful launch of the iMac and G4 offerings.
Harley-Davidson, Sears, Nike, MasterCard, and IBM have
all employed emotion to strengthen their market positions
It’s a good bet that these strategies will serve their
brand masters well even when there is less disposable
income in the marketplace.
On a more tactical level, it is critical in wobbly economies
that marketers understand the difference between unproductive
and productive awareness (a skill never mastered by some
of the late great dot-coms). Productive awareness is focused
on those markets and prospects that have already shown
an interest in purchasing your breed of brand. These loyalists
must then be given a new set of reasons to stay tethered
to the brand, and those reasons must be explicitly relevant
to the new economic times that are crashing in on us.
Such persistently astute brand marketers as Nike, IBM,
and Southwest Airlines find a way to deliver their messages
in the most impact-efficient manner possible in good times
and not so good times.
Unfortunately, one slippery slope to avoid is viewed by
some as unavoidable, namely, relying on discounting and
price promotions that can permanently devalue a brand.
While short-term distribution or share battles may require
some tactical trimming, discounting can become a potent
narcotic that ultimately increases the already rising
pressure on earnings. Consider how the McDonald’s brand
was hurt by playing the value meal game with the likes
of Burger King and Taco Bell in the early 1990s. Or more
recently, note what happened at Dial Corp. when the company
overstuffed the channel with discounted inventory that
ultimately created havoc with corporate earnings. Successful
long-term brand builders do not dilute their brand identity,
even to prevent short-term share loss.
Paradoxically, the single most important move a brand
marketer can take when facing economic challenges may
be within the company itself, rather than out in the marketplace.
In difficult financial times, every single member of your
brand team – and every single co-worker in your company
– must be rabidly obsessive about defending and growing
your brand. Now is the time to send your people through
comprehensive brand training workshops that help them
understand why brand building is business building. Now
is the time to rally the troops with rousing brand events.
Now is the time to have the CEO speak and act with passion
about the sanctity of the brand and the need to create
a brand momentum that will protect the company against
the ravages of a recessionary economy. Strong brand-driven
companies such as Starbucks, Charles Schwab, Sun Microsystems,
and IKEA are better prepared to cope with difficult financial
markets because their people have a better grip on what
their brands are, and how they can best be deployed.
We have feasted off of the good times for the past decade
and now we must make do with rations of our own making
during the winter ahead. May the best-prepared brands
prevail... and prevail they will.
(c)2001 ASM Communications. Inc. Used with permission